This week, Iceland’s parliament will vote on whether or not to accept the Icesave agreement with British and Dutch authorities, negotiated several days ago. Some are calling this the most important casting of ballots the Icelandic parliament has ever had to undertake. If the agreement is rejected, it could well mean the kiss of death for the current government.
The controversy over the Icesave agreement is harsh and far-reaching and numerous MPs have already said that they will not support it.That includes several members of the Independence Party, including one Tryggvi Þór Herbertsson who was the financial advisor to former PM Geir Haarde at the time of the bank collapse [and who featured with YT in this interview]. Tryggvi Þór was one of the guests on the programme Vikulokin [Week-end] on RÚV yesterday, a weekly talk show that reviews the week’s events in the company of a few of guests usually directly involved with the topics under discussion. Yesterday’s programme was entirely devoted to the Icesave dispute.
It was extremely enlightening. Near the beginning, the host played a clip from an interview that Tryggvi Þór did in the British media [didn’t catch the name of the programme] last October. Excerpt [verbatim]:
INTERVIEWER: A lot of British savers have money in the two largest banks Landsbanki and Kaupthing – is their money safe?
TRYGGVI ÞÓR HERBERTSSON: Yes, according to my knowledge, Iceland is a part of the directive on deposit insurance, so yes – they should be.
I: I know you’re part of the deposit scheme, I’m asking if they did come to you, you would say, ‘we can pay your 20,000 euro’, or would you say, ‘the economy is in such difficulties, I’m sorry, we can’t meet this obligation’?
TÞH: No, we are not in that kind of difficulties.
– Oh, the folly!
It’s tragicomic to watch how the coalition parties and the opposition have completely switched roles in parliament these days. The Left-Greens, for instance, were vehemently opposed to paying the Icesave debts – until they came into power. Now, suddenly, they are in favour. Whereas much of the opposition [led by the Independence Party, of which the aforementioned Tryggvi Þór is a member] opposes it – some with a vengeance.*
Be that as it may, one of the more interesting things to be illustrated by the programme yesterday was just to what extent the Icesave dispute was an international one – and not just a dispute involving Iceland on the one hand, and the UK and Holland on the other. It seems common knowledge that the UK and Holland exercised their influence behind the scenes to force Iceland to sign a preliminary agreement on Icesave last November, just when this country was appealing for a loan from the International Monetary Fund. The message was clear, and came not just from the IMF but from the European Union: there would be no assistance from the IMF or any other European country until Iceland agreed to the terms set by the UK and Holland. And if Iceland refused? There would be no foreign currency to pay for basic necessities like food, fuel or medical drugs. Starved into submission.
Oppression? Coercion? Manipulation? – You decide.
In another compelling interview [on Kastljós last Friday], Einar Már Guðmundsson, one of our most prolific writers, presented an interesting perspective, drawing parallels between the Icelandic economy in the past few years and economies fuelled by the drug trade. In Einar Már’s view, over the past several years a system emerged in Iceland in which the nation’s wealth was transferred to a handful of moguls and into the banks, the bankers lied to and misled the nation, the wealth was squandered in vast excesses and extravagance – and now the IMF and the European Union are stepping in, not to help the people, but to maintain this system. And how? By allowing the moguls to get off scot-free and making us, the Icelandic people, responsible for their mess – and their debts.**
There is some dispute about whether the Icelandic people are really obligated to pay the Icesave debt. According to some legal experts, the Icelandic state fulfilled the obligations it undertook with the EFTA [European Free Trade Association] agreement by simply having a deposit insurance scheme in place. Yet when that regulation was drawn up and signed, no one could imagine the scenario that would later come to pass – the collapse of a country’s entire financial system. In other words the directive was flawed and was never intended to be applied to extreme circumstances such as this.
Many people have wanted to see this settled by an international tribunal – but the problem is that no tribunal exists by which all of the disputing parties are bound. Iceland is not bound by the European Union court, and the UK and Holland are not bound by an EFTA court. The only possible solution would be arbitration court – but on that all parties must agree, and alas, they do not.
Anyway. It’s hard to envision a more despicable situation for this – or any other – country to be in. The Icelandic people are proud people, and on the whole we want to pay our debts – when they are OUR debts. But when we are being held hostage to pay the debts of private individuals who squandered and pillaged our wealth we become like Third World countries forced to pay the debts of its tyrannical leaders – while their people starve.
AS PROMISED, THE WEATHER IS INDEED FINE
Although somehow I think we all envisioned a bit more sunshine. Not that anyone is complaining – it has been very calm, which is rare around here, with temps are in the mid-teens. We have 12°C right now [54F]. The sun rose in the sky at 3 am [and was blazing at 5 am], and will go down exactly at midnight.
* I should point out, though, that a share of the opposition is not opposed to the agreement in principle, but rather the terms of this particular agreement. Tryggvi Þór, for instance, is strongly opposed to the fact that the interest on the loan – some ISK 40 billion per year – will inevitably fall on the state. He would like to have a clause in the agreement that interest paid by the Icelandic state may never exceed more than one percent of our gross national output – which seems eminently sensible.
**Just to put this into perspective once again: the Icesave debt, which in the worst possible scenario we the Icelandic people would be responsible for, would be enough to run the Reykjavík City Police force for 130 years.
Some more on Icesave: