UPDATE at 18.53: Icelandic timeline
UPDATE at 17.23: The Icelandic President talks to Newsnight
An avoidance of responsibility, or democracy in action? Analysis of the Icelandic President’s declaration to the people suggests the latter, with the words “people”, “passed”, “referendum” and “nation” occurring frequently. Conversely, the terms “international”, “British”, “Dutch” and indeed “Icesave” are rare.
The President has vetoed a second round of legislation to repay British and Dutch governments for their (advance) reimbursements to Icesave account holders in their countries. (NB. Terms had largely been agreed on 5 June, 2009, under which the Icelandic Guarantee Fund would repay depositors €20,887.) The President has asked for a referendum on the issue, saying: “The people are the supreme judge of the validity of the law”.
This is perhaps unsurprising. But three things stand out. First, at a time when many eyes are on Iceland, it is clear that the audience for this speech will be international and not just domestic, but very little attempt is made to engage the aggrieved parties. Second, the President argues (wrongly, in my view) that a referendum is the only route to international harmony. And third, Iceland is a representative democracy, in which representatives are elected to govern in the best interests of the people, which is decidedly different from enacting the majority will on any given subject.
It is hard not to feel sorry for a tiny country grappling with the risks taken by international banks operating outside their borders. Neither Icelandic taxpayers – not British or Dutch – have done anything wrong. In theory it is shareholders who are responsible: but since current law states that a share can never be worth less than zero, and banking etiquette demands moral hazard be eliminated, it is taxpayers – somewhere – who will lose out. The President’s speech has not helped because this issue is global and cannot be settled by the view of Icelandic voters.
* NB. Althingi is the Icelandic parliament
Related debate: The Economists’ forum is having an Iceland debate
