Look Who's Back! Party Behind Iceland's Bank Crash Returns to Power

The Left-Green movement, Iceland's most left-wing party, has been bestowed the honor of forming the country's government for the first time. However, this breakthrough came at a high price: in order to form the cabinet, the Left-Greens had to form an unholy alliance with their antipodes, the market liberalist Independence Party.

Not only did Independence Party leader Bjarni Benediktsson, who was pointed out by the Panama Papers as having offshore activities and benefitting from insider information, become Finance Minister, but his party was in power between 1995 and 2007, that is during the decade preceding Iceland's financial crisis that crippled the island's economy. Many Icelanders found this particularly shocking given that the Left-Green had been banking on criticism of Iceland's "corrupt elites."

"Bjarni Benediktsson, the Prince of Tax Heavens, becomes Finance Minister, and those who ruined Iceland will sit in the government. It's surprising and shocking," Albert Einarsson of the Norwegian Agency for Lifelong Learning, who had graduated from the University of Iceland, told the Klassekampen daily.

"We are ready to compromise to establish a form of stability in Iceland," Icelandic Prime Minister Katrín Jakobsdóttir previously told Klassekampen.

The Left-Greens' contradictory siding with their archenemies has been met with internal criticism using such epithets as "unethical" and "almost criminal" to describe the affair. At least two Left-Green MPs will not support the alliance, which leaves Jakobsdóttir, who has but a slim majority, with a wounded party.

Iceland's new coalition spans the entire political spectrum, featuring the Left-Green, the liberal conservative, yet markedly anti-EU Independence Party and the center-right Progressive Party with agrarian issues in its focus.

​Katrín Jakobsdóttir, became only the second woman to head the Icelandic government, after Jóhanna Sigurðardóttir (in office between 2009 and 2012), who also had the distinction of becoming the world's first openly lesbian head of state.

​Forty-one-year-old Jakobsdóttir is a mother of three. She became deputy chair of the Left-Green in 2003 and served as Minister of Education, Science and Culture from 2009 to 2013.

The snap election in October was announced after Bjarni Benediktsson's government collapsed in September, following the revelation that the prime minister had concealed his own father's efforts to help a friend convicted of pedophilia have "his honor restored" in a formal procedure. Subsequently, leaked documents have shown that Benediktsson was likely to have benefitted from insider trade information, as he notoriously sold all his shares in Icelandic bank Glitnir the day before the state took control. After the leak, Icelandic media were prescribed a ban on discussing this matter.

The tiny island nation of only 330,000 was among those hardest hit by the international banking crisis of 2008. It was also one of the worst disasters in the country's history resulting in 5,000 Icelanders emigrating from the island.