Reykjavík Grapevine - 24.09.2010, Blaðsíða 27

state. This is a vicious circle. The public’s
spending power decreases, so income
based on tolling and taxing imports is
lost—and then we have to pay interest of
our debts.
A lot of what we need to do to accom-
plish this can be hard and painful—and
we’re not finished yet—but we’ve made
some great advances. Things are going
well, and the situation now is a lot bet-
ter than was predicted in the direct af-
termath of the collapse. Inflation is fast
receding and our economy is straighten-
ing out, so despite everything that’s gone
down in the past eighteen months we are
definitely on the right track, even if it is
a big struggle. I don’t want to credit the
state treasury or me as Finance Minister
with our success, but we have still have
managed to solve a lot of problems con-
nected to the ministry.
This is where the biggest and hardest
problems created by the banking collapse
wound up to be resolved—aside from
running the state treasury and managing
problems related to that, our banks went
bankrupt so we needed to reconstruct
them. The Ministry of Finance handled
all that work and the negotiations con-
nected to it.
Processing the collapse
We also are in charge of the horrible Ic-
eSave affair that remains unsolved, and
we needed to negotiate with foreign states
and central banks to receive currency
loans. We also handle a big part of the In-
ternational Monetary Fund negotiations,
we’re restoring the savings banks... these
are all hard and complicated tasks that are
added to the ministry’s day to day duties.
We’ve worked towards assisting the
economy, helping businesses and homes
through troubles. We’re trying to work
beyond just putting out fires and solving
problems, presenting new ideas such as
tax breaks for start-ups and innovators,
and we introduced stimulating measures
to increase demand for contractors, rais-
ing VAT rebates for construction and
restoration work. We are sending out the
message that now is a good time to build
or renovate, and the state is supporting
that with tax breaks... I could go on.
We’ve started an innumerable
amount of these kinds of measures, and
any claims that this government has been
inactive are wrong, simply put. We have
worked very hard, under very difficult cir-
cumstances. Of course this has been try-
ing; it has been a busy and unbelievable
time. And on top all this, we have been
investigating the collapse and what lead
to it, the SIC [Special Investigative Com-
mittee] Report, the Special Prosecutor;
there are a lot of things to tend to in terms
of processing the collapse.
So to sum it up, you could say our task
is threefold: to keep things running, to
investigate the collapse and its causes,
and laying the foundations of a renais-
sance. And I think it’s going very well,
even though the situation is still fragile...
No room for ideology
following the discourse, and
especially in terms of what the
opposition is saying, it wouldn’t
seem like you’re doing all that
much, nor that you’ve had any
success. Based on their criti-
cisms and their track record,
can you imagine what a coali-
tion between the Progressives
and The Independents would be
doing? Would their measures be
any different, in your view?
I am not sure of that. As I have said,
reality takes over in the end. You may fos-
ter an ideology and lots of ideas on how to
do things, but they ultimately clash with
reality.
In a situation such as ours, people
have to be realistic, face it as it is and seek
out the solutions and methods that are
available, to pick the comparatively best
ones. That leaves little room for ideolo-
gies.
I am not saying that how things are
done isn’t important, it certainly is, but
to some extent our options are very much
limited by our circumstances. I am con-
vinced that any government would have
chosen a mixed way as we are doing—it’s
the only option, really. Reality takes over,
and even the most hardline neo-liberals
would realise that you cannot solve these
problems without resorting to every mea-
sure. The choice to be political and ideo-
logical in these times simply isn’t an op-
tion. It does matter, however, how you
choose to do the things that need to be
done, how you implement the necessary
changes. For instance, we are trying our
utmost to preserve our welfare system
and shield it from cutbacks—we are cut-
ting half as much from the budget of so-
cial services, education and police than
other areas. We are showing it through
our taxation methods by adding taxation
to those in the highest income bracket
while sparing the lowest one by introduc-
ing a special low-income bracket. We are
trying to preserve the standard of living
for those that make the least money. This
is where politics enters the sphere; this is
where they’re important.
We haven’t had a lot of choices, and
I am totally convinced that the Indepen-
dence Party, that bears so much respon-
sibility for the collapse after its eighteen
years in power, isn’t fit to undertake
this task. They don’t have the credibil-
ity, people would remember. A change
in government back in 2009 wasn’t only
inevitable, it was absolutely necessary.
McDonalds no more?
There seems to be a certain
determinism at work when you
claim you don’t have a choice,
yet it is evident that many of your
party members are ideologi-
cally motivated. Were you never
tempted to... try something new?
Don’t you imagine some of them
had hopes you would?
You can’t place too deep a meaning in
my words when I say that we are subject
to our circumstances. In this instance we
do not get to choose the battlefield or the
tasks at hand, the collapse determined
that. We have a job to do, and our first re-
sponsibility is to defend our society and
its interiors, to ensure that every aspect of
it is functioning and that we see our way
out of these troubles. That’s number one.
