Sigrún Davíðsdóttir's Icelog

Everything is relative, also angst

with 3 comments

From 1998-2000 I lived in Denmark and followed how things evolved both there and in the Nordic neighbouring countries. Outside, these countries seemed an oasis of tranquillity, peace and harmony though that feeling was less prominent inside. Of course, there were a lot of problems to be discussed and solved at a closer look – and it is that closer look that colours the public debate.

In the summer of 1992 I spent some weeks on an Italian beach immersed in hectic, loud and lively Italian family life. One of these summer days, the Sicilian judge Paolo Borsellino was assassinated, only a few months after the assassination of his colleague Giovanni Falcone. These were tense and tragic times and the uncertainty and power vacuum following spectacular corruption cases, the rise of “mani pulite” and the collapse of the Italian “partitocrazia” was palpable. There were even rumours that the army was thinking of asserting itself. Returning home to Copenhagen I opened the door. The Swedish newspaper “Svenska Dagbladet” was on the doormat. The main headline was “Bad ventilation in public places” – surely, this can only make headlines when all problems have been solved.

Moving to the UK in 2000, I looked back at these countries with certain nostalgia – compared to most, almost all, other countries the Nordic countries just seemed to have solved all problems. I nodded approvingly at the recent Economist’s front page coverage of the Nordic countries as a supermodel, excluding Iceland, embodied by a Viking. I was also glad to see the use of the term “Nordic” – a native English speaker once told me this term was not English. Well, it has now turned English though in the Nordic countries themselves the term includes the five countries – Denmark, Finland, Iceland, Norway and Sweden.

There is a good case for not including Iceland among the Nordic supermodels – the social structure is different, so is the value system. In the four other countries, social democrats have been the political architects. In Iceland it has been the conservative, the Independence Party. And so on.

Yes, there is much to be learnt from the four Nordic countries, in particular the natural inclination to egalitarianism and taking it for granted that society is made up of men and women and should be accommodating to both – an attitude woefully lacking ia in the UK. Research after research shows that such societies thrive and grow and it is not prohibitively extravagant to expect these fundamentals to be in place. Which of course doesn’t abolish political dispute but that is what democracy is for – to discuss these issues in a more or less civilised way and reach a workable conclusion and compromise.

My own country made the front page of the FT February 5, also with a Viking, this time a statue holding the Icelandic flag, embodying “The Icelanders’ angst; Saga of a society in rehab. Analysis.” The feeling is more chatty Hello than stern FT; the analysis done not with graphs and statistics but with mini portraits of seven Icelanders, all well known in Iceland. The point is to show that in spite of good economic numbers – such as unemployment falling from a peak of 9.2% to 5.7% (or 5.6% according to Iceland Statistics) and a growth of ca 2% – Icelanders are still “struggling, some are angry and some are keen to move on.”

Right, there is the whole gamut of feelings, as in most countries but angst? No, I don’t think angst is the prevailing mood among Icelanders and even much less now than a week ago when the EFTA Court ruled on Icesave. “Not enough done” has however been a common theme in the political debate. The government has been spectacularly bad at taking credit for the recovery that has, in spite of problems, taken place, giving the opposition plenty of space to spread its own version of too little, too late, wrong and bad.

Recently, I was on the Pat Kenny show on Irish Rte, explaining the Icelandic 110% way, the extensive write-downs of mortgages, one of the measures to get things moving again. Kenny asked if this meant that had he a mortgage of €400 and the value of his property was only €200 would he then get his mortgage written down to €220. Yes, exactly. There was a few seconds’ stunned silence. This would be seen as quite something to do, universally and over the line in Ireland or in any other country. In Iceland, people shrug their shoulders; yes, it’s good – but it’s not enough. Not for everyone.

Right, it’s not the panacea solution for everyone but it is quite helpful to many. The same goes for changes in bankruptcy law, to shorten the time of bankruptcy to two years and some other measures. Daniel Gros, CEPS, thinks that small countries like Latvia and Iceland do not have much to teach bigger countries re austerity. He might have a point in general but some of the measures taken in Iceland could prove of use to others, ia Ireland and Spain.

