To any observer of the Icelandic banking crisis, one of the most surprising aspects must be that no one, whether in the financial community or then government, has assumed any responsibility.
Both are on the Guardian’s list of 25 people responsible for the economic crisis. So is Iceland’s former PM Geir Haarde. Like his colleagues, denying the obvious is Haarde’s take on history. For most Icelanders, it was shocking to see the former Emperor, like a sketch out of Spaugstofan, with no clothes on in BBC’s HardTalk. When asked repeatedly, he would not offer an apology to the people of Iceland who now must suffer so much, neither as former PM nor as a human being. A simply sorry last autumn might have allowed him to keep his job. But Haarde chose denial.
Did he and his party really think that they would get away with bankrupting the country and not shouldering any blame? So it would seem. But then again, they always have.
Peace was restored at the price of independence. It seemed that prosperity might follow also.
After the start of the Norwegian period, fish became, for the first time, the most important export. Markets opened up in the Baltic once that area had become Christian. Catholics were not allowed to eat meat on Fridays and hence fish became a popular substitute. The Norwegian port of Bergen, through which much of the Icelandic trade flowed, became incorporated into the Hanseatic trading system.
This, however, did not lead to an increase in living standards among the Icelandic public. Quite the contrary happened as the climate became harsher and crops could no longer be grown. At the same time, a few families became very wealthy from the fish trade. The rich became richer and the poor poorer.
When the bubonic plague devastated Norway in the mid-14th century, shipping to and from Iceland virtually ceased. Both Norway and Iceland came under the control of the king of Denmark. In 1490, new laws were set stipulating that those who did not own livestock must become tenants for someone who did. Hence, the poorer labourers were from then on forced to work for the wealthier landowners. Most Icelanders became virtual serfs and were not allowed to make a living out of the one thing Iceland had in abundance, namely fish. Fishing was only practiced during time off from farmhand duties, and the catch belonged to the landowner.
In 1914, a shipping company, Eimskip, was formed. Its founders were well aware that Iceland had lost its independence centuries earlier because it did not have control of its shipping and were determined not to let history repeat itself. The company became known as the “dream child of the nation,” and everyone, rich and poor, bought stocks so that it might prosper. At the time, its owners totalled 13.000 in all, at a time when the population had not yet reached 100.000. But ownership was not distributed evenly. This fact was well hidden, as ownership of major corporations was kept secret.
Some people wondered whether Eimskip’s considerable proceeds should not be spent on lowering prices on traffic rather than overtaking other companies. This would lead to more purchasing power among the general public and benefit the population and economy as a whole. But those who owned the nation’s dream child had other interests. Iceland was no longer a part of Denmark, but it had a new set of lords.
The 15 families controlled virtually all traffic to and from the country. These were later nicknamed “The Octopus,” as its many arms all seemed to be feeding the same mouth.
Its main rival was another conglomerate, Sambandið, often called the “Small Octopus” or “the Squid.” The Octopus was tied to the Independence Party, and the Squid to the Progressive Party, the two parties who have divided Iceland between them for most of the 20th Century.
In 1991, the Independence Party, along with the Social Democrats, formed a government headed by Prime Minister Davíð Oddsson. Oddson’s grand plan was to open up the economy, privatise most government run companies and encourage competition. No doubt most of the companies were intended to go to the old guard of the Octopus, most of who were loyal party members. But somewhere down the line, Oddsson lost control of the privatisation. A new, hungry class of oligarchs emerged, who were swifter and more fierce than the old elite had been. They also had liquid cash, some from ventures in Russia, others from control of the lucrative supermarket chains in Iceland. The old elite had less capital, and had relied on co-ownership in most of the major companies. The Octopus was eaten up by these new sharks.
By the first decade of the 21st Century, a group of between five and 25 men owned virtually all the country’s wealth. The gold rolling into their coffers came from the Icelandic people, who had to pay the highest prices in the world for necessities such as groceries, as well the highest interest rates in the world. The combined wealth of the Iceland was such that those who controlled it managed to become major players on the international stage.
Icelanders are hardworking people in a harsh land. Through sheer grit, they managed to turn it into one of the most prosperous countries in the world. But time and again, they have been robbed blind while a select few got most of the proceeds from their work. Currently, our money is to be found in the Cayman Islands while, through yet more hard work, we must rebuild the country yet again.
Iceland managed to prosper in spite of, not because of, the Independence Party that kept prices high and competition limited. Imagine what a paradise hard-working people could create if they were allowed to keep the fruit of their labours themselves rather than surrender it to the wealthy few. Let us hope this time they will. Let us hope they will be duped no more.