Reykjavík Grapevine - 18.05.2012, Side 14

14
The Reykjavík Grapevine
Issue 6 — 2012
In part I of this series, ‘Iceland and
the rest of the world,’ I traced the
history of Iceland from its time as
a poor danish colony to becoming
independent, hosting a US military
base and becoming Americanized—
while still doing business with the
Soviet Union—to the nation’s brief
stint as world financiers buying up
all of the shops on the High Streets
of the UK. Since the 2008 crash,
much has changed, not the least
Icelanders’ attitudes towards other
countries.
It could even be said that this quite
large, but sparsely populated, island
in the north has been set adrift on the
world seas. Icelanders are at the mo-
ment very confused about where to
look in global politics. True, Iceland
applied to join the European Union in
the summer of 2009, but negotiations
have been very long winded, partners
have yet to start discussing the crucial
chapters on fisheries and agriculture,
and the whole thing now seems quite
hopeless.
NATIONALISM VS. THE EU
With the euro crisis and the rise of ex-
tremist politics, not to mention a dis-
pute with Iceland over profitable mack-
erel fishing, the European Union does
not seem very alluring. In fact, latest
polls show that a great majority of Ice-
landers are against joining the EU and
many favour ending the negotiations. If
the talks are concluded, however, there
will be a referendum, possibly in 2013.
Most likely the outcome will be a re-
sounding no.
Iceland has long been suspicious
of foreign powers. Nationalistic senti-
ments are rife—and some politicians
are quite adept at playing upon them.
The left wing movement in Iceland has
long been more nationalist than social-
ist. Thus opinions about the EU can be
quite extreme, with some opponents
comparing the EU to the Soviet Union
or the Third Reich. One of the claims is
that the EU would take over Icelandic
resources, mainly energy and fish, and
thus we would end up being a colony of
Brussels.
In some ways this is a rerun of the
debates about the US bases in the ’50s
and ’60s—then the largest and most di-
visive political issue—but this time na-
tionalist forces on the left and the right
have joined together, their real leader
being President Ólafur Ragnar Gríms-
son, who is now fighting for his fifth
term on a very nationalistic ticket.
THE GREAT POST-CRASH ISSUE
Another reason for the unpopularity of
the EU is the Icesave issue. When the
Icelandic banks collapsed in 2008, the
parliament passed emergency legisla-
tion that put most of the losses on the
backs of foreign creditors who had
lent money to the banks. This could
not have been done otherwise; Iceland
simply did not have the money to prop
up the banks. Thus foreign creditors
suf-
fered
losses
amounting
to almost
10,000 billion Icelandic
krónur. For the most part
these were German banks
which, in fact, accepted these
losses quite gracefully.
But one obligation stood
out and this soon became the
overriding political issue of the
post-crash era. When the Icelan-
dic banks first ran into trouble in 2006,
they couldn’t really borrow any more
money. So they found a solution—con-
sidered ingenious at the time—which
involved founding online savings ac-
counts in neighbouring countries that
offered very tempting interest rates.
Landsbanki bank’s so-called Icesave
accounts in the UK and Holland be-
came especially popular.
This gave the banks a few more
seasons to live, but the question of
who would pay if the banks collapsed
went unanswered. Somehow the Ice-
landic and the UK financial authorities
managed to evade this issue (after the
crash it came out that insiders had al-
ready in 2006 known that the collapse
of the banks was inevitable). In Octo-
ber 2008, Landsbanki bank went bust,
and the UK and Holland governments
pointed at Iceland and said, you have to
pay! The EU followed suite and so did
Iceland’s supposed best friends, the
Scandinavian governments.
At the time this seemed like an
exorbitant sum and many Icelanders
felt that they shouldn’t pay for the ex-
cesses of bankers and the stupidity of
politicians. However, Iceland was under
great pressure from the UK, Holland
and Europe. Two times the govern-
ment signed agreements to pay and
these were passed by parliament, but
then vetoed by President Ólafur Rag-
nar Grímsson who was by then taking
a more active part in politics than any
president before him. Both agreements
were then voted down in referendums.
Now the issue is before a special
court, convened through the EEA
agreement, which is like a part EU
membership for Iceland and Norway.
If this court rules against Iceland, the
EU will
likely become more
unpopular still (although that
verdict will perhaps not be so terrible,
as it is now clear that the former
Landsbanki has funds to meet most of
the Icesave obligations).
