Popular and political support keep socialism alive with new economic stabilization plan
The sudden and ongoing devaluation of the isal has met a swift political response, leading to a controversial, nation-wide debate on three different economic stabilization plans. Ultimately, the plan by the ruling Islævian Socialist Party (PSI) was approved through its absolute majority in the People's Council, though without the usual support of its nominal coalition partners.
Islævia's economic contraction is tied to the increasing inefficiency of the large public sector and a loss of confidence in the country's small private sector.
The PSI economic stabilization plan calls for a reestructuring of the public sector, subsidies conditioned on the recommended reforms, an artificial increase in the isal's value through Central Bank action to stop inflation, and improved regulatory efficiency of the private sector. It thus continues the socialist policies that have guided Islævia's economy since 1986. Only the PSI supported the proposal, which passed with 37 votes for, 31 votes against and 3 abstentions (those of the National Party).
The Communist Party of Islævia (PKI), otherwise a close PSI political ally, presented its own, completely different proposal. If passed, it would have pegged the isal to the international NSD, increased state control over the public sector, increased government spending, and broken down failing private corporations (with some of the resulting smaller businesses absorbed by the state), but it was defeated with 11 votes for and 60 against.
But perhaps the most controversial plan was the one designed by the Liberal Party (PL) and jointly presented by the opposition. It calls for mass privatizations, drastic reductions in subsidies, and a brand new "liberalized" regulatory environment for private enterprises. The proposal was received with mixed reactions by the general public. Islævian economists warned that the plan would entail a dramatic, years-long economic contraction and even the collapse of public services before any potential benefit could be felt in the long-term. However, the plan was unsurprisingly supported by most of the international community and the opposition, raising suspicions of collusion. Especially strange is the support received from the Democratic Left (ESD) and Together, which are known to oppose such a catastrophic shock therapy, after shady backstage negotiations with the PL. The proposal was however easily defeated, with 20 votes for and 51 against.
Polls suggest that the PSI plan is by far the most supported among Islævians, followed by the opposition one. The PKI plan received little popular support.
The Supreme Court has refused to investigate the drafting of the PL plan, stating that there is "no evidence" of illegal activity.