We’re flying out of Berlin in a couple of hours after a fabulous week-long break from everthing back home. It’s been fantastic. Seriously. Icelandic current affairs, which I’ve loosely kept up with via mbl.is and Facebook, have seemed a whole lot more dreary from over here than back home. It’s like the old adage about the fish who don’t know they’re wet – when we’re in the thick of things back home we don’t always notice how heavy they really are.
The big thing now, of course, is the public discontent over the Icesave agreement. If you’ve just joined us, Icesave was an online bank opened in the UK by Iceland’s Landsbanki in 2006, which managed to accumulate around 6 billion pounds in deposits over a period of 18 months. Icesave operated in the UK and Holland, and was a branch of the Icelandic mother bank, which means the Icelandic state is liable to cover the deposits of British and Dutch nationals as if they had had their funds in the bank in Iceland. Immediately upon the bank’s collapse, the UK [definitely] and Dutch authorities [I believe] compensated their citizens via a “loan” to the Icelandic state, and the terms of repayment of that loan have just been negotiated.
The main dispute revolves around the horrible injustice of the Icelandic public being made responsible for a debt that was accrued by a private banking institution. And this is no small debt – the total amount that the Icelandic state has just taken on is enough to run the Reykjavík city police force for the next 130 years. It doesn’t take a rocket scientist to figure out that this will make a colossal dent in the country’s budget and will mean severe cutbacks in all areas of society – in our health care system, educational system, etc. etc. etc.
So why IS the Icelandic public being made liable for the debts of a private institution? Well with the emergency laws that were set when Landsbanki collapsed last October, the deposits of all Icelandic citizens were covered 100% in all Icelandic banks. And because Landsbanki was a branch of an Icelandic bank – as opposed to a foreign subsidiary – there is an EEA [European Economic Area] directive that states that citizens cannot be discriminated upon on the basis of nationality. So foreign nationals who were customers of Landsbanki must obviously receive the same treatment as the Icelandic citizens in that same bank.
I’ve heard a lot of people say over the last few days that it might even have been better not to cover the deposits of Icelanders in those banks – to just allow the whole thing to collapse. But anyone with a bit of sense can see that it would have completely paralyzed Icelandic society. If everyonehad lost everything they had in the bank, society would have completely ground to a halt and collapsed within days, as companies went bankrupt, etc. So it was simply the least terrible of two horrible choices.
We had dinner with a friend last night who happens to be British, and he was adamant that Iceland should simply default on its loan to the UK – just refuse to pay. It’s not a new argument – however, it’s something that’s easy to say, for someone who would not have to stick around to face the consequences.
Meanwhile, many young people – like Ragnheiður, my youngest stepdaughter who we have been visiting here – are not very keen to return to Iceland at all. She’ll be going to school in Salzburg this fall, and who knows what she’ll decide to do when she’s finished studying. If things are in the toilet back home, I wouldn’t blame her – and would even encourage her – not to come back. It’s the same with other young people, who have nothing to lose and everything to gain by leaving Iceland. Even YT, who has lived in Iceland now for 15 years and have never wanted to leave, am thinking how tempting it would be just to jump ship.
However, those of us who own property and have committments back home can’t leave that easily. And in any case, I’m not sure it’s the right solution. Still, I will not be getting on that plane this evening with a light heart. Sadly.