Sigrún Davíðsdóttir's Icelog

As expected, there has been a reshuffle among the Icelandic advisers on capital controls – a new group has been formed. Freyr Hermannsson from the CBI has been left out. As before, the new group is led by Glenn Kim, with two vice chairmen. Sigurður Hannesson, whose remit as adviser on capital controls was announced already on January 9 by his employer MP Bank, is one of the two chairmen. Why MP Bank stepped out of line and announced Hannesson’s move before the government did is still unclear. After all, the CEO of MP Bank is married to prime minister Sigmundur Davíð Gunnlaugsson’s sister so the coordination should have been simple.

Hannesson is a close friend of prime minister Sigmundur Davíð Gunnlaugsson and said to have been a strong influence on Gunnlaugsson for a long time. Allegedly, Hannesson talked Gunnlaugsson into accepting that the loan write-down, the so-called “correction” could not be the ISK300bn as Gunnlaugsson had mentioned earlier but only ISK80bn. Also, Hannesson is said to have explained the importance to the PM of solving the dispute regarding the LBI agreement. Hannesson, a soft-spoken mathematician is unassuming and quiet in public but jolly among friends. He is generally popular and respected and seen as an amenable person.

A trusted lieutenant of the PM Hannesson is seen as someone who could add the power of decision-making to the new group although the word “negotiate” is still not uttered by anyone in power – no plans to negotiate with creditors though that will have to happen in some way if a reasonable solution is to be found any time soon. “Hannesson seeks solutions in every case and being a banker he will understand the environment of the creditors,” one source said.

With Benedikt Gíslason, an adviser to Bjarni Benediktsson minister of finance and leader of the Independence party, as the other vice chairman to division of power is taken care of at the top; Glenn Kim has the leaders’ representatives on each side. Gíslason is already tried and tested and enjoys the trust of Benediktsson. Gíslason’s demeanor is similar to Hannesson, a quiet and soft-spoken person.

Eiríkur Svavarsson remains on the group. Seen as somewhat dogmatic and stuck in the Icesave dispute, where he was fiercely against negotiating and supported the EFTA Court path, he is the only lawyer, apart from Ingibjörg Guðbjartsdóttir from the CBI. Among the new-comers he will enjoy a status as veteran of the process since the PM set up the first but at the time unannounced advisory group in November 2013. In addition to these five there are Jón Þ. Sigurgeirsson from the CBI where he runs the governor’s office and is generally seen as close to governor Már Guðmundsson.

“New phase towards lifting the capital controls” is the headline for the Ministry of Finance press release announcing the new group. Up until the announcements there were speculations and conflicting statements as to what would happen. “There is one thing today and another tomorrow,” one source close to the process said.

Björn Valur Gíslason, an ex-MP for the Left Green, has posted a list on his blog of quotes, linked to media coverage, by the PM and Benediktsson where they have been promising to lift the controls very soon ever since they came to power. It is a good revision of big words and broken promises, so far. In August 2013, just after coming to power the PM announced he would appoint an ” abolition” manager to abolish the controls. This job was never filled and it took months until the first group was appointed. Recently, after the PM said there would be decisive action this month, Benediktsson said it really did not matter if something happened before the end of this month or next month. Somewhat comic, with all these earlier promises in mind.

With the new group in place it seems likely it will take some time to study the options as stated in the press release. The new here is that there is something to study. As I’ve pointed out earlier, spring might seem some plans sprouting.

*Updated from an earlier version.

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