Icelandic government seems set to lose majority

Reykjavik, May 13: Iceland's government looked set to lose its majority today with 76 percent of votes counted in polls, opening the door to an opposition coalition taking power and a possible first woman prime minister.

Still, the margins were razor-thin -- hanging on three votes at one point -- and experts said the outcome was far from clear.

''We don't know anything for certain until the last vote is counted,'' University of Iceland political science professor Olafur Hardarson said on the national television network.

The election has been dominated by a single issue -- the tempo of big industry development in Iceland, which has a population of just 300,000.

The long-ruling Independence-Progressive Party coalition wants aluminium giants like Alcoa to keep building smelters powered by Iceland's geothermal and hydroelectric resources, a trend that has driven rapid economic growth in recent years.

Main opposition parties the Left Greens and Social Democrats want development halted until the environmental and economic impact of the latest projects becomes clear.

A poor showing by Prime Minister Geir Haarde's Progressive Party coalition partner meant that even if the government retained its majority, his Independence Party would likely need to seek a new partner to keep power.

The Progressives lost five of their 12 seats in the 63-seat parliament in what Hardarson called the worst performance in the 90-year history of Iceland's oldest party.

Independence, with 36 percent of the vote, was on track to increase its number of seats to 24 from 22.

Haarde has said his natural second coalition choice is the Social Democrats, but its leader Ingibjorg Solrun Gisladottir vowed yesterday to throw her weight behind the opposition.

''My promise to talk to the opposition parties first still holds,'' she said during televised election coverage. ''Now there is an opening for exciting change.'' If the opposition does gain enough votes to form a government-toppling coalition, Gisladottir would probably become Iceland's first woman prime minister -- a job she has repeatedly said she covets.

The former Reykjavik mayor has pledged to introduce policies to allow the country's very poorest to share in the economic bounty of the past few years.

Voter turnout at 82 per cent of the 221,000 eligible voters was down from 87 per cent in 2003 elections.

The Left Greens made the biggest advance in the elections, and looked set to rise from five seats to nine.

Political scientists have said the party's strong performance is an illustration of Icelanders' unhappiness with unfettered industry growth.

Public discontent has centred on worries about dam projects on Iceland's rivers to power the smelters and by record-high borrowing costs in a fast-growing economy.

Reuters>