How the men behind Iceland crisis are still calling the shots

Archie Bland
Friday 08 January 2010 01:00

As Iceland convulses yet again over the saga of its £ 3.6bn debt, there are plenty of people in Reykjavik who say that it's time for a new government. The current lot have had their chance to solve things, they say, and it plainly isn't working.

Yet there is something unfair about this rebellion: because the current government played no role in creating this mess. Indeed, some of its members were among the few outspoken critics of the era of unbridled capitalism that led to the parlous situation in which Iceland finds itself today.

Consider, stranger still, the fate of those who cheerily paved the way for the bankers to bring Iceland to its knees.

Chief among them is David Oddsson, the prime minister who oversaw the privatisation of the banks that led to the meltdown in 2003, and then went on to spend four years as governor of the central bank.

If that transition seems unlikely enough for a man with no economic training, his more recent move is similarly perplexing: Oddsson is now editor of Morgunbladid, an influential national newspaper. It is as if Tony Blair had stepped down to succeed Mervyn King, only to jack it in in favour of the top job at The Independent.

Sure enough, Morgunbladid's treatment of the country's finances has caused some observers to raise an eyebrow. In a regular unsigned comment piece and in the newspaper's editorials, Oddsson has evaluated the state of affairs in a rosier tone than many can share.

Yesterday was a case in point. As the country agonised over what most people have seen as a brutal foreign response to the news of the referendum, Morgunbladid saw things differently. "A harsh reaction abroad?" the editorial asked. "In light of the situation, the coverage has been incredibly positive."

Oddsson's voice could also be heard in the assertion in his paper that no one abroad is shocked at what happened in Iceland – that people overseas entirely understand the difficult circumstances the government faced, and to suggest otherwise is simply scaremongering.

Only slightly less remarkable than Oddsson's story is the continued influence of one Hannes H Gissurarson, a professor of political science who was hugely influential in the staggeringly rapid liberalisation of Iceland's economy.

In 2001, he wrote a book with the memorable and possibly ill-judged title, How Can Iceland Become the Richest Country in the World? His prescription was to privatise everything, including the fish; it was followed to the letter, and we all know what happened next. And here he is in The Wall Street Journal yesterday, almost entirely unrepentant. "Many Icelanders are dismayed by the feebleness of the present Icelandic government," he reports poker-faced.

Gissurarson's gobsmacking cheek, and the fact that so many of his countrymen agree, is perhaps a reminder of how short political memories are. But elsewhere in the piece he has a point that makes uncomfortable and plausible reading for British eyes.

"A lot of the damage done can be directly attributed to the actions of the British government," he writes. "Should the British not solve the problem they themselves created?"

That is a distorted view of reality, of course, but not without a grain of truth; and British officials may reflect, as their repayments appear in jeopardy once more, that with a less punitive approach the whole thing might have been settled by now.

Oddsson and Gissurarson may be the villains of this piece, but a quick flick through an anthology of cartoons from last year's newspapers in a Reykjavik bookshop suggests that someone else is blamed here. Almost as often as any domestic figure appears an extremely unflattering image of the man Icelanders loathe nearly as much as many Britons do: Gordon Brown.

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