Reykjavík Grapevine - 08.01.2010, Page 8

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The Reykjavík Grapevine
Issue 01 — 2010
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- The Independent
in concer t:
APRIL
The music hall in Reyk-
javík, which had been
delayed construction
since the previous fall,
managed to land an
agreement for funds
to continue construc-
tion. Protests against
the Ministry of Justice,
calling for changes to
refugee law, began to
gather momentum. Squatters occupying
vacant houses in the city (which were ac-
tually owned and slated for demolition to
make way for larger, more modern build-
ings) battled with police throughout the
month. Parliamentary elections held at the
end of the month saw the emergency co-
alition of the Social Democrats and Leftist-
Greens voted into power with a majority of
34 of 63 seats.
MAY
The month began
with a visit from David
Lynch, who pledged to
usher in an era of great
good fortune by teach-
ing Icelanders all about
Transcendental Medi-
tation. Financial Times
journalist and novelist
Roger Boyes releases
his book “Meltdown
Iceland,” covering the bank collapse on
the overheating of the economy. Iceland's
new government reaches an agreement
to, among other things, apply for Iceland's
admission to the EU. Refugee issues con-
tinued to stay in the media, as protests
continued, including at least one hunger
strike. Unemployment reached a peak in
this month, as 12,000 Icelanders became
either unemployed or under-employed.
Iceland also managed to win second place
in the Eurovision Song Contest, thanks to
Jóhanna Guðrún and her song “Is It True?”
Parliament resumed.
JUNE
The Dalai Lama visited
Iceland, and told Ice-
landers in attendance
at a lecture he gave
that he has optimism
about the future of Ti-
bet. The initial Icesave
deal was approved,
immediately sparking
protests inside and
outside of parliament. Tourism continued to
climb as foreigners took advantage of the
depressed currency. Renowned corrup-
tion-hunter Eva Joly, who was appointed
by the Icelandic government to investigate
the causes of the bank collapse, began
to speak publicly about her frustration in
dealing with Icelandic authorities. Former
Kópavogur mayor Gunnar I. Birgisson re-
signed under charges of corruption and
nepotism.
News | Paul Nikolov
The Year In Brief
Opinion | Ingi F. Vilhjálmsson, Journalist
One word in particular can be
used to sum up the atmosphere
in Icelandic society in the year
2009. That word is: reckoning.
During the past year there has been a
political and a moral reckoning taking place in
Iceland. This reckoning has been the effect of
the catastrophic economic collapse that hap-
pened on the island in the autumn of 2008.
The most important element of this reck-
oning was the pseudo-revolution that took
place in Iceland in January. This revolution led
to the end of the coalition government of the
Independence Party (Sjálfstæðisflokkurinn)
and the Social Democrats (Samfylkingin).
Following the premature end of this coali-
tion, Samfylkingin formed a temporary, minor-
ity government with the left-wing party Vinstri
Græn (Leftist-Greens) until elections were
held in April, where these two parties received
a majority to form a new coalition government.
This left-wing government was historical in
the sense that it was for the first time since Ice-
land received its independence from Denmark
in 1944 that a left-wing, majority government
had been formed.
This was interpreted as the consequence
of the reckoning with the right wing policies
of Sjálfstæðisflokkurinn, which many believed
were one of the main causes of the Icelandic
economic collapse of 2008.
This interpretation entails the belief that
the collapse had been caused by a small group
of greedy, immoral oligarchs that had bought
up most of Icelandic companies and been al-
lowed to mismanage them in a reckless way.
The financial deregulation and the hands-off
policies of the government of Sjálfstæðisflok-
kurinn, as well as a very weak financial ser-
vices authority, allowed these oligarchs to run
wild and do as these pleased, and were under-
stood as being the consequence of the crude
type of capitalist ideology that Sjálfstæðisflok-
kurinn had implemented during its eighteen
years in power.
However, the followers of Sjálfstæðisflok-
kurinn argued that the collapse of the Icelan-
dic economy did not show that capitalism was
bad, but only that the particular capitalists that
bought up Iceland had not properly used the
freedom granted to them by the capitalist poli-
cies of Sjálfstæðisflokkurinn. It had therefore
not been shown, they claimed, that capitalism
as such had failed in Iceland. Furthermore,
Sjálfstæðisflokkurinn could not take respon-
sibility for the actions of the oligarchs even
though the party had been the political entity
most responsible for the creation of the system
that collapsed.
Whoever is right, there was this strong
reckoning between right wing and left wing
politics during the year. Currently the left is
winning, since the left-wing parties form the
present government. But that might change
since it is a historical anomaly for Iceland to
have a left-wing government in power and the
polls show Sjálfstæðisflokkurinn is gaining
strength again.
This debate can be seen as one side of a
more general, moral discourse that has been
ongoing in Iceland, about the business meth-
ods used by this small group of oligarchs;
methods that most people agree were a part
of the cause of the economic collapse.
The general stance is that the condemna-
tion of these methods is apolitical: Most peo-
ple, right or left, agree that they are immoral
and unjust. In this moral debate it has been the
majority of the general public against the oli-
garchs who have tried to answer for their ways
of doing business.
The most notorious aspect of the business
model of the Icelandic oligarchs is the incred-
ible amount of money they borrowed from the
Icelandic banks—banks they themselves often
owned large stakes in.
