Skip to comments.Icelandís economic thaw a thorn in EUís side
Posted on 05/05/2013 8:55:33 AM PDT by Leifur
Iceland just elected the parties which plunged them into crisis only five years ago. Is it casino capitalism all over again, or just a slap in the face of the EU?
In terms of redemptive electoral stories, the return of the Independence Party in Iceland is quite significant, albeit that they will come back to government with only a few percentage points more votes than they polled at their nadir in the depths of the Icelandic crisis in 2009.
However the biggest winner was Sigmundur Gunnlaugsson, the leader of the Progressive Party, who propelled his party to hold 19 seats (same as the Independence Party) with 24.4 versus 26.7 per cent of the vote respectively. The parliament (Althing) has 63 seats, so the two leading parties have a comfortable working majority against a dissipated opposition which includes two new parties.
True, the political class is not exactly enjoying a ringing endorsement. True, 83.3 per cent voted, but that turnout was the lowest since independence from Denmark in 1944. Politicians are only trusted by 15 per cent of the population. Unsurprisingly, only bankers fare worse.
At the inflection point of the crisis, Iceland introduced capital controls and stinging austerity, but it also had a tool up its sleeve which struggling Mediterranean nations cannot take advantage of. Whereas they are imprisoned in the euro, the Icelanders let their krone collapse.
Icelandic companies diligently sought to export their cheaper goods. Meanwhile, hordes of non-Viking raiders arrived and exported secondhand cars and other goods to Scandinavia and Eastern Europe, adding some liquidity to the Icelandic economy at its bottom. Compare that with Spain or Italy, where the euro has inflated the price of everything to levels which render these countries less competitive. An acute failure in a competitive globalized world.
The Progressive Party in particular gained in the election thanks to Gunnlaugssons resolute approach to the crisis. While declining socialist UK Prime Minister Gordon Brown railed impotently, demanding recompense for British depositors in the collapsed Icesave Bank, Gunnlaugsson even in opposition was a firm opponent of any repayment. Now the new government is likely to enforce severe losses and write-downs on creditors to the Icelandic banks.
Devaluation and enforced losses on creditors wont make Iceland much more popular within the EU, but then again the EUs rather arrogant attitude towards Icelands membership of the zone helped force a dramatic turnaround in sentiment away from the pro-European integration government, which was roundly defeated at the weekend. Part of the reason for that defeat lay in Brussels demonstrating the worst of monarchical/imperial arrogance in expecting hard-pressed Icelanders to be utterly supplicant to the daft dogmas of myopic Europhilia.
Ultimately the EU, stuck in a bipolar world view of the US and EU as the only major trade blocs, was entirely wrong-footed as the Icelanders opted to find a third way solution. This unique approach has involved a closer relationship with China (which covets mineral rights in the Arctic Circle, to which Reykjavik has considerable access) and has raised eyebrows in Western capitals. However, with Obamaland apparently unaware of what Iceland is, Britain and Holland demanding banking reparations in desperate political grandstanding moves while the EU overall behaved like a medieval fiefdom having defeated a barbarian nation, is it altogether surprising that the Icelanders opted for a path which largely ignores the West?
It was hardly difficult to see the Icelandic expansion for what it was - a crazed bubble - but just like the Baltic States at the time, stating that the emperor had no clothes was a rapid path to being ostracized! However, when a nation of 320,000 had control of multiple shop chains in the highly-competitive UK high street and was acquiring trophy assets such as English Premier League clubs, it was hardly difficult to ponder whether a banking sector 10 times national GDP was really sustainable!
Now, Icelanders have opted for the lure of austerity relief on their inflation-linked mortgages and hope the right wing parties can do what they have done in the past: deliver growth, while avoiding the excesses of the bubble years (where Britain/America and the entire EU were complicit in trying to inflate the unsustainable).
...oh and if you think this election result is just a little blond exceptionalism in the North Atlantic, check out the recent Irish opinion polls...
The realignment of the coaliion was in fact a behind the scenes coup of those that did not want to rein in the banks and their owners, those that wanted to close their eyes and keep the party going, but still the social democrats managed through their people in the media (we have a powerful state media here) to put the blame on everybody but themselves, so they won big last time.
