Iceland privatized its banking system in 1997 following policies inspired by Milton Friedman under the leadership of then Prime Minister David Oddsson, a process that has been heavily criticized for literally giving the banks to the friends and members of the Independents Party and the Progressive Party. In retrospect this is nothing new; these same parties have through the last century shared evenly the wealth and resources of our small country.
Since 1997, the banking system has grown more then anyone could have imagined. In the end it was 10 times the size of Iceland’s Gross Domestic Product. No one seemed to notice when the bankers went on a shopping spree, buying property and corporations all over Europe. The media, the president and the parliamentarians were all cheering them on, and anyone who dared to call out against the madness was instantly ridiculed by the same people.
When Robert Wade, Professor of London School of Economics warned our government in early 2008 of the dangers ahead, our PM claimed Wade’s article was no more relevant then a opinion letter in the Icelandic tabloid DV. These are the answers the Icelandic public has grown used to from our leaders: pure arrogance. In a speech on Monday, Mr. Wade described how the government planned to turn Iceland into an international banking center, a plot doomed to fail in his opinion, a plot the Icelandic public was widely unaware of.
But there might be hope for Iceland. There are grass-root movements forming; people are calling for a new constitution and a new social democratic system. Today, activism is flourishing in Iceland; the number of groups, movements and demonstrations has never been greater. Hopefully, the days of financial capitalism are over and we can focus on creating real value, producing and manufacturing.
Meanwhile the Social Democrats are determined to use the recent economic crisis to get Iceland into the Eurozone. In the view of Ingibjörg Sólrún Gísladóttir (Chairman of the Social Democratic Alliance), it is the only way. The times when a small currency like the Icelandic Krona could keep things floating are gone and will never return. Even more people see the EU as a change of moving from the old political system which has been heavily infected with nepotism and corruption, a system that has largely been mistaken for a Scandinavian welfare state. We have been Americanized under a neoliberal, unregulated monetary system that has crashed. It is time to build a new system, a new Iceland.