Ogmundur Jonasson --a member of the Parliament of Iceland and of the Executive Boards of PSI and EPSU --, continues to successfully lead the opposition to the unfair treatment of Iceland by the governments of the UK and the Netherlands. Today, the movement he leads succeeded in getting the President of Iceland to refuse to sign legislation that would impose onerous conditions on his country's population.
Acting on behalf of powerful financial concerns, the governments of the UK and the Netherlands have used the IMF and EU to pressure Icelanders to shoulder the burden the price of the decisions of the executives of Landsbanki and foreign investors (see story below from the Financial Times) .
Jonasson, who resigned his post as Health Minister over his views on the Icesave agreement, has stated that "the British and Dutch are using the IMF and the EU as weapons to force the country to accept more debt than it is responsible for."
After the coalition government led by Prime Minister Johanna Sigurardottir --of whose cabinet Jonasson was a member--, approved legislation that opponents consider unfair to Icelanders, a quarter of the population signed a petition opposing it, and President Grimsson refused to sign it. The matter will now go to a referendum.
“It is fundamental for a democratic society to listen to the will of the people,” said Jonasson. "We have a saying," he told PSI, "that in times of crisis, the task is 'everyone take to the oars'. But for that to be the case, we all have to be on the same boat. And a few have profited and left, leaving the rest of us with the burden of their mistakes."
How the issue gets resolved in Iceland will not only have repercusions for the future of that country, but for the issue of who pays for the consequences of the financial crisis around the world.
Iceland president adds twist to bank sagaBy Andrew Ward in Stockholm
Financial Times, January 5 2010
It is a drama befitting of the country known for its epic Viking sagas of overseas conflict and domestic feuds. Olafur Ragnar Grimsson, president of Iceland, on Tuesday added another twist to the dispute with Britain and the Netherlands over €3.8bn of lost bank deposits when he refused to sign legislation authorising repayment of the money, which has triggered a downgrade to junk status.
Iceland has been at loggerheads with the two countries since the collapse of its banks in October 2008 wiped out the savings of more than 300,000 British and Dutch customers in the Icesave arm of Reykjavik-based Landsbanki.
The dispute has become a lightning rod for broader debate over the future of Iceland, as perceived bullying by the UK and the Netherlands has turned public opinion against the country’s bid to join the European Union and poisoned attitudes towards the $10bn economic rescue programme led by the International Monetary Fund.
Mr Jonasson’s view is typical of the 60,000 Icelanders – a quarter of the electorate – who signed a petition against legislation passed narrowly in parliament last week to approve the repayments. Most Icelanders grudgingly accept that overseas creditors must be compensated, even if taxpayers are deeply resentful that they have been left to foot the bill for the mistakes of bankers and regulators who oversaw growth in the country’s financial sector to more than 10 times the size of gross domestic product.
But opponents say the terms of the proposed repayments of £2.35bn to the UK and €1.3bn to the Netherlands over 15 years, at an interest rate of 5.5 per cent, were stacked in favour of the creditor countries.
Iceland is subject to EU bank deposit-guarantee rules as a member of the European Economic Area but critics say these have been applied unfairly and want the country’s obligations determined in court.
UK officials criticise such complaints, pointing out that Iceland has been given seven years’ grace with no interest before the first payment is due. Reykjavik agreed the deal in June and won parliamentary approval in August but lawmakers added several conditions tying repayments to economic growth and placing a time limit on the state guarantee. Britain and the Netherlands rejected some of these conditions, forcing Iceland to seek fresh parliamentary approval for a compromise deal agreed in October.
The Icelandic government on Tuesday stressed that the repayments approved in the August legislation would go ahead whatever the outcome of the national referendum that will now take place on the revised bill.
But it is far from clear that Britain and the Netherlands will be willing to drop their objections to the terms of the earlier bill.
Diplomats say it is inconceivable that Iceland could join the EU while in dispute with two member countries and the standoff threatens to derail the IMF-led rescue programme because some of its loans are conditional on settlement of the Icesave issue. It was this threat of international isolation and renewed economic turmoil that caused lawmakers to reluctantly pass the legislation last week by a margin of 33 votes to 30.
Mr Grimsson has risked a political crisis by resisting the will of Johanna Sigurardottir, prime minister, and her coalition. Although the president is head of state and democratically elected, the role is largely ceremonial and approval of legislation is usually a formality.
While critics questioned the constitutionality of Mr Grimsson’s intervention, opponents of the bill hailed it as a triumph of democracy.
