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Iceland Busts the Banksters

Icelanders have become "the world's first rebels against the idea of clearing up after the mess made by a reckless private bank."

John Nichols

March 7, 2010

What if Americans had been asked whether they wanted to bail out big bankers and Wall Street speculators?

How many would have voted "no"?

A measure of patriotism feeds the hope that they would have made their opposition known as resoundingly as have the voters of Iceland, who on Saturday rejected demands by the United Kingdom and the Netherlands–working hand-in-hand with the rapaciuous International Monetary Fund — that the people of the tiny island nation cover losses triggered by the failure of a private bank.

A "yes" vote on Saturday’s referendum would have saddled each citizen of Iceland with $16,400 of debt, with the money to be paid to compensate the British and Dutch governments for expenditures to cover depositor losses stemming from the failure of the Icelandic bank Icesave.

The overall debt of $5.3 billion, or 45 percent of Iceland’s economic output for last year, would have impoverished the country.

As Icelandic President Olafur R. Grimsson explained this week: "Ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, (were) being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers."

Fortunately, Iceland is a democracy. So those farmers and fishermen, taxpayers, doctors, nurses, teachers got to decide whether they were inclined to pay for a bank bailout.

They shouted "no" as loudly as that word could be uttered.

An early analysis suggests that roughly 98 percent of the Icelanders who cast valid ballots rejected the "deal."

Only 2 percent supported it, while 5 percent of ballots were invalidated.

London’s Telegraph newspaper put the vote in the proper perspective when it declared: "On Saturday Icelanders became the world’s first rebels against the idea of clearing up after the mess made by a reckless private bank. This popular insurrection has been watched anxiously by the governments in Greece, Ireland, eastern Europe–and even Britain–concerned that this defiance could become contagious."

It should become contagious.

Despite the threats made against Iceland by the economic powers that be, the reality is that the rejection of this particular agreement will result in a dramatically better deal being reached.

Indeed, in anticipation of the "no" vote, officials in the U.K. and the Netherlands had penned a letter to Iceland’s Finance Minister, Steingrimur Sigfusson, in which they committed themselves to seek a more equitable solution that is in line with international standards.

That fact has caused some to suggest that the referendum vote did not have much meaning.

In fact, as Iceland’s former Health Minister, Ogmundur Jonasson, who resigned last fall in protest of Icesave deal-making, said: "This is a dispute between people and capital, property rights and human rights. Maybe we need a little bit of revolution–this is why many people in finance dislike the referendum, because it is symbolic. It is people questioning the rights of capital."

The debt demands on Icelanders amounted to nothing less than "economic warfare," said Birgitta Jonsdottir, who was elected to parliament last year as an anti-bailout candidate.

On Saturday, Iceland fought back.

Their "little bit of revolution" should spread to other countries–including the United States, which has saddled taxpayers with huge debts in order to bail out big banks and bad speculators.

The point here is not to say that there must be no consequences for bad policies on the parts of banks and governments. Of course, there are soome responsibilities that must be met.

But the people who pay the taxes have a right to be a part of the decision-making process. And, in a democracy, voters have a right to say "no" when they recognize that they are being forced to pay for the dirty deals of the big bankers and the failures of governments and international agencies that were supposed to regulate the bankers.

"What you are seeing here is an outcome of 97 percent in some districts–98 percent in others–voting no," said Eirigur Svavarsson, a lawyer who headed a group that opposed efforts to impose a deal on Iceland, as the results of the referendum vote were reported.

"Democracy is a strong tool," explained Skulason. "We are saying this is an unreasonable agreement and we want a new agreement."

That’s a reasonable demand–for Icelanders and Americans.

John NicholsTwitterJohn Nichols is a national affairs correspondent for The Nation. He has written, cowritten, or edited over a dozen books on topics ranging from histories of American socialism and the Democratic Party to analyses of US and global media systems. His latest, cowritten with Senator Bernie Sanders, is the New York Times bestseller It's OK to Be Angry About Capitalism.


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