SocialismToday Socialist Party magazine | |
WITH 59.8% voting ‘No’ in the referendum on 9 April,
Icelanders have declared for the second time that they will not pay for
the banking crisis. The total cost of the Icesave deal was €4 billion,
equivalent to half of Iceland’s yearly economic activity, and which
would take 46 years to pay back. Icesave was the name used by a large Icelandic bank,
Landsbanki, for getting money through accounts in Britain and the
Netherlands in which small savers and local governments were promised
high returns. When the country’s huge credit bubble burst in 2008, the
money disappeared. Governments in London and The Hague guaranteed the
money to the lenders, but David Cameron’s coalition still wants the
Icelandic government to cover the cost. This is an attempt to play off one set of taxpayers
against another – Icelanders against British and Dutch. The referendum
was about the Icelandic government getting the money out of the pockets
of the working population to pay for the failings of the private
profit-making bank. No wonder the decision went against it again. A year ago, Icelanders voted ‘No’ to a similar
proposal. Then, a massive 93% voted against. This time, the interest
rate proposed for repayments had been lowered from 5.55% to 2.64%. The
Social Democrats, who lead the minority government, were behind the
agreement as was the main opposition, the Independence Party. The
Alltinget (parliament) voted in favour by a two-thirds majority. Outside
the parties, however, discontent continued to ferment. When the crisis originally broke, the government
fell and there were almost permanent protests – a ‘parliament of the
streets’. This time, the president again felt the pressure from below
and refused to sign the agreement, forcing a referendum. Two Green-Left
ministers quit the government on the issue. Now, the government says that the Landsbanki
bankruptcy agreement can cover most of the cost, implying that taxpayers
would not pay. But if there is any money in Landsbanki it should be
spent on the crisis in Iceland, not to pay for the bank’s speculation.
In any case, Icelanders are not convinced. Cuts and unemployment have
taken a heavy toll. Iceland’s economy has been in recession for two
years. The rating agency, Moody’s, is about to lower the country’s bonds
from ‘junk’ to ‘non-investable’. The Swedish-language Islandsbloggen.se
predicts "Yet another budget with cuts and tax increases". The authority with responsibility for reviewing the
EU’s free-trade arrangements with Norway and Iceland wants to pull
Iceland up before the European Free Trade Agreement Court in Luxembourg.
The ‘No’ victory may also lead the IMF to make sharper demands for
payment on its 2008 loan. The Icelandic government is now using capital
controls to prevent money leaving the country. It could come under
pressure from the population to refuse to pay any debts. President Ólafur Ragnar Grimsson said the referendum
showed up "a rift between the government and the people". But the Social
Democratic prime minister, Jóhanna Sigurđardóttir, said that the
government will not resign. The Social Democrats also want to continue
to press for EU membership, although this is even less likely now. The referendum result underlines the dissatisfaction
and anger in Icelandic society. Several new parties have been formed in
recent years, but they have not responded to the needs of the people. In
municipal elections in the capital, Reykjavík, the Best Party had a big
success, winning the mayor’s position. Almost immediately, however, it
began new cuts, contrary to its voters’ expectations. Iceland needs a fighting socialist party that can
show the way forward and campaign against the government, the banks’
owners, and the demands of the IMF and EU. The defiant referendum vote
indicates the potential for a fight-back by workers and young people. It
needs to be followed up with mass mobilisations, strikes and street
protests. Already, the Icelanders’ example can be an
inspiration to workers and youth in Ireland, Greece, Portugal and the
rest of Europe in the fight against austerity and capitalism. In turn,
victory in these countries would have a great impact in Iceland. Bankers
and bosses cannot be allowed to make workers and ordinary people pay for
the crisis of their system anywhere. |
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