That’s not to say we don’t have con-
victions on how society should work, we
have plenty of those and no one should
imagine even for a second that we are re-
building the same society that collapsed,
or the same economy. We aren’t. We are
for instance re-building banks at a tenth
of the size they were when they crashed.
The financial system will now be owned
by the state again, after it had been pri-
vatised with horrible results. We have a
clear vision of where we are heading: to-
wards a Nordic welfare society, away from
toying with neo-liberal ideas and Ameri-
canisation.
We are experiencing a clear turning
point in our political history; Iceland is
heading in a different direction than it
was in the years before the crash. I say
that we are returning home. And where
is home? It is in the Nordic family, with a
strong Nordic, mutually responsible wel-
fare system. These are our politics, just so
that’s clear. Quick change?
Just how fast we can accomplish these
changes—can we revolutionise the sys-
tem while we are trying to keep it from
collapsing entirely—that is an altogether
trickier subject. I think we are going to
have to accept that this is a long road to
recovery we are on. When we are done
restoring and rebuilding our politics and
ideologies will be clear. We want a soci-
ety that is entirely different from what we
had back in 2006, free of the greed and
the overconfidence in the market that
prevailed. The gospel said: “no supervi-
sion, the market will correct itself, it is
infallible!”
That ideology has crumbled to the
ground. We now know what to do, and I
think Iceland has changed a lot both in
terms of political ideology and also public
opinion. Try walking the streets and ask-
ing pedestrians whether they support pri-
vatisation. I predict that 90% of those you
poll will answer with a resounding no.
Four years ago, I think you would have
gotten reverse results. An ideology had
been bashed into the nation’s head, the
state had been relentlessly talked down
and the market glorified. They laid a lot
of groundwork for that ideology, which
has now collapsed.
Damaged
It is pleasing to note that the discourse
now is more open and critical than it
used to be. We are not going to be treated
like this again. This is good, and I won’t
complain that us in the government or
me personally are subject to constant
criticism. People are keeping a close and
critical watch, and this is good. The only
thing that worries me is that the Kreppa
is now stuck in our heads, that we are too
focused on our
problems. A lot
of good things
are happening,
and we must not
ignore that.
But many pil-
lars of our soci-
ety are damaged
by the collapse.
Our politics
are in a state of
shock, you could
say our entire po-
litical system is damaged, as the munici-
pal elections in Reykjavík showed. One of
the things that crashed is faith in society.
There is a lot of suspicion and distrust
around; it is inevitable when such things
happen, when something happens that
shouldn’t happen, that must not happen.
And people naturally feel like they’ve
been betrayed. That a lot of people let
them down, and there is a lot of truth in
that, as the SIC Report reveals very clear-
ly. We have a lot of work on our hands
reclaiming what was lost, to reconstruct
not only the material entities but also re-
store trust and faith in our community,
so people can start trusting Parliament,
regulatory agencies and the media again.
“I will keep at this”
Do you honestly believe that
you’ll be given a chance to finish
your work? The Independence
Party hasn’t polled higher since
before the collapse, it seems to
be widely accepted that you will
finish this term and then return
to your former place in the op-
position...
Well, if we manage to finish this
term, which I hope, I do believe we are
best suited to follow this work through. If
we manage to get Iceland through these
difficulties, which we are well on our way
to doing, we can look back on that work
and say: See! We took over their ruins,
and we restored order, we resurrected
Iceland.
That will be a decent reward in itself.
I can’t really ask for more than when all
this is through I can stand proud and
rightfully exclaim: I did all I could, I sac-
rificed myself to this task, I spent all my
time, my energy, my efforts on restoring
Iceland. I did my best.
And I do believe that if one compares
the current situation to what we were fac-
ing by the end of 2008, to what was pre-
dicted in terms of the economy, it gives
great reason for optimism. We need to
keep that in mind.
I am both a mountain climber and a
marathon runner, and I do not give up
easily. I’ve said it before and I can repeat
it for Grapevine: I will resign the day I
lose faith in our ability to solve the prob-
lems at hand, but while I still believe it is
doable—and I am convinced that it is—I
will keep right at it.

Marathon man
you speak of marathons, climb-
ing mountains and sacrificing
yourself for the cause of rebuild-
ing Iceland... I am sure folks are
generally grateful for your hard
work, but are you sure this is
a healthy way to work? What
is your average workday like?
People say you’re always on the
job...
