Published August 17, 2010

The problem with the Magma deal is not that it involves a heartless foreign corporation (though of course it does) or that this corporation received advice from Icelandic regulators on how to circumvent restrictions on foreign ownership, or that Iceland is going down the path of exploited third world countries (though it may be).

The real problem is the lack of vision by Iceland’s public “servants.”

King Solomon wrote in Proverbs 29:18 that “Where there is no vision, the people perish.” Perhaps the wisest man of all time could see into the future, and sent this one especially for Icelanders.

The authors of the Black Report note several occasions when bank officials were asked what their strategy was, their purpose, and they had no answers. All decisions were made without forethought, without consultation, without consideration of the consequences. Apparently, the decision to privatise HS Orka was in part ideological (the mayor of Reykjanes is an old Independence Party hand), in part a desperate attempt to get some quick cash, and in part an attempt to help some old friends make a few bucks on the side.

I somehow doubt that there was much consideration by the decision makers as to how this 130-year lease of our natural resources would impact their great-great grandchildren. If we are going to open our country to foreign investors—which is not an inherently crazy idea—then we need to set out the rules in advance. We need to have a public debate in advance of any action. We need to create barriers between decision-makers and the financial benefits of privatisation. We need transparency. We need to know where we want to go. As the great American sage Yogi Berra put it: “You’ve got to be careful if you don’t know where you’re going ‘cause you might not get there.”

I would have hoped that we would have learned from our previous attempts at privatisation, but evidently not. When fishing licenses were given to vessel owners, despite the fact that the nation’s maritime resources are considered to be a public good in our constitution, there was no open debate, there was no open bidding process, there were no temporal limitations imposed. When the banks were privatised, they were sold—or rather handed on a silver platter—to political insiders without public debate, without due diligence, without any strong regulatory framework. When we raped our land to create hydroelectric power for the aluminium smelters, no vote was taken, no disclosures of conflicts of interest were made, no terms were published.

Seen against this historical backdrop, the Magma deal is what we should have expected. As a result of the Icelandic government’s current back-pedalling, our international reputation is once again being trashed in the business publications. We’re unreliable, we don’t understand the importance of contracts, we can’t keep our hands off of done deals. A thorough investigation of this matter should be undertaken, but I would hope that this time it will lead to the creation of some guidelines for decision-making by our politicians. Notices of public meetings and requests for contracts must be published, public contracts must be available on the internet, and conflicts of interests must be disclosed. The country’s energy should be devoted to long-term strategies, rather than to the hot topics of the week. Instead of acting like addicts looking for their next hit, we need to act like adults planning a prosperous and sustainable future.