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Related: Editorials & Other Articles, Issue Forums, Alliance Forums, Region ForumsThe President Of Iceland Tells Us How He Had The Balls To Stand Up To Britain (Including The Banks)
http://www.businessinsider.com/olafur-ragnar-grmsson-iceland-icesave-uk-banks-europe-2012-4The president of Iceland sits in his study drinking tea from an immaculate china set. "If a collapse in the financial sector can bring one of the most stable and secure democracies and political structures to his knees as happened in Iceland," Ólafur Ragnar Grímsson says to me, "then what could it do in countries that have less stable democratic and political history?" The tiny country is unique not only in its stunning geography but also in its open democracy. This democracy was pivotal in the choice to let three giant banks fail during the financial crisis.
For Ólafur, the crisis of 2008 was personal. Once the darling of the left wing, he worked as finance minister for several years before he became president of the country in 1996, a largely ceremonial role that he's inhabited ever since. Like many in the country he was once a cheerleader for Iceland's financial sector, privatized at the start of the 21st century and the sudden collapse was a painful reminder that Iceland was a small, isolated place. Now, of course, most headlines we see about Iceland seem positive. Iceland is repaying its IMF loans early, unemployment is down, and growth is above average. The streets of Reykjavik seem calm and happy. Other countries, of course, haven't been so lucky. The crisis remains front page news in Greece, Italy and Spain countries that followed a very different response from Iceland's.
Ólafur argues that his country's strength came from recognizing the problem was not just an "economic and financial challenge", but a "profound social, political, and even judicial" challenge. After the crisis, the country held a full judicial investigation, and went against "the prevailing economic orthodoxies of the American, European and IMF model." Ólafur says that he likes to think that the IMF learned more from Iceland during this time than vice versa. A key example of this approach is Iceland's refusal to pump money into failed banks. The decision was controversial at the time, but now looks increasingly wise. "I have never understood the argument why a private bank or financial fund is somehow better for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector".
There is, of course, another aspect. A tricky situation arose when the U.K. and Holland demanded money for their citizens' depleted Icesave accounts, and Iceland refused. The incident sparked a major diplomatic scuffle, with Iceland refusing to pay out and the U.K. even using "anti-terrorism legislation" against the state. For Ólafur, it's also a personal aspect. He was head of state, though he did not control the government in effect his position was more like being an elected Queen of England than being Barack Obama. But constitutionally he had the right to veto government legislation though it had never been used by his office previously. Ólafur decided to block government legislation to pay back the U.K. Twice. Both times the legislation went to a nationwide vote, and failed.
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The President Of Iceland Tells Us How He Had The Balls To Stand Up To Britain (Including The Banks) (Original Post)
stockholmer
Apr 2012
OP
Fumesucker
(45,851 posts)1. Good article..
But I suspect your title is going to draw some negative comments..
stockholmer
(3,751 posts)2. Its not my title, its the article at Business Insider's choice of words
Fumesucker
(45,851 posts)5. ...
Thanks for posting the article..
malaise
(269,254 posts)3. Love it -MUST READ
"I have never understood the argument why a private bank or financial fund is somehow better for the well being and future of the economy than the industrial sector, the IT sector, the creative sector, or the manufacturing sector".
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Same here
banned from Kos
(4,017 posts)4. He is right. Iceland went through severe austerity anyway though.
The Krona collapsed and interest rates went to 18%. Their economy suffered a lot.
But there is no way their tiny population of 320,000 could repay what the banks owed.
n2doc
(47,953 posts)7. The critical point is that it is over
While Ireland and other nations that went the "pay the banks" route still suffer. Including the US.
n2doc
(47,953 posts)6. "You could even argue that the bigger the banking sector is, the worse the news is for your economy"
True Dat. Very True. Willing to bet this gets very little play in Ireland, or the US, for that matter.