(Click here for previous articles in the series)

 

Like the pale green, violet and other shades of northern lights that dance across the polar sky, there are a range of perspectives in Iceland on the financial crisis and the massive citizens’ movement that arose as a result. On separate occasions, during our trip to Iceland in August of 2011, we had the opportunity to interview two MPs in the Althingi, the Icelandic parliament - Margret Tryggvadottir and Lilja Mosesdottir. 

 

Both women are community activists who came forward during the “Pots & Pans rebellion” in 2008 and 2009 that eventually resulted in the fall of the government. In the wake of this rebellion and the subsequent national elections, they became opposition members of parliament and, in our interviews with them, shared with us their thoughts about the successes of the citizens’ movement and the challenges still facing the people of Iceland.

 

At a conference in Iceland recently, hosted by the Icelandic government and the International Monetary Fund (IMF), the prime minister of the ruling coalition in the Althingi and other experts gave reports on how Iceland is recovering from the severe financial crisis that devastated the country several years ago. According to them, GDP growth in 2011 is expected to be around 2 to 3% and is "better than forecast." In addition, inflation is still fairly low and unemployment hovers around 7%, which is not bad relative to other countries in Europe and North America (1). The government also claims that, although it received loans from the IMF with conditions attached, it was able to "fence off" Iceland's "social safety net" from austerity cuts. In line with this assessment, Paul Krugman, the well-known U.S. economist, commented that Iceland has undergone an "economic resurrection" and that, in his opinion, its economic program "has worked."

 

Margret Tryggvadottir and Lilja Mosesdottir were in the thick of the people's movement against the Icesave bank bailout and the IMF imposed austerity cuts, and spoke to us, in some detail, about the successes that came out of that work. But they are clearly not as optimistic as the Icelandic government or Krugman about Iceland's economy. In a press statement released at the same government-organized conference mentioned above, Margret and her Movement Party colleagues, argue that the economic situation in the country is far worse than the government is portraying, pointing out that about 35% of all households are still in "a serious default position with their debts," and that, because many mortgages are indexed to the cost of living or foreign exchange rates, the situation is, in fact, getting even worse (2).

 

Furthermore, the Movement Party statement argues that, when all state and local government debt, liabilities and guarantees are added up, the "debt overhang" of Iceland's government is "enormous." As a consequence, they believe Iceland is due to suffer a decade or more of "Japanese" style economic stagnation.

 

Lilja Mosesdottir is a university professor and economist, as well as an Independent MP with no current party affiliation. Speaking with her in the same charming older building in downtown Reykjavik where packed community gatherings were held during the “Pots & Pans rebellion”, Lilja pointed out that, although Iceland's banks were allowed to fail and the Icesave bailout was defeated in two referenda, the new government of Social Democrats and Left-Greens still went ahead and used public funds to recapitalize the banks. 

 

These reconstituted banks, two of which are now, once again, privately-owned, got the assets of the old banks "at 45 to 65% of their face value," yet, despite that, are "unwilling to give any discounts or write-downs" to households or companies in distress, unless it is absolutely impossible for them to pay. In her opinion, Iceland's financial system is now "controlled by foreign shareholders whose primary interest is to recover as much of the value of their assets as possible." In this regard, these foreign financial interests are being assisted by the current coalition government of Social Democrats and Left-Greens, all of which is taking place at the expense of low and middle income Icelanders.

 

Far from protecting Iceland's social safety net, the coalition government is following an IMF imposed austerity program that has significantly eroded many public services and social programs. "Moreover," Lilja says, "pre-crisis structures and power relations have been re-established" by national power elites, with the assistance of the IMF and other "supra-national institutions." As a result, the Icelandic economy has entered a vicious circle of deficit cuts that suppress consumption and investment.

 

Lilja wants to build a more equal and sustainable society in Iceland, but is critical of the leadership of the trade union movement. Although many ordinary workers were involved in the struggles against the public service cuts and bank bailouts, the union leadership seemed to have acted as passive supporters of an IMF "recovery path" that protected the economic and financial elite. In her opinion, this is a result of how the union pension plans in the country are structured. The union leadership have consequently become big players, along with the banking elite, in the country's financial wheeling and dealing, and appears to have lost perspective of the fact that it is precisely ordinary workers and union members who have been hit hardest by the cuts and the propping up of the financial sector.

 

While both Lilja and Margret are critical of the existing governing coalition, they speak very positively about the "Pots & Pans rebellion" and the Icelandic people's struggle against the "Icesave" bailout. They are also eager to build on the accomplishments to date and develop an alternative to what they see as the neo-liberal economic path followed by the current and previous governments.

 

In this regard, Lilja highlighted the series of public meetings that she and others organized during the Pots & Pans rebellion that were "unprecedented in Iceland's history" and turned out to be "an essential source for empowering the general public" and educating them about the both the issues at hand and the process of direct democracy.

 

As we concluded our interview with Margret, she stressed that people should never "waste a crisis." When everything falls down, she says, "you have incredible freedom of building up something new.” To her, the struggle to build a new Iceland is not over and much still remains to be done.

 

No doubt, like the Northern lights flitting across a winter sky, it is an aspiration shared by many Icelanders - both elusive and tantalizing.

 

 

Photo accessed from: Visit Iceland. For further images and information on Iceland go to:www.icetourist.is ; and  www.visitreykjavik.is