To recap: In 2008 the American housing market collapsed. Every bank that had investments in that market shit themselves so badly that the underwear manufacturing industry boomed in Asia. One European country after another felt the domino effect of economic collapse pressing against their banks, imperilling the Euro and critically changing the shape of the world political landscape. We all looked to the horizon in disbelief and horror, the media portraying events as if it was some awful and new 'Apocalypse-porn' movie by Michael Bay. The new world was being formed and the leaders of this world did not want Iceland to be seen as an example, or seen at all. Here is why:
When you think of Iceland you probably think of ice, volcanoes and it's small population.
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| Population: Bjork. |
In 2007, after just four years of a pure neo-liberal political regime, Iceland was one of the richest countries in the world. Bet you didn't know that. 320 thousand people and no army and it was fucking loaded. In 2003 all the countries banks were privatised. In an attempt to attract foreign investors the banks offered on-line banking which, because of it's low costs to run, meant they could offer high rates of return. The accounts, IceSave, attracted many small investors from the UK and the Netherlands. But as the investments grew so did the debt the interest promised on the investments. As more investors jumped on board the banks foreign debt quickly out paced that which they could safely return. As rich as the country was by the end of 2003 the banks debt was 200 times that of the countries GNP, by 2007 it was 900 percent. The 2008 economic crisis was the coup de grace. The three main national banks, Landbanki, Kapthing and Glitnir went bankrupt and were nationalised. The banks debt became the nations debt and at the end of the year Iceland too declared bankruptcy. In the space of one year the country went from wealthy to broke.
Contrary to what we have seen across Europe and America, where political pressure has built on nations such as Iceland to follow set economic regulations and become the whipping-bitches of richer countries forcing them to accept bailout money in exchange for losing political sovereignty to their economic policy, this only caused the Icelanders [Bjork] to regain their sovereign rights. Though direct participatory democracy they wrote a new Constitution. But only after much, much suffering.
Geir Haarde, the Prime Minister of a Social Democratic coalition government, negotiated a two million one hundred thousand dollar loan, to which the Nordic countries added another two and a half million. But the foreign financial community pressured Iceland to impose drastic measures. The FMI and the European Union wanted to take over its debt, claiming this was the only way for the country to pay back Holland and Great Britain, who had promised to reimburse their citizens for lost investments.
Naturally the international community continued to weigh pressure on Iceland [Greece? Anyone?!]. Threats of political and economic sanctions were called from the U.K. and Holland whilst the British government calling to freeze Icelander savings and checking accounts. As Iceland went to vote, foreign bankers threatened to block aid from the IMF. If Iceland refused to pay their debts it would have a drastic knock-on effect to other countries economically, and potentially politically and socially. The only factor that would relent this pressure was the contracted bailout loan of 3.8 BILLION Euros. This would have placed the nation completely at the mercy of European policy makers. As Grimsson said: “We were told that if we refused the international community’s conditions, we would become the Cuba of the North. But if we had accepted, we would have become the Haiti of the North.”
In the March 2010 referendum a staggering 93% votes against the repayment of the debt. The IMF immediately froze the loan. The international community condemned Iceland but it did nothing to halt the revolution. With a frenzy of support from its citizens the Icelandic government launched civil and penal investigations into those responsible for the financial crisis. What elsewhere was an unstoppable domino effect had not only ended with Iceland but it was pushing back. Interpol put out an international arrest warrant for the ex-presidents of Landbanki, Kapthing and Glitnir as other bankers implicated in the crash fled the country in droves. [See two paragraphs below for an update.]
But the Icelanders didn't stop there: They, the citizens along with government, decided to draft a new constitution that would free the nation from the exaggerated powers of international finance and virtual money. To write this constitution the people of Iceland democratically elected 25 people from amongst 552 adults whom are not affiliated with any political party but voted for by at least 30 citizens. This was not the work of politicians but was conceived of the people, born on the Internet. The constituents were streamed on-line, citizens sending their comments and suggestions, witnessing the document taking shape. Accessible to all and by all, this is TRUE DEMOCRACY at work.
On Friday the 8th of June the Icelandic Supreme Court put two of the bankers responsible for their economic crisis on trial. They both recieved a four year non-suspended jail sentence. I wanted to write more about this particular event but just the amount of background writing and research I've had to do to write this blog has tired me out.
What will be the out come of this? Time will tell. Until then Iceland is the country that ALL eyes should be turned to. The leaders of Europe have put Greece out to pasture, instilling fear and long-term poverty into the heart of the Greek nation and every Euro citizen who's been watching. They made sure that everyone knows what happens when you fail to pay your debts. Except in Iceland.
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Bjork: Declare Independence
How cool is Iceland? Very!
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