Icelanders are notoriously good at spending. The Icelandic term is “eyðslukló” – “spending claw” – and the Icelandic spending claw is now at it again. Going abroad, buying this and that, thereby showing some optimism. The spending claw is certainly not showing any sign of angst, not even now, in mid winter. According to Gallup Iceland “National Pulse” (Þjóðarpúlsinn) the mental state of the nation is slightly down from summer – as normally happens during this naturally dark time of the year – but it peaked higher in July last year than the previous year and is now also slightly higher than same time last year. Consumption of smaller goods was ISK5bn over Christmas a year ago, this time ISK7.1bn. And so on.

Plenty of things Icelandic in the international media recently. “Have you seen the front page of the International Herald Tribune,” an Icelander asked me in Brussel last Friday. “It’s the most beautiful IHT front page I have ever seen.” Right, the Esja – the majestic mountain cuddled up under white clouds on the other side of the bay from Reykjavik – was naturally well at ease on the front page and so was Olafur Hauksson, the special prosecutor and poster boy of bankers and financiers’ investigations in Iceland. The headline, “Iceland, Fervent Prosecutor of Bankers, Sees Meager Returns.”

I am not sure what the “meagre returns” mean here. The Office of the Special Prosecutor, headed by Hauksson, was set up in early 2009 with no staff and nothing. Now, three men are in prison related to financial dealing before the collapse. Some high-placed managers and large shareholders have been charged but these cases are still being processed by the Courts. HSBC has admitted to money laundering going back to the early 2000s. No one has been charged. It is only recently that bankers involved in Libor rigging, also going back number of years here in the UK are being investigated – it seemed at first there would only be fines. The investigations in Iceland are going far slower than most would like – but the bankers and other major players in the financial boom in Iceland are actually being investigated. That is more than can be said for most countries.

Is it necessary to make criminal investigations into what went on during the bubble years in Europe? Some say not, that one should look forward and not backward. I can’t see that one excludes the other. Human beings are not one-track beings and society can put efforts into both. Moreover, I think that the palpable anger in countries like Greece, Spain and Ireland – though expressed in different ways – also stems from the fact that little has been done to throw light on, investigate – and prosecute where appropriate. In addition, there is the immensely illuminating report of the Special Investigative Commission, set up at the behest of the Icelandic parliament, whose report was published in April 2012. No country has recently done comparable investigation.

It is perhaps the dark, cynical and prodding mind of editors that come through in the headlines mentioned above – there is often discrepancy between articles and headlines – but when their behaviour is scrutinised Icelanders do not seem to be particularly angst-ridden. Though the OSP investigations are taking time they take less time than some of the major SFO investigations. The judgements in OSP cases so far indicate that at least in a certain type of cases, of which there will no doubt be more, sentencing is likely, in some cases severe sentencing. The OSP might certainly experience some setbacks; charges might be thrown out, those charged found not guilty but at least Icelanders can’t say that nothing is being done in bringing bankers and financiers to justice. Too big to fail, to important to jail doesn’t quite hold in Iceland.

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Written by Sigrún Davídsdóttir

February 6th, 2013 at 10:04 pm

Posted in Iceland

3 Responses to 'Everything is relative, also angst'

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  1. Thank you for the excellent reporting. Normally the law is an ass. This time common sense and the law came to the same conclusion. Those of us involved with Kaupthing knew that their business model would fail, to say the least. We told the FSA, who ignored these warnings, and only needed to look at the public facts to come to the same conclusions. The FSA, Treasury and Bank of England had far more resources and powers than the Icelanders. So who was more to blame? To me it is a no-brainer. The really difficult question is why have none of those involved in the UK been even reprimanded, and Sants even been knighted?
    There is growing recognition that Hestor has not addressed the fundamental cultural issues at RBS any more than the old and the current board has at Barclays. Our politicians are so in awe/debt to these bankers, that they are still avoiding the issues. All credit to the Icelanders for addressing the real issues.

    Tony Shearer

    7 Feb 13 at 5:47 pm

  2. “The really difficult question is why have none of those involved in the UK been even reprimanded …” :
    That is a question the former depositors in KSF Isle of Man (many of whom had chosen to place their savings with The Derbyshire) who suffered the consequences of the Kaupthing debacle continue to ask.


    7 Feb 13 at 9:03 pm

  3. Link to the Pat Kenny radio show appearance – segment entitled “Europe’s Eye on Ireland”:

    What Goes Up...

    11 Feb 13 at 11:20 am

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