From Iceland — Post-Financial Crisis Iceland

Post-Financial Crisis Iceland

Published August 17, 2011

Post-Financial Crisis Iceland

‘The Pots and Pans Revolution’ of 2008 and 2009, which happened during the aftermath of the total failure and collapse of the financial sector, had two distinct demands; firstly, the resignation of the right-wing government and a call for general elections; and secondly, for a new constitution made by the general public in a ‘Constitutional Assembly.’ Both demands were met.
As demonstrations rage in Spain, Greece and other European countries that are struggling with the financial crisis, many look to Iceland for inspiration. The Icelandic flag is seen at demonstrations against the protection of banks all around Europe. And with some good reasons. Two and a half years after the greatest financial disaster in the history of Iceland the economy is supposedly on the up, and the probabilities of Iceland defaulting are all but gone. The Constitutional Committee has finished its draft for a new constitution. And the general public got to vote, two times, on whether the Icelandic public should pay for the enormous losses of private banks. And said no on both occasions! For those living in countries where huge amounts of money have been spent on bailing out banks that are once again paying out ridiculous bonuses, and where governments are cutting down welfare systems; in countries where the general public has not been allowed to participate in the decisions made, circumstances in Iceland surely look bright and shiny.
And once again Icelanders hear and see in the media glowing reports from abroad about the progress made in Iceland, both economically and democratically. But this time, contrary to the news of the financial masterstrokes of 2007, the response of many Icelanders is that someone should go and tell these foreigners the truth: That ‘The Pots and Pans Revolution’ was a failure and that things are not as bright and shiny as they seem to be.
In late 2009 and the beginning of 2010, it became clear to many that the new left-wing government was not going to make effective democratic changes to the political system nor to the economic system. The new government, lead by harsh opponents of the IMF in the past (most notably in the months before taking office), worked closely with the IMF and other international protectors of global capitalism. The welfare system was protected, with some exceptions, but almost no steps were made to use the privatised profit of the financial boom to pay for the nationalised debt of the financial crisis. Little seemed to change as the leaders of the political parties made decisions without involving others in serious discussion or debate.
In late 2010, I took part in founding the Democratic Alliance Alda ( Our objective is to fight for a sustainable society with a truly democratic economy and political system. Those who formed the alliance saw that those in power were not taking the necessary steps to democratise Iceland and reach sustainability. The Alliance looks for real examples of successful and documented instances of democratisation and incorporates them into its policy. Amongst those examples are the participatory budgeting of Porto Alegre, the Co-operative enterprise of Mondragón—Spain’s seventh largest enterprise—and the Randomly Selected Citizen Assembly of British Columbia. Many more success stories are to be found all over the world, and the Constitutional Committee of Iceland might become one of them, despite its shortcomings. Alda sets itself apart from other organised political groups in Iceland in that it calls for core systemic changes rather than adjustments to the current representative democracy, where the economic sector is exempt from the rules of democracy. Power should be diffused and decisions made by the general public more often and using different processes—both in the political arena and the economic sector.
Alda sent Iceland’s parliament ideas for democratisation but has yet to even receive a reply—a clear example of the work to be done. Parliament committee meetings are closed to the public and they do not hold transcripts, let alone publish them publicly. So much for the new and open politics of the left-wing government. The same is true of the Constitutional Committee, which also decided to have its committee meetings, where the deep discussion took place, closed to the general public. Although the Committee welcomed ideas and feedback from the public, those who submitted to it could not count on receiving a formal response, what arguments were laid against it or any other information. Some have described the Committee’s work as a crowd-sourcing process, which is a rather generous way of describing its process. Only the formal voting sessions were open and the Committee mostly used a thick report, written by a committee appointed by the political parties, with a selection of constitutional amendments. Alda thinks that it is a basic democratic right that the public can observe the dealings and discussions of its own representatives and that when changing the constitution the process should be more open and diverse, with sufficient time and resources made available. It should be more crowd-sourcing and less of a replica of the representative system in place.
The general poll on Icesave was objected to by the political leaders, those elected in general elections after a unprecedented public revolution in Iceland—with a call for a deeper democracy. And the argument against a popular vote: The wait for a result and a result contrary to the one reached by those in power would be too costly for the economy. What it showed was that the left-wing government placed direct democracy second behind their own rule and the economy—pressure from global capitalism.
The Constitutional Committee has suggested that a certain percentage of voters can call for a general poll but not on financial issues. General polls like the one on Icesave will become impossible if the amendment is passed. One gets the feeling that decisions on financial issues should only be made by politicians and most preferably right-wing politicians. At least, these matters should not be left to the public, which is not to be trusted in such important matters! The Constitutional Committee is not supposed to discuss or come up with amendments pertaining to the economic system—yet the reason for making a new constitution was the failure of the political AND economic system. The political and economic system seems to be reproducing itself with some changes but few that diffuse power, redistribute resources or seriously jeopardise the power relations.
What other nations can learn from Iceland is to protect their welfare system, even if that is expensive; that the general public should be allowed to make decisions on financial matters through general polls; and that a popular constitutional assembly is more than capable of making a new constitution. What others should be aware of is that power relations are not easily broken or changed by simply electing new political parties; that popular assemblies need to be in deep connection and discussion with the general public or face the danger of being isolated and inadvertently controlled by the political system; that global capitalism is a force to be reckoned with which left-wing political parties do not have the resources or ideology to fully test—even when the cracks are obvious to all; and, finally, that although revolutions can bring about change the end result might be the same and therefore it is necessary to make clear demands, both ideological and practical, for changing the corrupt system of power that we call democracy today.

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