Iceland forgives citizens debts

2024 Author: Seth Attwood | [email protected]. Last modified: 2023-12-16 15:55

The government proposes to write off half of it directly (80 billion kroons), and another 70 billion kroons to provide families in the form of tax breaks for three years. The total amount of mortgage loans in Iceland at the end of June was 680 billion euros.

“This will directly affect 80% of Icelandic families,” says Prime Minister Sigmundur David Gunnlaugsson. “And indirectly, literally everyone. This will boost economic growth and purchasing power.”

The costs of the program are approximately equal to 9% of the GDP of this northern country. The authorities are going to finance it by raising the tax on the financial sector.

Meanwhile, before the crisis, the weight was the opposite: it was the banks that ensured the well-being of this country, they were provided with benefits, a practically tax-free zone. The banking crisis of five years ago completely changed the state of the country's economy. Since then, Icelandic banks have had to forgive their clients 1.5 billion euros.

Copyright © 2014 euronews

Why is Iceland not on the news?

The story told on Italian radio about the ongoing revolution in Iceland is a prime example of how little our media tells us about the world. Iceland literally went bankrupt in 2008 at the onset of the financial crisis. The reasons were mentioned only in passing, and since then this little-known member of the European Union, as they say, disappeared from the radar.

As one after another European countries are threatened with bankruptcy, which threatens the existence of the euro, which, again, will have a variety of consequences for the whole world, the last thing that those in power would want is for Iceland to become an example for others. And that's why.

Five years of pure neoliberal rule have made Iceland (population 320,000, no army) one of the richest countries in the world. In 2003, all banks in the country were privatized, and in order to attract foreign investors, they offered online banking, and the minimum costs allowed them to offer relatively high rates of return. The accounts, named IceSave, have attracted many small UK and Dutch investors. But as investments grew, banks' external debt also grew. In 2003, Iceland's debt was equal to 200 percent of its GNP, and in 2007 it was 900 percent. The 2008 global financial crisis was a fatal blow. The three main Icelandic banks - Landbanki, Kapthing and Glitnir - floated belly up and were nationalized, and the krone lost 85 percent of its value against the euro. Iceland filed for bankruptcy at the end of the year.

Contrary to what might have been expected, in the process of directly applying democracy, the crisis led Icelanders to regain their sovereign rights, which ultimately led to a new constitution. But this was achieved through pain.

The prime minister of the Social Democratic coalition government, Geir Horde, was negotiating a $ 2.1 billion loan, to which the Nordic countries added another $ 2.5 billion. But the international financial community pressed Iceland to take drastic measures. The FMI and the European Union (possibly referring to the IMF, ie the IMF; approx. Mixednews) wanted to take on this debt, arguing that this is the only way for the country to pay off Britain and Holland.

Protests and riots continued, eventually forcing the government to resign. The elections were pushed to April 2009, bringing a leftist coalition to power, denouncing the neoliberal economic system, but immediately surrendering to demands for Iceland to repay a total of 3.5 billion euros. This required every Icelandic person to pay 100 euros a month for fifteen years to pay off debts incurred by individuals in relation to other individuals. It was the straw that broke the camel's back.

What happened next was extraordinary. The notion that citizens should pay for the mistakes of the financial monopoly, that an entire country should be levied in order to pay off private debts, changed the relationship between citizens and their political institutions, and ultimately led Iceland's leaders to side with their constituents. Head of State Olafur Ragnar Grimsson refused to ratify a law that would make Icelandic citizens liable for the debts of Icelandic bankers and agreed to call a referendum.

Of course, the international community has only increased the pressure on Iceland. Britain and Holland threatened severe reprisals that would isolate the country. When the Icelanders gathered to vote, the IMF threatened to strip the country of any aid it could. The British government threatened to freeze Icelanders' savings and checking accounts. As Grimmson says: “We were told that if we did not accept the terms of the international community, we would become northern Cuba. But if we agreed, we would become northern Haiti.

In the March 2010 referendum, 93 percent voted against paying off debt. The IMF immediately froze lending. But the revolution (about which the mainstream media practically did not write) was not intimidated. With the support of angry citizens, the government initiated civil and criminal investigations against those responsible for the financial crisis. Interpol issued an international arrest warrant for former Kaupthing bank president Sigurdur Einarsson, and other bankers also involved in the crash fled the country.

But the Icelanders did not stop there: they decided to accept a new a constitution that would free the country from the power of international finance and virtual money.

To write the new constitution, the people of Iceland elected 25 citizens out of 522 adults who did not belong to any political party, who were recommended by at least 30 citizens. This document was not the work of a handful of politicians, but was written on the Internet. Constituent meetings were held online, and citizens could write their comments and make proposals, watching with their own eyes how their constitution gradually took shape. The constitution, which was ultimately born out of such popular participation, will be submitted to parliament for approval after the next elections.

Today the same solutions are being offered to other peoples. The people of Greece are being told that privatizing their public sector is the only solution. Italians, Spaniards and Portuguese are facing the same threat.

Let them look at Iceland. Their refusal to submit to foreign interests, when a tiny country loudly and clearly declared that their people were sovereign.

This is why Iceland is not on the news.