The bankrupt holding company Baugur, for
example, leaves a debt of more than 300 bil-
lion Icelandic krónur. While Milestone, another
bankrupt holding company, owes around 100
billion krónur that were mostly borrowed from
the bank Glitnir, which the company partly
owned. Then there is Exista, tottering on the
brink of bankruptcy. Exista was the biggest
creditor and shareholder of Kaupthing bank.
Most of these debts will be written off by their
creditors, since the loans were either unse-
cured or the assets used to secure them—most
commonly the shares in the banks—are now
worthless.
The sky-high loans to these large hold-
ing companies only form one side of an even
murkier tale, since smaller companies and
individuals could often get loans from the
Icelandic banks without putting forward any
pledges. In many cases these companies and
individuals received these so-called “bul-
let loans” because the banks offered them to
the customers or the employees of the banks.
They did not stand a chance of losing anything
if they decided to take the loans: The only party
who took any risk was the bank itself.
Ordinary, everyday Icelanders did not have
access to loans like these, and it has made
them angry to learn all the stories about the
business practices of the banks and oligarchs,
and how common they had become prior to
the collapse. This has led these people—cer-
tain businessman and bankers—to be consid-
ered as public enemies number one in Iceland
over the past year, and it is almost certain that
some of these people will serve prison time for
the crimes they committed.
So the reckoning I initially mentioned is,
first and foremost, a reckoning between the
general public of Iceland, the people who did
not belong to the economic or the political elite
and who cannot be blamed for the collapse,
except indirectly at most, and the people who
governed the country into the mess it is cur-
rently entrenched in.
As I write this, it is not foreseeable what
the end result of this reckoning will be, since
the events that led to collapse are still be
looked into by the ‘Special Prosecutor’ hired
to do so, and a special committee that is in-
vestigating it from a more academic, analytical
standpoint. Icelanders can only rest assured
that the answer to the question: “What hap-
pened and who will be punished for it?” has
been and is being looked into. But we are a
pretty long way from having a satisfactory an-
swer. That will probably take years; the reck-
oning has only just begun.
Ingi F. Vilhjálmsson, is a journalist at the news-
paper DV in Reykjavík
A Year Of Reckoning
2009: Politics & Life
Breaking News | Icesave
Our illustrious president, Ólafur Ragnar
“Epic Lulz” Grímsson, decided to purge
himself of his reputation as Icelandic
Venture Capitalist Cheerleader Numero
Uno and vetoed the Icesave bill, thereby
refering the bill to national referendum.
The president, citing among his rea-
sons the overwhelming opposition to the
bill in two separate opinion polls, and the
50,000 signatures on an online petition
calling for the bill's veto, issued a state-
ment, saying in part, “It is my sincere
hope that this decision will lead to perma-
nent reconciliation and prosperity for the
people of Iceland, at the same time laying
the foundations for good relations with
all other nations and by the way I TROLL
UUUU LOLOLLOLO :D:D:D:D:D !!!11!”
The veto comes at a strange time, to
say the least. Forgotten was the Prime
Minister's own conditions to Gordon
Brown, among them that the Icesave
deal would not be an admission of legal
obligation, and that if the burden of pay-
ment proved too much to bear, Iceland
would expect re-negotiations with the UK
and Holland. The Icesave law was never
meant to be written in stone, yet the veto
seems to pretend that it was.
Despite the veto, it should be noted
that a) there are no laws on how a national
referendum is conducted (although at the
time of this writing, that is being worked
out, and a referendum could be held as
soon as 20 February), and b) Article 26
of the Icelandic constitution, which al-
lows veto powers to the president, states
that a vetoed law is actually in effect until
a referendum is held that defeats the law
by simple majority. The Prime Minister
emphasized this point to the internation-
al media, and has sworn that the ruling
coalition will hold, despite the set back.
One interesting bit of news: remem-
ber how 70% of the nation was opposed
to the Icesave deal? Yeah, well, now only
41% agree with the president's veto. This
might be an excellent example of "be
careful what you wish for" regret. At the
same time, another Gallup shows that
67% of Icelanders would rather see the
government create a new Icesave law for
parliament to vote on, rather than create
a national referendum. For the average
Icelander, a referendum isn't the point; a
new deal is.
I would be remiss if I didn't mention
a point that some in the foreign media
seem to have overlooked - even if a ref-
erendum does kill the Icesave law, this
DOES NOT mean that we are not going
to pay. It means that we are going to re-
negotiate. No matter what side of this is-
sue you're on, it's an important point to
drive home.
Also of note: the conservatives – who
fought long and hard for the bill's defeat
– don't actually want the president to have
any veto powers, and have held that posi-
tion ever since one of their own bills was
vetoed in 2004. The conservatives are
also not that crazy about national refer-
endums, having strongly opposed them
with regards to the Kárahnjúkar dam
project, and the Iraq War. A source close
to the Social Democrats that the Grape-
vine spoke to said that the bill's defeat
was actually the last thing the opposition
wanted – now they'll have to deal with the
possible negative economic consequenc-
es of the law's defeat by referendum. The
referendum itself may cost about 200 mil-
lion ISK. This may very well be their last
shot at credibility.
The one thing certain in the year to
come: Icelanders sick of hearing about
Icesave will have to live with the subject
for at least another year, not to mention
some of the grimmer results that could
follow.
Iceland's President Trolls Europe
Here we go again...
PAUL NIKOLOV
HÖRÐUR SVEINSSON