Party Analysis: Sjálfstæðisflokkurinn (Iceland)
The Problem of Historical Dominance
For much of Iceland’s modern history, Sjálfstæðisflokkurinn - the Independence Party - has been less a party than an institution. Founded in 1929 and dominant for decades after independence in 1944, it fused economic liberalism with pragmatic conservatism, championing free markets, fiscal restraint, and national sovereignty, while accommodating a modest but durable welfare state. For generations, it was Iceland’s natural party of government.
That assumption now looks less secure. In the November 2024 snap election, Sjálfstæðisflokkurinn recorded its worst-ever result, winning just 19.4 per cent of the vote and 14 seats in the 63-member Althing. Overtaken by the Social Democratic Alliance, it entered opposition under Prime Minister Kristrún Frostadóttir’s centre-left coalition. Leadership change followed swiftly: Bjarni Benediktsson stepped down in January 2025 after 16 years at the helm, and in March Guðrún Hafsteinsdóttir became the party’s first female chair.
Yet reports of decline may be premature. By December 2025, polling suggested a rebound. Gallup placed the party on 22 per cent nationally - slightly ahead of the Social Democrats - while a Maskína survey put it at 28 per cent in Reykjavík, its strongest municipal showing in years. With membership still encompassing more than 15 per cent of Icelanders, Sjálfstæðisflokkurinn remains deeply embedded in the country’s political infrastructure. The question is not whether it will survive, but whether it can still dominate.
Why Sjálfstæðisflokkurinn Exists
Sjálfstæðisflokkurinn emerged from a deliberate act of consolidation. Formed through the 1929 merger of Iceland’s Conservative and Liberal parties, it was designed to unite non-socialist forces at a moment when left-wing and agrarian movements were gaining ground. Its founding mission was twofold: to promote economic freedom and private enterprise, and to secure full national independence from Denmark - achieved in 1944 amid the disruptions of the Second World War.
From the outset, the party positioned itself as a broad tent on the right, capable of bridging ideological divides in a small and exposed society. Unlike more doctrinaire conservative movements elsewhere, it combined resistance to excessive state control with selective acceptance of welfare reforms in the 1930s, ensuring mass appeal without abandoning core liberal principles. This pragmatism became its defining feature.
Over time, the party came to represent voters sceptical of state intervention, wary of European integration, and committed to Iceland’s strategic autonomy - most notably through NATO membership without EU accession. Its durability reflects a persistent constituency for market-led growth, fiscal discipline, and sovereignty in foreign affairs. Recent leadership renewal, framed by Hafsteinsdóttir as a shift from reactive management to proactive future-shaping, reflects an attempt to modernise without repudiating this inheritance.
What the Party Has Achieved
Measured by longevity and influence, Sjálfstæðisflokkurinn is one of Europe’s most successful conservative parties. From 1931 until 2009, it emerged as the largest party in every election, peaking at 38.6 per cent of the vote in 1991. Every one of its leaders has served as prime minister, and it has led or participated in most governments since independence.
Its policy imprint is substantial. In the post-war period, it helped steer Iceland’s transformation from a poor agrarian society into a high-income economy. In the 1990s and early 2000s, it drove privatisation and financial deregulation, aligning Iceland more closely with global markets while also embracing social liberalisation - symbolised by reforms ranging from welfare expansion to the lifting of the beer ban in 1989.
The party’s record is not unblemished. Its association with financial liberalisation left it exposed after the 2008 banking collapse, though it returned to power in 2013 and played a central role in the recovery through tourism promotion and economic diversification. Between 2017 and 2024, it anchored a succession of coalition governments, managing post-pandemic recovery, volcanic emergencies, and Iceland’s growing role within NATO amid heightened Arctic tensions.
The 2024 election marked a rupture rather than a collapse. While it lost seats amid disputes over immigration and energy policy, the party retained strong municipal bases - particularly in the southwest and rural areas - and continues to shape debate on EU membership, infrastructure security, and fiscal strategy, including renewed efforts to privatise remaining state bank shares.
What Success Would Look Like
For Sjálfstæðisflokkurinn, success means restoration rather than reinvention. The party’s immediate objective is to reassert itself as Iceland’s primary governing force by the next scheduled election in 2028. In practical terms, this implies lifting its vote share beyond 25 per cent, securing 16 - 18 seats, and positioning itself at the centre of a viable centre-right coalition.
Policy success would involve rolling back tax increases, addressing inflation and housing costs, and delivering visible infrastructure investment - particularly in regional healthcare and transport. It would also entail blocking renewed momentum towards EU membership or euro adoption, while advancing market-oriented reforms such as regulatory easing and further bank privatisation.
In the longer term, the party’s ambition is to entrench what its leadership describes as “proactive conservatism”: promoting individual opportunity and competitiveness while safeguarding national assets such as fisheries, energy resources, and Arctic infrastructure. The challenge lies in doing so without appearing nostalgic or rigid in a society increasingly shaped by urbanisation, climate politics, and generational change.
Electoral Rules and Strategic Constraints
Iceland’s electoral system both cushions and constrains Sjálfstæðisflokkurinn. Proportional representation using the d’Hondt method across six constituencies, combined with a 5 per cent national threshold for levelling seats, tends to reward established parties with efficient vote distribution - particularly in rural districts where the Independence Party has long been strong.
At the same time, the system punishes fragmentation. The party’s 2024 defeat owed much to vote-splitting on the right, which diluted its seat yield despite the absence of any dominant winner. Coalition-building is unavoidable in a system where no party has exceeded 30 per cent in recent decades, making relations with the Progressive Party and Reform Party critical to any return to power.
Urban politics presents a further challenge. Multi-member districts in Reykjavík and its suburbs dilute traditional advantages and place a premium on leadership appeal and issue salience. The party’s polling rebound in the capital by late 2025 suggests renewed competitiveness, but sustaining this momentum will require adaptation rather than organisational muscle alone.
How Critics See It
To its critics, Sjálfstæðisflokkurinn represents entrenched privilege rather than pragmatic governance. Parties on the left portray it as elitist and overly deferential to business interests, accusing it of prioritising deregulation over social equity and environmental protection. Its role in pre-2008 financial liberalisation remains a potent line of attack, reinforced by scandals such as the Panama Papers and controversies over political patronage.
Progressive and populist voices argue that the party has been slow to respond to rising inequality, housing shortages, and climate imperatives, while some nationalists criticise its commitment to NATO as excessive reliance on foreign power. Even centrist commentators occasionally fault it for contributing to right-wing fragmentation rather than providing clear leadership.
These critiques converge on a broader claim: that Sjálfstæðisflokkurinn is better at managing the status quo than addressing the structural pressures facing a high-cost, globalised society.
How It May Be Remembered
Sjálfstæðisflokkurinn’s long-term reputation will depend on whether it adapts to a changing Iceland or fades into managed decline. If it regains power and successfully navigates the challenges of Arctic geopolitics, climate transition, and economic diversification, it may be remembered as the party that translated liberal conservatism into lasting national resilience.
If, however, demographic change and political fragmentation permanently erode its dominance, historians may cast it as a transitional force - indispensable to Iceland’s early republican success, but less suited to the polarised and pluralist politics of the twenty-first century.
Either way, its imprint is unmistakable. Few parties have shaped a nation so thoroughly, or so long. Whether Sjálfstæðisflokkurinn can do so again is the central question of Icelandic politics today.