I am at the office from before eight
in the morning and usually at least un-
til dinnertime, often I spend the evening
here too. I frequently work weekends, and
you could say that I barely took a day off
last year. I have no vacation to speak of;
I get the occasional weekend off. I avoid
going abroad unless it’s absolutely neces-
sary, when I need to protect our interests
or negotiate with foreign nations or inter-
national foundations. This year, I’ve made an effort to
maintain a slightly more normal work-
ing routine, and
that’s working
so and so... the
workday is long,
and of course it’s
tiring. I wouldn’t
want to burn
myself out, but
fortunately I am
relatively healthy
and I have good
stamina. So I
plan on main-
taining the juice in my batteries. I can’t
hide that it’s trying, and it’s not just the
work that affects you. The environment
and atmosphere surrounding the job is
also a factor. We are not immune to the
discourse and various jabs pointed at us,
but I try to maintain an understanding
that the public’s vocal dissatisfaction and
our status in the polls doesn’t necessarily
mean that people are unhappy with what
we’re doing or that it could be any differ-
ent.
I try to remember that there is so
much repressed rage and unhappiness,
people are angry over what happened and
it is normal to criticise the powers that be
at any time.
Of course there are many that believe
we could have done more, for instance to
assist families with their debt. There a lot
of talk regarding that, and it is hard to be
in the position to have to say that we are
trying our best but we simply cannot do
more. This is our reality. There are limits
to what we can do; we are in a difficult
position. We will have to slowly defeat
this thing, we will have to be patient,
understanding and maintain unity. We
gain nothing from strife and struggle; we
need to row together on the same boat, in
the right direction. We can do this.
But all marathons have a fin-
ishing line... where do you see
yours?
Our ultimate goal is to get our society
and our economy back in working order,
to envision being on top of our debt and
not needing outside help, to get unem-
ployment down to reasonable numbers.
There is more than one goal; we will mea-
sure our success incrementally. A nation
does not live to fulfil a single goal; it is
a constant evolving story with peaks and
valleys.
WTf!
What happened? you are privy
to a lot of information that the
general public isn’t, so it seems
fair to ask: What happened?
How do we explain it to our in-
ternational readership?
What I think happened is that firstly,
we got addicted to an ideology. The ide-
ology of neo-liberalism and blind faith
in ‘the market’ was steadily promoted
to the nation, and Icelanders adopted its
attitudes and tenets to an extreme and
blindly trod forth.
Iceland was, for all purposes, trans-
formed into a laboratory, a testing ground
for greedy neo-liberal, privatisation
ideals. They privatised the banks and
various other state enterprises alongside
pushing an environment of deregulation
and lax supervision. A group of young
and energetic men surfaced that took
advantage of this environment to the full
extent. All of the sudden we were the best
in the world, we were experts at banking
and finance and thought we could teach
established nations, like Denmark, how
to do business. We were beset by a puerile
and nouveau riche arrogance, an entire
generation lost all moral restraint. People
f launted their wealth and boasted of it,
they could only travel in private jets and
the f lamboyance and vulgarity surround-
ing Iceland was such that it got noticed
the world round.
Their dishonest business practices
along with the government’s many fail-
ures in managing the economy added to
a problem that was too big to handle. One
only needed to look at the gauges to see
where we were headed in 2006-7, to see
things were going seriously wrong.
Some people tried to point this out,
the occasional banker or scholar—and
myself. I wrote articles, I gave speeches,
I wrote an entire book where I warned of
the path we were taking. But we were too
few. The environment and zeitgeist at the
time was such that warning voices were
laughed off, at best. This was a dangerous
atmosphere, any healthy introspection or
self-criticism was totally absent. I have
remarked that what happened at the core
was the complete defeat of critical think-
ing. We lost control of ourselves and of
the situation, and it can never be allowed
to happen again.
You can analyse this from various per-
spectives. The economical one, but also
from a political, ideological and social
standpoint. It is important that we don’t
overlook any of these factors when we try
to understand what happened here.
The never-ending party
you say you warned that this
would happen, but you evidently
had no success. Do you feel you
should have employed different
methods?
Well... [laughs]... I’ve thought a lot
about that. Truth be told, I am troubled
by it and feel like I need to look inwards,
just like others. Why did we, who saw the
signs, who knew something was deeply
wrong, why did we fail in getting our
voices heard.
When I try to seek explanation I feel
it isn’t because I didn’t try hard enough.
I resorted to every mean at my disposal, I
wrote articles, I gave speeches, I put forth
several motions in Parliament to try and
reclaim economic stability. I submitted
the first one in 2005, I was deeply wor-
ried about the situation back then and in
the accompanying statement I portrayed
the risks facing us. I even explicitly say in
one place: “All the same signs are appear-
ing in Iceland that lead to the Scandina-
vian banking recession around 1990. We
are headed for the same kind of bubble,
which is very dangerous.”
One of the reasons this was so hard
was that there were so few of us that ac-
tively opposed this ideology. It had a nice
ring to it, and claimed to usher in a new
era of globalisation, innovation and evo-
lution. The party was so fun that nobody
wanted to ruin it and say: “Alright, it’s
two in the morning and we all need to go
home.” It was like everyone thought the
party would last forever; that there would
The Reykjavík Grapevine
Issue 15 — 2010
15
you may foster an
ideology and lots
of ideas on how
to do things, but
they ultimately
clash with reality.