From Iceland — A Perfect Circle: Iceland Seven Years After The Crash

A Perfect Circle: Iceland Seven Years After The Crash

Published October 6, 2015

A Perfect Circle: Iceland Seven Years After The Crash
Andie Sophia Fontaine
Photo by
RÚV/Lára Hanna Einarsdóttir

Every generation has their share of “do you remember where you were when” moments. For me, one of those moments will be October 6, 2008 – the day Iceland’s banking system collapsed, precipitating a series of events that would make international headlines.

On this day, I had shown up for a work-related class very early in the morning after already working the night shift. I sat in the back, opened my laptop, and was immediately greeted with dire headlines, howls of outrage, and international news sources reporting that Iceland had “gone bankrupt”. In the days and weeks that followed, we would have confirmed what pretty much all of us living here knew all along: that our high-rolling bankers and financiers were engaging in the kind of cheap market manipulation practices you would expect from a clumsy first-year trader. Iceland did not have the money to cover the banks’ losses, and all those years of bragging about how our Proud Viking Spirit was behind our financial success – and anyone who warned we should put on the brakes was a jealous hater – were transformed into a toxic mixture of denial, confusion, and rage.

For a moment there, it looked like things could change for the better. Leftists I knew, for example, saw the crash as an opportunity to finally come to power – up until then, Iceland’s government had always been conservative and centrist. But leftists weren’t the only people who gathered by the thousands in front of parliament, day after day, demanding the resignation of the government. The prevailing mood is that we had all been lied to. The neoliberal principle was an illusion, we had been tricked into buying it, but now we were wide awake. We were determined to create a new society, learn from our mistakes, and never repeat this foolishness again.

During this time, the international media was all over us. They praised the grassroots movements glowingly, talking a lot about how we refused to bail out the banks, how we were going to conduct a full investigation and bring the culprits to justice, how we were showing the world what a democratic movement looked like. The high point of all this was the period of time between the resignation of the Independence Party-Social Democrat coalition in January 2009, and the early elections of April that same year that put the Social Democrats and Left-Greens in power.

What happened next wasn’t so much a second collapse, but more of a long, slow, whimpering death of those ideals. The IMF was welcomed with open arms. Austerity defined the new economic policies. The ostensibly leftist government was weirdly silent in defending their policies, leaving a dialogue vacuum for economic reactionaries to hijack the conversation. The much-celebrated new constitution died in the shadows. Yes, there were investigations, and even charges filed. Yet amazingly, former Prime Minister Geir H. Haarde – who was put on trial for incompetence and mismanagement – received a merely symbolic sentence, little more than a verbal admonishment really, with the government forced to cover his legal fees. Today, he is Iceland’s ambassador to Washington, D.C.

Four years of this proved that it mattered little what party was in power; the system itself was fundamentally flawed. We needed, and still desperately need, a new socio-economic model. Instead, elections came and went in 2013 and we got … more of the same.

The Progressive Party and the Independence Party – the same two parties responsible for decades of financially disastrous policies – were voted back into power. There’s still no new constitution. Tourism has replaced finance and heavy industry as the new Boom Which Will Surely Last Forever, the new basket for all of our eggs. A handful of bankers are in minimum security prison, but apart from that, we are right back where we started. As if the 2008 crash never happened and, seven years later, we don’t seem to have learned a thing.

That being the case, another crash is all but a certainty. What will we replace our government with when that happens?

There is some reason to hope. Across North America and Europe (especially in the UK), grassroots movements are growing that back candidates who are decidedly well outside the establishment. Here in Iceland, you can see that reflected in the high and persistent levels of support for the Pirate Party. There is demonstrable strong and growing dissatisfaction with the false dichotomy between Establishment A and Establishment B. 2017 may be a very interesting year in Iceland indeed.

But we already know that the system itself is flawed, so we simply cannot repeat the mistake of relying on elections alone as a means of democratic participation. Backing a better candidate or party isn’t enough. The way we work, the way we maintain our social welfare system, the way we produce and distribute resources – all of this needs to be changed, from the ground up. We cannot rely on politicians anymore. If we are to change this country for the better, we need to organize again and coordinate a grassroots, direct-democratic means of deciding policy and implementing it. It needs to be pervasive, comprehensive, and sustained. We need, in other words, to build a new society within the shell of the old, and then dismantle the obsolete and disastrous mechanisms that currently hold our society hostage.

These are radical ideas, certainly, but looking back over the past seven years, I really see no other alternative. Business as usual stays business as usual, no matter which political party is leading the government. There can be no new day for Iceland so long as we continue to repeat our mistakes. But repeat our mistakes we will, if we never change the way we run our country. A better world is possible – there’s a lot more of us than there are of bankers, after all. We need only the belief in our own collective power, guiding us while we build the kind of society we can feel good about leaving to our children. For the sake of us all, and for those to come, I have no choice but to believe it’s possible.

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Enough. Stop. Now.

Enough. Stop. Now.


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