Iceland's PM poised to fend off challenge from left

Icelandic Prime Minister Bjarni Benediktsson's conservative party looked set to remain the country's biggest party after Saturday's general election, with half of votes counted, but the makeup of the future government was uncertain. Bolstered by a thriving economy, scandal-plagued Benediktsson and his Independence Party were facing a challenge from the Left Green Movement and its potential allies -- the Social Democratic Alliance and the anti-establishment Pirate Party -- which could still dethrone the conservatives if they manage to secure a fourth ally. With nearly half of ballots counted at 0315 GMT, Independence was credited with 17 seats in the 63-seat parliament, followed by the Left-Green Movement with 11 and the Social Democratic Alliance with eight. Under the Icelandic system, the president, who holds a largely ceremonial role, tasks the leader of the biggest party with forming a government. "We are winning this election. We hope to get more seats in parliament as the night goes on," Benediktsson told a cheering crowd of supporters at the Independence Party's election rally in Reykjavik. "We will need to take a deep breath and wait for the final results to see the options on the table," he later told AFP, adding: "I am optimistic that we can form a government." Final results were not expected until Sunday morning, but even then it could take days, weeks, or even months for the leader of the biggest party to form a coalition, as eight parties vied for seats in parliament and many said all coalition options remained open until negotiations were held. The election campaign has played out against a backdrop of deep public distrust in the political elite following a slew of scandals in recent years. Benediktsson called Saturday's election -- Iceland's fourth since 2008 and second in a year -- after a junior member of his three-party centre-right coalition pulled out last month over a legal controversy involving the PM's father. Benediktsson, a former lawyer and businessman whose family is one of the richest and most influential in Iceland, has also been implicated in several financial scandals, including the so-called Panama Papers release which revealed global tax avoidance and evasion. If the election results were confirmed, his Independence Party would lose four of its seats in parliament. - 'No obvious majority' - Meanwhile, if the left were to seize power, it would be just the second left-leaning government in Iceland since its proclamation as a republic in 1944. The first one governed in 2009-2013, when the Social Democrats and the Left Greens ousted the right after Iceland's 2008 economic crisis -- when its three major banks collapsed and the country teetered on the verge of bankruptcy. "I hope that when all the results are in, we will be a part of the next government," Left-Green leader Katrin Jakobsdottir, 41, told party supporters in Reykjavik. "We have eight parties in parliament and right now there doesn't seem to be any obvious majority. All parties are open for discussion," she told AFP. Her campaign promises included investing in social infrastructure and ensuring that Iceland's economic prosperity reaches the health care and education sectors. Nearly one in two Icelanders would prefer to have her as their new prime minister, according to a September 19-21 poll published by daily Morgunbladid. Since the 2008 financial crisis, Iceland has made a spectacular recovery with robust growth of 7.2 percent in 2016 and unemployment at an enviable 2.5 percent. A year ago, snap elections were called after prime minister Sigmundur David Gunnlaugsson was pressured to resign when he was named in the Panama Papers scandal. More than 600 Icelanders -- in a country of just 335,000 people -- were also named in the documents, including Benediktsson, then finance minister. Yet Benediktsson still managed to build a coalition with the centre-right Reform Party and the centrist Bright Future, but the latter quit after nine months because the prime minister had covered up the fact that his father signed a recommendation letter for a convicted paedophile who sought to restore his civil rights. Independence Party supporters still view it as the main force for economic stability and growth. Nearly half of Iceland's postwar prime ministers came from the eurosceptic party.