Friday, March 06, 2009

Iceland and the saucepan revolution



Frontline article by Christophe Chataigne, March 2009

"We managed to topple the government using the best of non-violent protests, civil disobedience and political satire," - 24 year old receptionist Guðjón Heiðar Valgarðsson encapsulates what many of the protesters felt when on 26 January the then prime minister, Geir Hilmar Haarde, announced the resignation of his government.

"The Saucepan Revolution" as it is called, because of the pots and pans protesters had with them, made Haarde the first leader to resign as a result of the global economic crisis.

Haarde's right wing Independence Party had been in power for nearly two decades, steering Iceland's economy away from the fish industry and geothermal energy to finance by deregulating the banking sector in the late 1990s.

But in the autumn of 2008 Iceland felt the full impact of the crisis. Its currency, the Krona, collapsed. Banks' debts are ten times Iceland's gross domestic product and the people who were encouraged to take low interest mortgages in foreign currency are now unable to meet their repayments. Inflation is now over 20 percent and unemployment is rising dramatically.

The human cost of the crisis is revealed by some churches offering food for a small fee and the under-reported increase in suicides. Valgarðsson's grandfather told of two of his friends who had hung themselves because "they were plunged into debt". One man even asked a protest organiser to build a gallows outside parliament so that a member of his family could hang himself in public.

One person central to Iceland's shift to finance is Davíð Oddsson. Oddsson was Iceland's longest serving prime minister before he became chair of the Central Bank of Iceland. Over his reign as prime minister he enforced neoliberalism on Iceland with a programme of tax cuts, large scale privatisation and "reforms" of the banking sector.

This saw a handful of people become millionaires. Father and son Jóhannes Jónsson and Jón Ásgeir Jóhannesson transformed their small retail chain, Bónus, into a near-monopoly (explaining why one of the protesters climbed onto the roof of parliament and replaced the Icelandic flag with Bónus's piggybank logo). They also took control of many high street retailers through their investment company, Baugur.

The scale of the crisis in Iceland hit the population when Haarde announced that the country was near bankruptcy. The population's fury at the government didn't take long to express itself. People started to converge on the tiny parliament to protest at the recklessness of their government. "I was outraged at the ridiculous wages, bonuses and special deals a small portion of the population was being rewarded while at the same time Iceland remained one of the most expensive countries to live in," said Valgarðsson. The weekly protests became the biggest to hit Iceland since the ones against the country joining Nato in 1949. At their height the protests involved 10,000 people in a city of 120,000.

After the fall of Haarde's government a new minority government took over, led by the Social Democratic Alliance and the radical Left Green Movement. This made Social Democrat Jóhanna Sigurðardóttir the world's first openly lesbian head of government. Their main task is to prepare the ground for new elections on 25 April.

But there are divergences between these two parties, especially around two issues. Iceland has received a $10 billion financial aid package led by the International Monetary Fund (IMF) - the first Western country to ask for IMF help since Britain in 1976. While the Social Democrats welcomed the conditions attached to the loan the Left Greens are more cautious. "Of course we are worried about the conditions," Drífa Snædal, the secretary of the Left Greens, told Socialist Review, "but the good news so far is that the IMF does not demand strong fiscal cuts as it has to other countries in the past." Another disagreement is over Iceland joining the European Union - with the Left Greens opposed to it.

Election polls suggest the Left Greens will become the biggest political party and lead a new coalition. This reflects the protesters' hope of a shift away from neoliberalism. "Right now we have a chance to build a truly revolutionary society, which aims to benefit the whole of it, not just a privileged few," said Valgarðsson. That opinion is also shared by the Left Greens. "I think the situation in Iceland is just the beginning of what will happen all around the world," said Snædal, "I hope this is the end of pure capitalism and we will see the rise of more humane policies. People are getting more interested in politics and want to have more influence on their society."

But whatever the outcome of the next elections, or the conditions imposed by the IMF, the people of Iceland had better keep those saucepans handy if they want to "steer this country away from the absurdities of the past", as Valgarðsson puts it.

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