“It is fundamental for a democratic society to listen to
the will of the people,” said Mr Jonasson. “I would have expected that nations,
like Holland and Great Britain, which are known to respect democracy, would
understand this.”
Former minister to BBC: Iceland being blackmailed over Icesave
October 4, 2009
The Icelandic Foreign Minister and the country’s former Minister for Health, who resigned on Thursday, were interviewed on BBC Radio 4’s World at One programme Friday lunchtime.
“We don’t like it when we get the International Monetary Fund, the European Union acting on behalf of the British and Dutch governments forcing us to pay what is more than our due,” former minister Ogmundur Jonasson told the programme.
Jonasson said that Icelanders want to pay what they are responsible for paying, but that they do not like British and Dutch blackmail. When asked specifically whether he felt the two countries are blackmailing Iceland, he responded that they are.
He continued by saying that Iceland wants to take the issue to a European court to have the country’s responsibility assessed fairly; but that the British and Dutch are using the IMF and the EU as weapons to force the country to accept more debt than it is responsible for.
Iceland health minister resigns30 September, 2009
Ogmundur Jonasson, Iceland’s Minister for Health resigned his position earlier today in a meeting with Prime Minister Johanna Sigurdardottir. He says he cannot put his weight behind the Icesave deal as the government is requiring its ministers to do. He does not, however, wish for his actions to destroy the coalition.
Jonasson said after the meeting that although he has resigned as a minister, he will carry on his duties as a Member of Parliament. He is an MP for the Left Green Party, led by Minister of Finance Steingrimur J. Sigfusson.
Jonasson said that despite his resignation from the Cabinet, he hopes the current government remains in power as long as possible and that it will bring the successful resolution of the ongoing Icesave dispute to the very top of its parliamentary agenda. “The whole time, I have felt that the Icesave issue and the survival of this government are separate issues,” he told Visir.is.
Jonasson continued that he has no idea who will take over his ministerial role yet, before reasserting the importance of the Icesave issue: “I had hoped we would continue our work before the summer holiday when this huge issue was being dealt with separately from all other party political matters.”
Iceland rebels oppose repayment of £2.3bn owed to Britain
• Individuals and groups resist unpopular debt
• IMF holding knife to our throats, says minister
By Simon Bowers
The Guardian, Monday 28 September 2009
Iceland's centre left coalition government, which swept to power after a banking system meltdown left the country facing bankruptcy a year ago, is under mounting pressure from rebel ministers, opposition politicians and a grass roots protest movement over the nation's commitment to repay a £2.3bn debt to Britain.
The deeply unpopular debt represents the bill Britain is charging Iceland for taking over its deposit guarantee obligations to almost 300,000 UK savers who had money in Icesave online accounts offered by Landsbanki, one of three Icelandic banks that collapsed into bankruptcy protection a year ago.
Depositors included many UK charities, councils and emergency services funds as well as thousands of individual savers.
Honouring obligations to British savers – and a further £1.2bn of guarantees linked to Dutch Icesave deposits – was made an implicit condition in a $6.4bn (£4bn) package of emergency loans Iceland took from the International Monetary Fund and fellow Nordic countries last autumn.
Many Icelanders believe the international community, led by Britain, have forced them to shoulder Icesave deposit guarantees that their small economy cannot afford to meet.
Iceland's outspoken health minister Ogmundur Jonasson, a member of the power-sharing Left-Green party, told the Guardian: "People here want Iceland to honour its international legal and ethical obligations, including the Icesave obligations. But here we are talking about sums equivalent to about half the GDP of the country.
"The IMF is holding a knife to our throat. We have great sympathy with those who lost their deposits but we won't pay more than we are capable of paying."
Icelandic media commentators and grass roots protesters have suggested the price being exacted for the failure of the nation's banks is proportionally many times greater than Treaty of Versailles reparations demanded of Germany after the first world war.
An opinion poll in June found 63% of Icelanders were opposed to the country guaranteeing Icesave deposit accounts.
Jonasson's remarks, which threaten to destabilise the coalition government and could split the Left-Green party, come at a delicate time for Iceland's new administration as it is locked in backroom negotiations with Britain about repayment terms.
UK Treasury officials have made clear they are unhappy with Iceland's proposal that the country's Icesave obligations should expire by 2024 if an amount remains outstanding. Britain wants that date extended. Iceland's finance minister Steingrimur Sigfusson, also from the Left-Green party, insisted discussions with British officials are now about final- ising details, though he confirmed the expiry date remained a potential sticking point.
