structural adjustment: Icelanders have not said their last word…

Jérome Duval, Olivier Bonfond, CADTM

After plunging the peoples of the South in poverty in their countries into debt, the IMF (International Monetary Fund) is now tackling the European peoples, hit hard by the international capitalist crisis. The ratings agencies, tools at the service of the financial oligarchy, playing for their full part in the race to profitability in the debt market, not hesitating to financially punish the slightest misstep countries weakened by crisis. But Icelandic, imposing a referendum on an irresponsible and dangerous act, do not intend to submit as easily. The fight is certainly unbalanced, but it's not over ...

A neoliberal model that collapses

Like many so-called "rich", Iceland played and lost to the great game of neoliberalism. Considered one of the richest OECD countries, Iceland has seen its unemployment rate go from 2% before the collapse of the financial sector in October 2008 at 8,2% of the labor force in December 2009. Today, this small country of 320.000 people without an army, suffered the brunt of the financial crisis, including a debt that exploded near 320 % you PIB one 2009 |1| .

After being privatized 2003, the three main banks (Kaupthing, Landbanski a Glitnir) had to be urgently re-nationalized in October 2008 following the implosion of the banking system. The exchanges on the stock markets were even suspended for several days in the Reykjavik Stock Exchange. The State, who paid millions of euros for the takeover of the bank |2|, is on the verge of bankruptcy and warns that it will ensure that the deposits made in Iceland. Panicked, Foreign investors demanding their money placed in branches in London, Berlin, The Hague or Brussels. After setting the case of 34.000 German investors with Kaupthing Bank, the largest bank in the country, London and The Hague compensate their nationals affected by the collapse of the Icesave online bank, branch of Landsbanki. So, a few 320.000 Dutch and British savers recover some of their investment through the contribution of their State. What a great deal for the private sector : on one hand the responsibilities of Icelandic bankers and their branches abroad evaporate through the nationalization of their debts, that is to say, the recovery thereof by the Icelandic taxpayer, and, on the other hand, British and Dutch speculators see their risky investments guaranteed by their respective States ...

A question arises : how the state Icelanders, given the state of its debt, can it repay Britain and the Netherlands without endangering its population ? Yet it is that are pressing the European Union, the IMF and the countries concerned : Iceland must repay whatever the human cost. The UK and the Netherlands who insist on being given priority over other creditors, refuse to compromise on the amount to be recovered.

A law imposed on the sly and making insulting the people of Iceland

austerity, Unemployment in explosion, aggressive attitude of the IMF and the EU, ... these elements cause a kind of shock in Icelandic citizens. For many months, demonstrations as we had not seen in over fifty years in this country are linked. Like that of many social movements facing the crisis in the world, the message is relatively clear of Iceland : " crisis, they pay it themselves ", "They" are of course responsible.

It was following this popular pressure that Prime Minister, Geir Haarde, said end 2008 that "there are many legal arguments that justify not paying". At the same time, Parliament passed a resolution announcing that the reimbursement would be conditioned to the "ability to pay" |3| from the country. What concern, if not anxious, donors, the IMF. These act then their weight behind the scenes and reverse the situation quickly and surreptitiously : a compensation law, loi dite Icesave |4|, was approved on the night of 30 the 31 December 2009 in a very narrow majority (33 votes to 30 against) by Parliament in full year-end party. Next IMF advice, This law provides for the opening to international aid, rapprochement with the European Union in view of future membership and restitution by the State of 3,8 billion of public money to the Dutch and British governments (1,3 billion euros in the Netherlands and 2,5 billion in the UK). The fact that Iceland can, by this law, repay a debt representing nearly 12.000 per citizen, equivalent to near 40% of the GDP of the island 2009, immediately reassures markets and the rating agency Standard & Poor's is quick to raise the outlook for the rating from negative to stable Iceland. |5| Recall that the credit rating agencies exercise a real discretion over government finances by directly influencing risk premiums and interest rates : "richest" and most creditworthy are rewarded for good grades (AAA, for example), acting downwards on rates and therefore on the amount refunded. On the contrary, countries said 'poor', high risk insolvent, receive poor grades and have to repay more interest in return for investment deemed "risky".

The people demand a referendum

President Olafur Ragnar Grimsson, after postponing the signing of this law by supporting need time to promulgate, moved back 2 January 2010 a petition of more than 56.000 signatures, nearly a quarter of the country's voters, asking to reject this law and submit it to a referendum. Magnus Arni Skulason, responsible for the protest movement, explained during the presentation of the signatures : "This is how we handed him the petition, asking him to reject Icesave bill. Just the interest rate linked to the repayment would turn our health system for six months. " |6|. It seems that public pressure has paid off since Tuesday 5 January 2010, President ad : “I've decided, on the basis of Article 26 of the Constitution, submit the new law to the nation”. So, as provided in the Constitution in case of refusal of the president to enact legislation, it will be submitted to a referendum. Consultation to be held on 6 mars 2010.

