So what is the national referendum going to be about?
According to some Facebook statuses and discussions you get the sense that too many people think that the president’s veto means that Iceland has an option on whether to pay the IceSave debt or not.
If only things were that simple.
The whole affair has been one of misunderstanding, mishandling, demagoguery and cries of wolf. Icelandic politicians have sunk even lower than anyone thought possible after 2008. The government failed to keep its enemies closer during the whole thing, by offering them a role they could not refuse a broader agreement could possibly have been reached. They also sent a burned out ex-politician to handle the negotiations, a man who was laughed at in Britain and the Netherlands, and it shows how desperately inwards Icelandic politics are.
The opposition has used any means necessary to strike some mean blows at the government. A member of parliament from the Progressive party had the nerve to tell me that she was for an agreement, just not this one, without explaining how a better one could possibly be attained. Around the same time she participated in the most blatantly organized filibustering in the history of Althingi. It was all about a power game. Hit the trenches and try to hurt the other side as much as possible. The end result has been a divided and bitter country on its knees. You could see the shock in the opposition eyes early today at what had happened before they managed to retract into the mud. And leave it to the Movement to celebrate the president’s speech with tears in their eyes and glee on the afternoon radio shows. The people who were aptly described as thinking of everyone else as being idiots but themselves.
The president’s decision to veto the bill was the cherry on top of the mudcake. For one thing, he ran away like a dog with his tail behind his legs once he had muttered some explanations which raised more questions than answers. Who were the members of Althingi who had convinced him that there was a majority in Althingi for a national referendum? What did he discuss with the InDefence group? Was he really that ticked off after the Aramotaskaup which had portrayed him as a lapdog for the moneymen which left Iceland hanging that he felt the need to dress up in a folk hero cape?
And what is this thing about a national referendum being the best possible form of democracy? California is bankrupt and dismissive of civil liberties because of citizen referendums. And Swiss citizens do not hesitate in constraining the liberties of minorities in their referendums. It appears that these tools of ”direct democracy” are most appealing to politicians in need of a quick image fix. Is Olafur Ragnar Grimsson really serious when he says that Icelandic voters are equipped en-masse to interpret Basel II directives, EEA agreements, ECOFIN reports and international agreements in a well-balanced and objective manner? Shouldn’t we focus more on restoring the credibility of our representative democracy than introducing demagoguery to a divided, hurt and scared nation? Icelanders need to pay more attention to politics and who they are voting for instead of asking for a national referendum on things large and small. Otherwise people like Gudlaugur Thor Thordarson keep getting voted into Althingi, paid for by Landsbankinn and FL Group.
If the president really believes that there is a gap between Althingi and the nation on this issue, will he also ask for a national referendum on household debt where there is at least as much of a gap? Setting aside the question of why Icelandic politicians seem so concerned about the state being treated fairly by its creditors, while remaining oblivious to the same claims by its citizens with their home-and car loans doubled, what would happen if we continued down this road of the ultimate demagogue and followed a proposal made by another one today? Ogmundur Jonasson wants Icelanders to be able to vote on whether to raise taxes or not. Have these people gone mad? Where on earth are you going to find a nation in which the majority votes yes on tax hikes? Which is exactly what the nation needs right now. What next, letting kids vote on what is for dinner, McDonald’s or fish? Oh, sorry McDonald’s isn’t available anymore because Iceland is a disaster zone. A cause of celebration for some, but an indicator of things to come for Iceland, fewer choices available all round and some medicine swallowed in a hard way.
The Dutch and the British government should also take a long, hard look at themselves. Are these countries going in hard because they can? Much has been said about the Icelandic government’s lack of PR in these two countries but it can hardly be said that Alistair Darling, Gordon Brown and Wouter Bos have set the Icelandic media alight with their citizens’ case. Why haven’t they been here? They only come off as brutes who are ready to kick the small kid when he’s down, again just because they can. Do they understand the plight ahead for Iceland’s citizens, 98% of whom did not bankrupt the country but are being left with the whole bill plus tips?
What does Wouter Bos have to say about the Dutch National Bank’s failure to stop Landsbankinn from offering their IceSave WMD in the Netherlands in the spring of 2008? It appears as if the DNB did not do its job properly of screening the Central Bank of Iceland’s ability to pay in the event of a bankruptcy. One look at this graph explaining its foreign currency reserves should have had alarms ringing all over Amsterdam, Eindhoven, Rotterdam and the Hague. But no, the failing bank was allowed access to the savings of Dutch citizens. How do the Dutch politicians explain this? Or do they only know loud words and threats?
The same goes for Gordon Brown and Alistair Darling. ”According to very senior sources at the regulator, the FSA had worries about the liquidity of Kaupthing’s British subsidiary before Christmas 2007. It did nothing to stop the establishment of the Edge accounts in the April, eight months before its eventual collapse, because the regulator thought it would help the bank’s cash position.” said the Telegraph on January 2nd. What is Britain going to do when its own banks start the eventual collapse of their own banks takes place? This year, next, ten year from now, economists such as Daniel Gros have told Britain to pray that the giants in their own back yard don’t implode. What will be the UK’s position if Barclays runs into trouble? Sounds far fetched? How many people believed Lehman Brothers would be history 20 months ago?
