Why Iceland Should Be In The News, But Is Not
An Italian radio program’s story about Iceland ’s
on-going revolution is a stunning example of how little our media tells us
about the rest of the world. Americans may remember that at the start of the
2008 financial crisis, Iceland
literally went bankrupt. The reasons were mentioned only in passing, and
since then, this little-known member of the European Union fell back into
oblivion.
As one European country after another fails or
risks failing, imperiling the Euro, with repercussions for the entire world,
the last thing the powers that be want is for Iceland to become an example.
Here’s why:
Five years of a pure neo-liberal regime had
made Iceland ,
(population 320 thousand, no army), one of the richest countries in the world.
In 2003 all the country’s banks were privatized, and in an effort to attract
foreign investors, they offered on-line banking whose minimal costs allowed
them to offer relatively high rates of return. The accounts, called IceSave,
attracted many English and Dutch small investors. But as investments
grew, so did the banks’ foreign debt. In 2003 Iceland ’s debt was equal to 200
times its GNP, but in 2007, it was 900 percent. The 2008 world financial
crisis was the coup de grace. The three main Icelandic banks, Landbanki,
Kapthing and Glitnir, went belly up and were nationalized, while the Kroner
lost 85% of its value with respect to the Euro. At the end of the year Iceland
declared bankruptcy. Contrary to what could be expected, the crisis
resulted in Icelanders recovering their sovereign rights, through a process of
direct participatory democracy that eventually led to a new Constitution.
But only after much pain.
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.
Protests and riots continued, eventually
forcing the government to resign. Elections were brought forward to April 2009,
resulting in a left-wing coalition which condemned the neoliberal economic
system, but immediately gave in to its demands that Iceland pay off a total of
three and a half million Euros. This required each Icelandic citizen to
pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to
pay off a debt incurred by private parties vis a vis other private parties. It
was the straw that broke the reindeer’s back.
What happened next was extraordinary. The
belief that citizens had to pay for the mistakes of a financial monopoly, that
an entire nation must be taxed to pay off private debts was shattered,
transforming the relationship between citizens and their political institutions
and eventually driving Iceland ’s
leaders to the side of their constituents. The Head of State, Olafur Ragnar
Grimsson, refused to ratify the law that would have made Iceland ’s
citizens responsible for its bankers’ debts, and accepted calls for a
referendum.
Of course the international community only
increased the pressure on Iceland .
Great Britain and Holland threatened dire
reprisals that would isolate the country. As Icelanders went to vote,
foreign bankers threatened to block any aid from the IMF. The British
government threatened to freeze Icelander savings and checking accounts. 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.” (How many times have I written that when Cubans see the dire state of
their neighbor, Haiti ,
they count themselves lucky.)
In the March 2010 referendum, 93% voted against
repayment of the debt. The IMF immediately froze its loan. But the
revolution (though not televised in the United States ), would not be
intimidated. With the support of a furious citizenry, the government launched
civil and penal investigations into those responsible for the financial crisis.
Interpol put out an international arrest warrant for the ex-president of
Kaupthing, Sigurdur Einarsson, as the other bankers implicated in the crash
fled the country.
But Icelanders didn’t stop there: they decided
to draft a new constitution that would free the country from the exaggerated
power of international finance and virtual money. (The one in use had
been written when Iceland gained its independence from Denmark, in 1918, the
only difference with the Danish constitution being that the word ‘president’
replaced the word ‘king’.) To write the new constitution, the people of Iceland elected
twenty-five citizens from among 522 adults not belonging to any political party
but recommended by at least thirty citizens. This document was not the work of
a handful of politicians, but was written on the internet. The constituent’s
meetings are streamed on-line, and citizens can send their comments and
suggestions, witnessing the document as it takes shape. The constitution that
eventually emerges from this participatory democratic process will be submitted
to parliament for approval after the next elections.
Some readers will remember that Iceland ’s ninth
century agrarian collapse was featured in Jared Diamond’s book by the same
name. Today, that country is recovering from its financial collapse in ways
just the opposite of those generally considered unavoidable, as confirmed
yesterday by the new head of the IMF, Christine Lagarde to Fareed Zakaria. The
people of Greece
have been told that the privatization of their public sector is the only
solution. And those of Italy ,
Spain and Portugal are
facing the same threat. They should look to Iceland . Refusing to bow to foreign
interests, that small country stated loud and clear that the people are
sovereign.
That’s why it is not in the news anymore.
Written by Deena Stryker of www.sacsis.org