THE dULL SCANdINAVIANS
Many Icelanders think the Scandina-
vian countries failed us at the time,
even if they put up a lot of the money,
which was eventually used to rescue
Iceland through the International Mon-
etary Fund. But then, at the time, Scan-
dinavians had grown very fed up with
the arrogance of newly rich Icelandic
financiers who seemed to think that
Scandinavians were slow and dull wit-
ted. A report by the Icelandic Chamber
of Commerce in 2006 stated frankly:
“We have nothing to learn from Scan-
dinavians as we are better than them in
every field.”
Things have changed since then.
Scandinavia now appears as a beacon
of stability. Icelanders tend to be far
more volatile and excitable than the
Scandinavians. Icelandic politics are
for example very quarrelsome, which
is a far cry from the consensus driven
politics of Scandinavia. So in a time
when there is much anger and mis-
trust, Scandinavia looks better than
before, not least Norway with its great
oil wealth. A lot of Icelanders have been
going there over the last few years in
search for better paying jobs.
It is said that the inhabitants of Ice-
land originally came from Norway, flee-
ing King Harald the Fair-haired and his
over-taxation. Now it seems they would
gladly join Norway again, and there has
even been speculation about Iceland
joining a federation with Norway
or adopting the Norwegian króna.
Admittedly, the Norwegians do not
seem very interested.
ENTER THE CHINESE
After the crash Icelanders started look-
ing for friends in new places. President
Ólafur Ragnar had long been cultivat-
ing relations with China, going on vis-
its and receiving Chinese dignitaries.
Some say that he has been to China
more often than he has been to the EU.
Ólafur Ragnar has been quoted saying
that China showed friendship in times
of peril, while other countries treated
Iceland unfairly. That is his version of
what happened, and he no longer hides
the fact that he is an opponent of the
EU.
This has come to a head with the at-
tempts of a Chinese billionaire, Huang
Nubo, who tried to buy a large tract
of land in northeast Iceland to build a
resort for Chinese tourists. This land
is really in the middle of nowhere; it is
mostly mountains and desert sands.
Building a resort there seems like an
outlandish idea. Huang’s proposal to
buy the land was turned down by the
Minister of the Interior, but now he is
trying to lease it for a long time. This has
given rise to much speculation about
his real intentions with some wonder-
ing if they have to do with China’s drive
toward the Polar region. Although the
area is totally landlocked, some wonder
if the Chinese intend to build a listening
post or an airport, which would not be
under Icelandic rule, and even that this
will develop into a fully fledged colony
with Chinese growing rice in the Ice-
landic north. Some of this sounds like it
could be coming straight out of a Bond
movie.
THE NEW NORTH
In Iceland, especially among those who
are opposed to EU membership, it is
popular to speak of the New North. The
idea is that as the Polar Seas open up
with global warming there will be great
opportunities in oil, mining and trans-
portation. Iceland lies on the periph-
ery of the Polar region and has no real
claims to its resources. But if a shipping
route open up, Iceland would be on the
way and plans have been drawn up
to build a transit port in the northeast
of Iceland. The Chinese would prob-
ably have to be involved, for most of
the traffic would come from there, but
monitoring this traffic and ensuring its
safety would be beyond the means of
such a small country. This would have
to involve a larger entity, like the EU or
even the US. Some old admirers of the
US even dream that these changes will
bring the Americans back to Iceland,
which they abandoned in 2006.
Those who advocate for the New
North even have ideas of forming an al-
ternative union to the EU with members
such as Norway, Greenland, Canada,
and perhaps other northern countries.
Canada’s role in this scenario is inter-
esting as a sizable part of the Icelan-
dic population emigrated there in the
late nineteenth century. There has also
been talk of Iceland getting rid of its
unstable króna and adopting the Cana-
dian dollar, called the loonie. We don’t
know what the Canadians themselves
think about this, as they haven’t really
been asked. Perhaps this shows how
confused Icelanders are about their
place in the world.
Iceland | Analysis
A TIME OF CONFUSION
“We have nothing to learn from Scandina-
vians as we are better than them in every
field.”
Egill Helgason is a journalist, political commentator, blogger and the host of
Iceland's only literary TV show, as well as Iceland's premiere political talk show.
How he has time to write articles for us, we do not know. But he does.
Iceland and the rest of the world – Part II
Words
Egill Helgason
Illustration
Inga María Brynjarsdóttir