"I must say it has been the intention of both sides to deal with this in a frank and positive manner."
British objections have also angered Iceland's rightwing opposition Independence Party, which was hounded out of office in February after decades dominating Icelandic politics.
It has vowed to drag the issue back before parliament if Britain blocks Iceland's repayment proposals.
In the midst of the banking crash a year ago, the Iceland's central bank governor David Oddsson – a former prime minister and key figure in the Inde- pendence Party – delivered a television address insisting Iceland could not, and would not, pick up the bill for its failing banks.
"We have decided that we are not going to pay the foreign debts of reckless people," he told state television.
"Placing such a burden on our children and grandchildren would be slavery for other people's fault."
These words helped spark a draconian response at the time from Alistair Darling, the chancellor of the exchequer. As well as stepping in to underwrite Icesave deposit guarantees for British savers, he deployed anti-terrorism laws to freeze Landsbanki assets. He and Gordon Brown described Iceland's attempts to abandon British Icesave depositors as "illegal".
Landsbanki, Iceland's central bank and the government were all placed on an official UK list of "financially sanctioned regimes" alongside Burma, North Korea and al-Qaida.
I'm not sure that the British (or Dutch) worker/taxpayer is very happy to pick up the bill for the mismanagement of Icelandic banks by the Icelandic government. So I doubt whether they will see what Ogmundur is doing in a positive light. At PSI you should be representing the interests of all your members not just a few.
Posted by: Woody | January 11, 2010 at 15:42
Dear Woody,
Thanks for your very welcome comment.
At PSI were bound by one overriding perspective: we as workers have interests in common that cut across borders.
One thing we share in common is the attempt by governments --and those who have used a myriad of deceptive methods to accumulate enormous amounts of wealth at our expense-- to make us, workers, pay for the consequences of their policies.
I fail to see any evidence that British or Dutch workers are going to get any benefit from the fleecing of Icelanders over the next few years. Rather, it is the same bankers, "captains of industry" and their politicians who will, once more, acrue the benefits, while British, Dutch and Icelandic workers foot the bill.
Whoever mismanaged the Icelandic banks, (whether it was the bankers themselves, or as you claim, the government), it certainly was not the average Icelander, who is now being asked to come up with the money that others have walked away with. Wealth does not vanish in thin air.
We in the public sector should be particularly opposed to those policies which would result in the slashing of the public sector in Iceland. And if anyone thinks that any penny taken from Iceland will be used to strengthen public services in the UK or Holland, he or she should follow the news more closely.
So, we believe we are representing the interests of all our members, which do not include bankers, when we support the efforts or our colleagues in Iceland, and any effort to defend the livelihood of all workers, anywhere in the world.
I believe that the best approach is for UK and Dutch workers to adopt the same stance as the Icelanders and refuse to pay the costs of the crisis, fight to get the value that was deducted from our pensions during the financial crisis, and stop any effort at reducing our real incomes and cutting the public services we all need. As I said, wealth does not vanish in thin air. It has only changed hands. And you will not find it under the mattresses of Icelandic workers or workers anywhere.
We should resist being pushed into a nationalist trap.
Thank you for your comment and the opportunity to clarify what, in these times of frustration and confusing information, is probably a concern others share with you.
Please keep offering us your input. It is only through open exchanges that we can all learn from each other's perspective. Most importantly, it is the only way we can forge a common view around which we can work together to build a stronger global union movement.
Posted by: Jorge Mancillas | January 11, 2010 at 16:14
Despite all your words you don't get the point - and you clearly don't live in the real world!
The British government (ie the British worker/taxpayer) has paid out over £3 billion to people who had savings with Icelandic banks - that is money that could have been used to invest in public services.If the money is not returned then British workers will either have to pay increased taxes, see their services cut or, of course, lose their jobs. The Icelandic government which is responsible for setting the rules by which Icelandic banks operate - and for overseeing their activities - is answerable to the Icelandic people, so it must be with them that the bucks stop. As you say wealth doesn't just vanish into thin air so it is up to the Icelandic government/people to pursue the negligent bankers in order to retrieve their losses.
This has nothing to do with nationalism and everything to do with equity (not forgetting that on a GDP/capita basis Iceland is a far richer country than Britain). The British public purse has lost £3 billion as a consequence of Iceland's failures - if it is not the Icelandic government that is going to make up that loss then who is?
Posted by: Woody | January 18, 2010 at 16:28