(Reykjavik) Iceland’s left-of-center coalition, led by out lesbian interim Prime Minister Johanna Sigurdardottir, has won a stunning victory marking the first time an openly gay politician has been elected leader of the tiny country.

The Social Democratic Alliance and the Left Green Movement won 34 out of the 63 seats in Parliament in weekend voting. It was a crushing defeat for the pro-business Independence Party that many blamed for the collapse of the country’s banking system.

Sigurdardottir and her coalition came to power with an interim government following the collapse of the Independence Party in February.

Iceland was particularly hard hit by the global credit crunch.

Former Prime Minister Haarde nationalized banks and negotiated about $10 billion in bailout loans from the IMF and individual countries. But his government came under sharp criticism for failing to adequately oversee Iceland’s banking system and protect the once-prosperous nation of 320,000 people.

Iceland’s banks collapsed last year with huge debts amassed during years of rapid expansion. Unemployment and inflation have spiraled and the IMF predicts that Iceland’s economy will shrink by about 10 percent in 2009, which would be its biggest slump since Iceland won full independence from Denmark in 1944.

Sigurdardottir, 66, a former flight attendant, became a member of parliament in 1978.

She is known as a tough politician and a champion of social causes. She was nicknamed “Saint Johanna” by the public for her advocacy for the elderly, handicapped and disadvantaged.

Sigurdardottir entered into a civil partnership with her longtime companion Jonina Leosdottir in June 2002.

Although she would be the first gay Prime Minister of Iceland, she is not the first openly gay person to lead a country.  That honor goes to Per-Kristian Foss, who served in 2002 as interim Prime Minister of Norway.