But now everybody has had enough of their mishandling of the economy and lost opportunities, so much that the left splintered into many parties, (14 parties in total competed, 4 on the left got in) and the two governing parties replaced their heads to try to distance themselves from the government.
It was not because of supposed austerity which media outlets abroad have latched on in a way to spin the news here to their own ends back in their home countries. There was no austerity, at least no signicant cutting of spending, only higher and higher taxation which hindered investment, and the only solution from them was that the EU would save us.
But guess what, we dont want to trust anybody else for saving us, we will do it ourselves here in Iceland, because we know that the regulations of the so called EU experts were what helped put us into this mess in the first place.
In case you are interested i pinged you guys, please let me know if there are others (that I may have forgotten also) that might be interested in what is going on in my little country situated between Europe and the US, trying to keep its independence from both, but trading with both and securing a good life from a harsh and rugged land with a small population.
Hidden people’s fault.
Good luck, FRiend!
iceland bank site:lewrockwell.com
Why should it? It is one of few sites that allow discussions that are eurosceptical.
Thank you for that, but of course I would like us to be in better cooperation with the US instead of being in a european customs union (or part of the market of that) through the EEA agreement which actively tries to disqualify US made products.
They just went back into the hinterlands, so we suddenly had lot of empty houses and reduced consumer demand. Maybe they will start coming back now...
Thanks for that, even though I don´t beliewe in luck per se, but taking control of your own destiny.
Funny is that you will never have a Free Trader Communist Globalist in the US look objectively at why the EU continues to crash....and that the Iceland model of handling the Failure of Free Trade (which is what is really happening in the EU...Failure of Free Trade) is a much better remedy than the Free Trader recommended and used taxpayer-subsidized Bank Bailouts and seizure of private funds/property to temporarily stabilize economies.
I just hope Iceland is careful when dealing with Communist China...US Free Traders sure have not)
Russia Today is an anti-liberty, pro-dictatorship and pro-Putin agitprop outfit — and the claim that it’s one of the few sites that permits Euroskepticism is ludicrous.
You fear the hidden people more than you fear Brussels.
Needs more hyperbole. (About par for Russkie propaganda.)
(No offense to Iceland, but no one cares about how the population of a country that amounts to a small suburb elsewhere may vote - other than what that geographic “economy zone” that surrounds the country may promise in exploitable commodities...)
Being anti-free trade is left wing...I am surprised to see such sentiments in FreeRepublic. Of course, giving free trade deal can though be useful to support your friends and punishing enemies, and you certeinly have enriched the Chineese and their communist masters especially, which may have been a stratetig mistake.
The failure of the EU is that it is not a free trade area that allows it countries to be independent, but a custom union to prevent free trade from abroad and subjecting the countries under a single, undemocratic rule with a political union.
Of course it is pro-putin, he probably pays for it, and thus it is probably anti-liberty, but surely European federalism is not pro-liberty, but European federalism may be something putin is afraid of and thus willing to allow euroscepting voices, which surely are pro-liberty, to be heard.
There are no hidden people. But Brussel is surely something to be afraid of, look at what Daniel Hannan has said about its hideous strenght, and you will see how dangerous it is.
Well we here care, and you should too, because we are one of the few countries in Europe with a strong atlantist heritage that is not yet subject to the anti-american control of Brussel. Even though we are small, it is better to have less enemies than more, especially if strategically situated.
Alas, I am not a native english speaker so I may miss somethings and my manner of writing can be strange or wrong. But I surely do not understand what your first sentence means.
Iceland may be a small country but the people of iceland’s refusal to let a few much larger European states make Iceland pay for their poor choices is admirable, especially when you also had to stand up to your own government to do so.
Maybe some other European people will take note and take responsibility for their own decisions also.
Thank you! Sadly I am afraid that those other countries don´t have that constitutional safety button we had, and a favorible (and a bit megalomaniac) president to push it.
And that is on top of how thoroughly the EU has managed to undermine democracy in its member countries, and sap people´s will to try to influence politics in a system where their vote matters next to nothing. I agree with you, hopefully they will, but instead of taking responsibility they are more and more getting disilusioned with politics and letting the elites control more and more.