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PORTSIDE  November 2011, Week 1

PORTSIDE November 2011, Week 1

Subject:

Why Iceland Should Be in the News But Is Not

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Date:

Thu, 3 Nov 2011 19:39:19 -0400

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Why Iceland Should Be in the News But Is Not 

By Deena Stryker
Bellacadonia.org: August 24, 2011

http://bellacaledonia.org.uk/2011/08/25/why-iceland-shold-be-in-the-news-but-is-not/ 

An Italian radio programs story about Iceland's
on-going revolution is a stunning example of how little
our media tells us about the rest of the world.
Americans may remember that at the start of the 2008
financial crisis, Iceland literally went bankrupt. The
reasons were mentioned only in passing, and since then,
this little-known member of the European Union fell
back into oblivion.

As one European country after another fails or risks
failing, imperiling the Euro, with repercussions for
the entire world, the last thing the powers that be
want is for Iceland to become an example. 

Here's why:

Five years of a pure neo-liberal regime had made
Iceland, (population 320 thousand, no army), one of the
richest countries in the world. In 2003 all the
country's banks were privatized, and in an effort to
attract foreign investors, they offered on-line banking
whose minimal costs allowed them to offer relatively
high rates of return. The accounts, called IceSave,
attracted many English and Dutch small investors. But
as investments grew, so did the banks' foreign debt. In
2003 Iceland's debt was equal to 200 times its GNP, but
in 2007, it was 900 percent. The 2008 world financial
crisis was the coup de grace. The three main Icelandic
banks, Landbanki, Kapthing and Glitnir, went belly up
and were nationalized, while the Kroner lost 85% of its
value with respect to the Euro. At the end of the year
Iceland declared bankruptcy.

Contrary to what could be expected, the crisis resulted
in Icelanders recovering their sovereign rights,
through a process of direct participatory democracy
that eventually led to a new Constitution. But only
after much pain.

Geir Haarde, the Prime Minister of a Social Democratic
coalition government, negotiated a two million one
hundred thousand dollar loan, to which the Nordic
countries added another two and a half million. But the
foreign financial community pressured Iceland to impose
drastic measures. The FMI and the European Union wanted
to take over its debt, claiming this was the only way
for the country to pay back Holland and Great Britain,
who had promised to reimburse their citizens.

Protests and riots continued, eventually forcing the
government to resign. Elections were brought forward to
April 2009, resulting in a left-wing coalition which
condemned the neoliberal economic system, but
immediately gave in to its demands that Iceland pay off
a total of three and a half million Euros. This
required each Icelandic citizen to pay 100 Euros a
month (or about $130) for fifteen years, at 5.5%
interest, to pay off a debt incurred by private parties
vis a vis other private parties. It was the straw that
broke the reindeer's back.

What happened next was extraordinary. The belief that
citizens had to pay for the mistakes of a financial
monopoly, that an entire nation must be taxed to pay
off private debts was shattered, transforming the
relationship between citizens and their political
institutions and eventually driving Iceland's leaders
to the side of their constituents. The Head of State,
Olafur Ragnar Grimsson, refused to ratify the law that
would have made Iceland's citizens responsible for its
bankers' debts, and accepted calls for a referendum.

Of course the international community only increased
the pressure on Iceland. Great Britain and Holland
threatened dire reprisals that would isolate the
country. As Icelanders went to vote, foreign bankers
threatened to block any aid from the IMF. The British
government threatened to freeze Icelander savings and
checking accounts. As Grimsson said: "We were told that
if we refused the international communitys conditions,
we would become the Cuba of the North. But if we had
accepted, we would have become the Haiti of the North."

(How many times have I written that when Cubans see the
dire state of their neighbor, Haiti, they count
themselves lucky.)

In the March 2010 referendum, 93% voted against
repayment of the debt. The IMF immediately froze its
loan. But the revolution (though not televised in the
United States), would not be intimidated. With the
support of a furious citizenry, the government launched
civil and penal investigations into those responsible
for the financial crisis. Interpol put out an
international arrest warrant for the ex-president of
Kaupthing, Sigurdur Einarsson, as the other bankers
implicated in the crash fled the country.

But Icelanders didn't stop there: they decided to draft
a new constitution that would free the country from the
exaggerated power of international finance and virtual
money. (The one in use had been written when Iceland
gained its independence from Denmark, in 1918, the only
difference with the Danish constitution being that the
word 'president' replaced the word 'king'.)

To write the new constitution, the people of Iceland
elected twenty-five citizens from among 522 adults not
belonging to any political party but recommended by at
least thirty citizens. This document was not the work
of a handful of politicians, but was written on the
internet. The constituent's meetings are streamed
on-line, and citizens can send their comments and
suggestions, witnessing the document as it takes shape.
The constitution that eventually emerges from this
participatory democratic process will be submitted to
parliament for approval after the next elections.

Some readers will remember that Iceland's ninth century
agrarian collapse was featured in Jared Diamond's book
by the same name. Today, that country is recovering
from its financial collapse in ways just the opposite
of those generally considered unavoidable, as confirmed
yesterday by the new head of the IMF, Christine Lagarde
to Fareed Zakaria. The people of Greece have been told
that the privatization of their public sector is the
only solution. And those of Italy, Spain and Portugal
are facing the same threat.

They should look to Iceland. Refusing to bow to foreign
interests, that small country stated loud and clear
that the people are sovereign.

Thats why it is not in the news anymore.

Originally published in the excellent SACSIS (with
thanks)

From: Romi Elnagar Sent: Wednesday, November 02, 2011
8:44 PM

* * *

___________________________________________

Portside aims to provide material of interest to people
on the left that will help them to interpret the world
and to change it.

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