Reykjavík Grapevine - 28.09.2013, Síða 18
The world has changed significantly since 2008,
and it owes a great deal to Iceland for this shift, but
not for reasons claimed by Facebook Revolutionar-
ies who praise the country for “setting an example.”
The Kitchenware Revolution's real gift to a world
bustling with discontent is its contribution to/part
in WikiLeaks' Cablegate disclosures. With Julian As-
sange and his colleagues lauded in Iceland for pub-
lishing Kaup#ing bank’s dodgy loan book in 2009,
Chelsea Manning took heed of the country's plight.
Explaining that she took interest in Iceland due to
discussions about Icesave in a Wikileaks chatroom,
Manning told a U.S. military court that she found a
cable describing “bullying” and decided to act.
“Iceland was out of viable options and was com-
ing to the US for assistance. Despite the quiet request
for assistance, it did not appear that we were going
to do anything,” she said. “I felt that I would be able
to right a wrong by having [WikiLeaks] publish this
document.” It was published as a test in February
2010. A deluge of cables followed in November. The
revelations in those documents acted as a lightning
rod for the 2011 ousting of autocratic President Zine
El Abedine Ben Ali in Tunisia, which in turn gave
hope to activists from Tahrir Square in Cairo to Zu-
cotti Park in New York City.
And the drama is still ongoing. After its security
was compromised in August 2011, WikiLeaks decid-
ed to dump the entire cache, unredacted, with many
of the 251,287 cables still lacking the attention they
deserve. Five years after the event that fundamentally
shaped their publication, it's worth taking a look at
what Cablegate itself has to say about Iceland's melt-
down. The sometimes typo-laden dispatches from
Reykjavík not only give a behind the scenes look at
intelligence gleaned from meetings, parties, lun-
cheons, phone calls, and lobbyist visits, they also re-
veal glaring ineptitude and callous cynicism before,
during, and after the collapse.
Too proud to beg
As doom drew near, high-ranking American and
Icelandic officials ignored the impending danger the
global financial system faced. In a bilateral meeting
with Secretary of State Condoleezza Rice and some of
her staff in June 2008, Geir Haarde said that “Iceland
is through the worst and that things will continue to
stabilize.” U.S. Under Secretary of State Reuben Jef-
frey III said the United States was “near the end of
the downturn” and agreed “that the fundamental
elements of the Icelandic economy appeared sound.”
In September, Lehman Brothers' bankruptcy was
felt far beyond U.S. shores. The Emperor's Clothes
were repossessed.
The flailing was far from over in Iceland after
the Lehman bankruptcy. A cable sent by U.S. Am-
bassador Carol van Voorst on October 3 described
Geir as “maintain[ing] that the economic situation
will get better.” She implied that the government
should have been “securing outside guarantees or
added cash reserves to back up the krona” (foreign
exchange is determined by demand for a currency
and supply of foreign currency in domestic banks)
and that doing so “would do much to calm anxieties
here.” A few days later, Landsbanki went under, and
in the cable describing the demise, van Voorst noted
that an IMF official said the organization “had been
watching Iceland for some time and had visited ear-
lier this summer.” One can assume that the world's
debt collection agency wasn't there for the pylsur. Yet
the government still had no comprehensive plan.
The inaction was noticed in Washington, as re-
vealed in an October 8 cable. Central Bank of Iceland
(CBI) Director for International Affairs and Markets
Sturla Pálsson told the Embassy that the CBI had
spoken with Tim Geithner, then head of the New
York Federal Reserve, and other unnamed Federal
Reserve officials in Washington. But, Deputy Chief
of Mission Neil Klopfenstein suggested the appeals
lacked urgency:
-----------------------------------
Palsson confirmed that the Cen-
tral Bank had not spoken with any-
one at the U.S. Treasury Department.
The Ministry of Finance's Director
General of the Economic Department,
Thorsteinn Thorgeirsson, said that
aside from an October 6 conversation
between Treasury Dept Under Secre-
tary Dave McCormack and the Finance
Minister, the only other official
contact the ministry had with the US
Government was with Treasury's Ice-
land Desk Officer Lawrence Norton.
-----------------------------------
Klopfenstein also noted that “the Central Bank's
Governors were talking to their Nordic colleagues,
but the Bank has not taken advantage of the swap
lines in place.” Projecting nonchalance amid a slow
motion car wreck, Pálsson said he wanted the U.S. to
get in touch with him, and insisted that a loan from
the Central Bank of Russia, which never actually
materialized, was “95 percent certain.” In another
cable sent on the same day, Klopfenstein was baffled
by claims that the U.S. refused aid. “[T]he Embas-
sy does not believe the Icelanders have adequately
checked out all possibilities of cooperation with U.S.
entities,” he said, telling Washington that envoys
“urged Iceland reps to reach out to U.S. authorities
The Collapse | Anniversary Special
18The Reykjavík Grapevine Issue 15 — 2013
Embassy Cables 101
The United States’s aboveboard intelligence gathering
On its website, Wikileaks describes the cache of cables as “orders
sent out from the Department of State, embassy reporting about the
local governments and details of US government activities in each
country.” In many ways, diplomats are like aboveboard intelligence
officers—collecting and dispensing information; sometimes state
secrets, in a bid to both formulate and carry out foreign policy.
Sometimes, this can be done at stuffy meetings—long tables, each
country's miniature f lag in the middle, with coffee, folders, and
stern expressions.
Sometimes, this can be done in less formal settings. As one U.S.
diplomat described in 2005, this sometimes includes a drink or two.
Bemoaning his trouble peddling the State Department's “cultural
programs,” which he described as “too simplistic and propagan-
distic for Icelanders,” then Deputy Chief of Mission and Charge
D'affaires Philip Kosnett described one way of getting Icelanders
to switch off:
------------------------------------------------
What we tend to end up doing most often is,
in effect, to stretch our budget by provid-
ing duty-free alcohol for receptions at exhibit
openings and art festivals. Because alcohol is
highly taxed in Iceland, our gifts of wine for
receptions strike Icelanders as far more gener-
ous than they actually are. In return for these
gifts, we get thanked on invitations and public-
ity materials prepared by the event sponsors,
and we get invitations for our staff to attend
events along with high society. Then we use the
events to hobnob, make connections, and talk up
U.S. policy.
------------------------------------------------
Source: https://www.wikileaks.org/plusd/
cables/05REYKJAVIK526_a.html
THE SECRET
HISTORY
OF THE
COLLAPSE
HOW U.S. DIPLOMATS SAW IT UNFOLD
BY SAM KNIGHT
“These assertions were
repeated in a cable sent
a month later, when
Voorst wrote that the
‘Grand Old Man of the
Independence Party’
was responsible ‘for
Iceland's stunning loss
of credibility in the
financial world’