The dark stain of Kreppa
By guest contributor Michael Schulz. A social scientist who has worked for 30 years as a humanitarian manager in development, natural disasters and conflict on missions for the Red Cross in Africa, Asia, the Middle East, Russia and Trans-Caucasus and was i.a. based in Ramallah for two years. The last 5 years Michael was a diplomat with a Red Cross delegation in New York, accredited to the UN. – His Icelandic connection is through his partner who gives Michael an ‘Icelandicness’ and the authority to speak of Iceland though seen through his European eyes. Michael takes a keen interest in all aspects of the ‘Kreppa’ (Icelandic for ‘crisis’) in a philosophical, historical, political, socio-economic and cultural context.
Isn’t it amazing: the Icelandic elites are being pilloried. Former large shareholders and CEO’s of banks, so called banksters, amongst them many who also owned large chunks of the Icelandic economy and media, politicians, members of parliament, “political” ministers, governors of the Central Bank, et al are being critically targeted by the special prosecutors, social media and the general public, not least the voters in elections.
At long last the big players and not merely the bystanders seem to be held accountable. Their criminal acts, corruption, un-ethical and immoral deeds have finally rendered them “vulnerable” to justice, both legally and politically.
Of course, the vast majority of the vulnerable are all those who had fallen victim to manipulation (some might call it marketing) by banks that had for example talked them into high risk, outright toxic credits, indexed or foreign currency loans, to buy property they couldn’t afford or luxury cars they didn’t need. The property prices were based on virtual not real value; the limousines and sports cars were unnecessary as there are no real highways to drive them in Iceland.
These are the people who did not so much lose illegitimate fortunes but ill-aspired affluence transcending Icelanders general prosperity. True, all could have been sceptical and questioned the origins and legitimacy of all those unexpected riches. Instead they indulged in a frenzy of consumerism, with luxury brands topping the lists.
But, it has to be said, being excluded from the elite’s exclusive circles it was near impossible to see through the bubble or net that had been cast over the entire society. Economists, the experts, for example, didn’t see that the bubble was about to burst – did they? Regulatory authorities did not provide oversight – did they? Besides, the ideological climate and a policy of laissez-faire was such that the excesses ruled over balanced supply and demand.
All in all up to 35% of Icelandic households are seriously hit by debt. Some will manage thanks to remainders of their former prosperity. Icelanders are a resilient people. But others will become the newly poor as opposed to the nouveaux riche.
Then there are the vulnerable, the people who did not lose ill-aspired affluence but lost a livelihood as they were on the fringe of relative prosperity and social security. They are poor.
The poor they are not one iota concerned whether their poverty is measured in relative or absolute terms. Their poverty is not only one of socio-economic terms as they lost employment or are a single parent or are elderly or old. For many poor their status is aggravated by personal, physical and/or mental adversities. And their social status is such that they are deprived of coping mechanisms.
Nowadays food security is an issue for many Icelanders. The charity Fjölskylduhjálpin alone (there are also a number of other charity organizations) provides between 400-500 families, roughly 1200 individuals, with weekly food rations. That’s about triple the number compared to before the crisis. The charity is still not able to serve all those who apply for assistance.
It is difficult to assess the number of families and individuals in need of immediate humanitarian assistance. Understandable albeit false shame and pride prevent many to register as there is social stigma attached. But, be it seems a reasonable estimate that 10000 families, 27000 individuals, now live in dire straits in Iceland.
Funding and donations in kind do not cover needs. Without volunteers recruited from amongst the beneficiaries the charity couldn’t function. The premises from which Fjölskylduhjálpin operates – ironically the historical location where the now bankrupted supermarket chain Hagkaup was started – have to be rented from Reykjavik City for annually ISK 1.2 mill. – almost half the annual amount (ISK 2.5 mill.) the City grants the organization.
To date, just over one and a half years into the crisis, it seems depressions or suicide rates are not on the increase. But in Iceland, with a population of just over 300 000, eventual trends might start on a miniscule scale, detectable and readable only over time. By contrast, psychiatry and psychology practitioners today report a significantly increased “pressure”, as more people seek help because of i.a. anxieties, fear, stress and anger.
Iceland is a small nation. Perhaps its national pride or misguided chauvinism when one hears there are needy and poor but(!) they are only very few and official welfare helps!
One wonders: Does it make a difference if the poor are only few? What about the proportionality of figures or are about 27000 individuals or almost 10% of a population of roughly 300 000 enough?
Welfare helps? Of course it does. It better does. But is it a generous gift from society or authorities? Isn’t it a “natural” entitlement, indeed a human right!?
Quantifiably, today’s monthly welfare support stands at about 125 000 ISK (leaving aside inflation, tax increases, etc.). Quantifiably, it has also been established that in today’s Icelandic society one requires monthly ISK 180.000 – ISK 220.000, say, rounded up and down, ISK 200.000 to make a living.
ISK 200.000 minus ISK 125.000 thus leaves a balance of ISK 75.000.
ISK 75.000? Yes, this amount marks the dark stain on the downside of Kreppa!
The authorities have argued social security can’t be increased because there was no money in spite of and because of millions being spent to repair a criminally wrecked financial sector and turning around the economy. How much do only the negotiations around the Icesave case cost in – say – salaries, legal fees, travel costs, mounting interest rates, etc.?
Besides, if the poor are the few, isn’t ISK 75.000 only a low sum per individual per month – compared to spending billions elsewhere?
There is no upside to the downside of Kreppa – except perhaps the return to social values, family, friendships and knitting. But there are the poor and that dark stain. The authorities should recall the ethical and moral failings of the past. They should understand that any society is only as strong as its weakest member and they should seek to wipe away that stain.
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