The sanctions are immediate

This would let the citizens decide their fate, while there is a good chance that this unjust law is denied ? Financial markets, always watching, react like clockwork and Standard & Poor’s menace, this time, to lower the country's rating, while Fitch, one of the other three major rating agencies, degrades (of BBB- to BB +) with the consequences we know : increase in amounts to be reimbursed for a country with payment difficulties, incentive to make new loans to repay the old, for, in fine, cause an acceleration of the "snowball effect" of debt.
Likewise it imposes its structural adjustment to the South since the debt crisis 1982, IMF now dictating its terms or "austerity measures" to European governments, in order to prioritize the repayment to creditors left amputating social spending for education, health, the necessities subsidies, etc.

IMF and EU, same fight

Given the perilous situation in Iceland, the IMF and the European Union play their weight. The IMF's "socialist" Dominique Strauss-Kahn, who never had much at its disposal to lend to countries in trouble, waiting to be assured of repayment to unlock a loan tranche as part of a bailout 5 billion mounted in October 2009. Long before the adoption of the law by parliament, the ultra-liberal European Union warns that it will open more and more airtight in case of submission via repayment to creditors. "The European Commission has clearly taken up the cause of the United Kingdom, demain am President Indique dès le mois de novembre [2009] there would be no European aid until the Icesave case would not be resolved " (…) "Europe and the IMF was about to perform a feat : swallow a country whose HDI (Index of human development) had climbed a few decades at the highest world level to the level of poor countries ... Consequence : Icelanders, for the most highly qualified and multilingual and working a lot with the Nordic countries, they are very easily assimilated, already starting to emigrate (8.000 of them golds already left, which is far from negligible) » |7|. Iceland who had filed in July 2009, an EU candidacy application, sees his compromise accession process. Early January, Spanish Foreign Minister, Miguel Angel Moratinos, whose country has just taken over the rotating presidency of the E.U., pounds : “I hope that the Icelanders see the EU as their future project.” |8|

The continuation of the IMF credit line and the accession to the European Union ultraliberal therefore depend on the repayment of unpayable debt Population, debt, one more time, do not concern since it is a private debt became public as a result of bank failure. Like always, socialization of losses and privatization of profits is a leitmotif of capitalism. also be noted that there has never been as full or partial in the global banking sector nationalization since they are in trouble ...

The media manipulation starts

In such a context of crisis, suspects is the outcome of a referendum : Icelandic whose quarter of voters already said he refused to pay a debt probably immoral and unjust reject the text. To discourage, the media machine is switched : the remoteness of the IMF or non-membership of the EU is unthinkable, a danger that the daily "reference" French Le Monde departs, "For Reykjavik wants to pay" and "the IMF bailout is crucial. It would restore foreign exchange reserves and provide liquidity to service the foreign debt. otherwise, accession to the EU would obtain better terms of borrowing ". If it was necessary to reassure the liberal reader in case of "no victory", the daily added : " Anyway, Iceland will respect the commitments approved in August 2009, both the Parliament and the Presidency : repayment will begin in 2017 ... " |9|

Icelanders have not said their last word

They know Icelandic deal with the media storm that looks like and reject at the European Constitutional Treaty in Ireland and France adversely neoliberal project for the peoples concerned ? The IMF and they return E.U. borne anyway ? Anyway, a sure thing : citizens are entitled to demand an audit of the debt and refuse to pay. Iceland can and should refuse conditionality imposed by the IMF who pocketed the passage interests of an unlawful debt. Integration in a European Union that is anything but serving the people, should not be a condition of ongoing negotiations ; it must be submitted to referendum. We support the Icelandic people in the repudiation of this debt and urge the implementation of other measures, such as the seizure of bonuses and tax benefits of the capitalist class, to repay small investors. They were deceived by bankers who offered tempting interest rates in risky financial packages. For the others, speculators of all kinds, they must simply assume. They played and lost to risky markets games, and their losses must never be worn by Icelandic taxpayers. The Icelandic tax payers must instead use policies for social justice and respect for nature. otherwise, Gordon Brown must leave Iceland in the list of terrorist countries in which it was included in October 2008 and apologize to the people of Iceland. |10|
Icelanders have not said their last word ...

Notes

|1| Interview de Mark Flanagan, Head of the IMF mission to Iceland : http://www.imf.org/external/pubs/ft…

|2| s A titre d'exemple, Icelandic State has disbursed 600 million to clinch 75 % you capital they Glitnir, the 29 September 2009, before taking over the control a few days later.

|3| Read Olivier Bonfond, Iceland : "If the debt can not be paid it will not be", CADTM

|4| Icelandic speak cynically of "Iceslave", Slavic meaning slave in English, with the idea they make this slave of bank debt.

|5| http://www.investir.fr/infos-consei...

|6| A quart des électeurs islandais pétition signe une contre la loi Icesave, Euronews 03/01/10. And Petition against Icelandic law on foreign deposits, Reuters, Saturday 2 January 2010.

|7| Eva Joly, Green MEP and advisor to the Icelandic government in the criminal investigation into the causes of the failure of banks.

|8| Le Figaro, 8 January 2010

|9| London and The Hague should show leniency towards Iceland, The world, 7 January 2010,

|10| The 8 October, Gordon Brown has invoked anti-terrorist legislation 2001 to freeze the assets of Landsbanki in the UK and Iceland put on the official list of terrorist countries, alongside North Korea and Iran to put pressure on the government to make him pay. offended, Icelanders have launched a petition "Icelanders are not terrorists" ; it is signed by more than 80.000 people (http://lisa.indefence.is/?PageID=1505)