The IceSave affair is an almighty failure to communicate by politicians in three countries who only know power plays and partisan games when they should be talking and reaching agreements. In this they have failed and they have failed in communicating to their citizens the larger ins and out of IceSave.
While Iceland is classified as junk and Britain and the Netherland get ready to throw it out with the garbage, nothing is resolved for hundreds of Dutchmen who banked with IceSave in good faith, charities and local municipalities in the UK who invested in the glorious Icelandic banks are grasping thin air and the citizens of Iceland are nowhere close to start the rebuilding they sorely need.
Because nothing ever gets built from trenches.
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Vilhjalm A.
2 years ago
Excellent, Dadi. Thanks very much for adding your views and for collecting all these news reports.
Iceland collectively has lost sight of the big prizes:
1) getting a real, usable currency for free, if and when Iceland joins the EU and gets the Euro. The amount of Icelandic savings is something like 1500-1800 billion ISK. As matters stand now, this is worthless monopoly money that can only be used in Iceland. Once that amount becomes Euros, it is real money.
2) being able to trade with other countries
3) loans from the IMF, Scandinavia, and the EU that may not have to be paid back. If Iceland joins the EU, Iceland becomes the EU’s headache and they will be forced to keep the country afloat, presumably by forgiving loans
4) EU subsidies
5) help with maintaining the Emergency Law. As matters stand, Iceland has taken over the domestic assets of Landsbanki which probably includes such things as fish quotas, energy income streams and real estate. Iceland has pledged almost nothing for these assets to Old Landsbanki. If the Emergency law fails, Iceland owes some 40-50 billion Euros, or else it must give all these assets to the creditors, in addition to Icelandic domestic deposits in New Landsbanki. If Iceland joins the EU, the EU will obviously have an interest in maintaining the Emergency Law and screwing the creditors of Old Landsbanki.
And then there is the real cost of Icesave, not the costs imagined by InDefence. A large part of the Icesave money will probably come from Landsbanki assets in Britain, which Iceland will “lose” either way. $3 billion in loans for Icesave will come from Scandinavia and if Iceland plays along this amount will probably be forgiven. So the real cost is may 400-600 billion ISK. Do Icelanders really want to give up some 30 billion Euros in benefits to save 1-2 billion Euros? That’s crazy.
You can blame an ignorant population blinded by nationalism, a cadre of shitstirring demagogues (InDefence et al), an obstructionist government minority (Sjalfstaedisfl and Framsoknarfl.) and a bungling inept majority coalition.
Iceland is doomed if it takes the isolationist route. Icelanders may think that they can survive on their own but really all it would take to crush Iceland would be some small measure such as intercepting Icelandic fish boats or denying landing rights to Flugleidir or freezing any Icelandic bank accounts abroad.
Carl Mosconi
2 years ago
Always refreshing to hear from someone that actually has the knowledge.
Emmanuel
2 years ago
I will not comment on the issues induced by this new delay in the ICESAVE dispute but on the use of referendum from a principle point of view. Irrespective of my personal position on the bill, I consider that the referendum which Grímsson calls upon is a terrible example of misuse and denial of democracy:
- misuse of democracy because the lay population is not competent for answering a question which is not about paying or not, but about the modalities of paying; the complexity of the agreement is not acessible to the profane.
- denial of democracy because the referendum gives the MP minority an opportunity to reverse, with the vox populi, the outcome of a battle lost at the Parliament.
IceSave: Nothing Ever Gets Built From Trenches | iceland today
2 years ago
[...] The rest is here: IceSave: Nothing Ever Gets Built From Trenches [...]
Andydane
2 years ago
How about putting some adsense or other ads on this website and use it to pay of the debt. Would make a great demonstration of Icelandic resolve
kría09
2 years ago
I absolutely agree with Emmanuel about the misuse of (representative) democracy in this case. In my view the President’s reasoning behind his decision has opened the gate to a constitutional hell by setting this precedent. There are no unambiguous criteria provided, which might lead to a presidential veto. It appears completely populist. Like he was lucky to have made some new friends after months in the dark, like cronyism – Icelandic style – in disguise.
How many people will be necessary to show up in front of Bessastaðir, how many torches will you have to bring to make him veto a law? Is a makeshift petition generally sufficient?
In other countries, the President can only veto a law, passed by parliament, if it is considered not to be in accordance with constitution or with other laws. But nothing of this in his statement.
Direct democracy requires a well-defined process answering all those questions, particularly the one, which issues should be up to a referendum.
And I definitely don’t consider this complex matter suitable for such a referendum
Morgan
2 years ago
A very thought provoking article, and not very happy reading for all concerned. I am British and was quite appalled by the way in which Iceland was treated by Brown and Co when the financial crisis started. I can see the reasoning behind trying to resolve this issue by representative democracy, but I agree it makes little sense given the complexity of the issue and the state of fear prevalent in all our countries at present. I personally believe that Iceland’s best way forward is to become more involved with the EU, and that it is the responsibility of countries like the UK to be willing to provide support to smaller nations (by population, not importance or pride) if financial times become difficult. We are stronger together. That said, there needs to be a change in financial systems, how Iceland managed to invest so much with so little collatoral seems ridiculous with hindsight and guaranteed to fail at some point.