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Iceland proves corruption is far from extinct in the Global North

Middle East
on 22 Comments

In Iceland, the Panama Papers mega-scandal has already claimed two casualties: the prime minister, Sigmundur David Gunnlaugsson, and the idea that corruption is nearly extinct in the Global North. My piece in The Nation, just out, looks at Iceland in some detail. I point out that other Icelanders, politicians and former bankers, have also popped up in the Papers, so the scandal is far from over.

A leading academic who studies the right-wing cabal that got control of the island nation in the 1990s and ran it into the ground in 2008 argues that in the days and hours before the big collapse, elite insiders sneaked their money out to safety. Professor Silla Sigurgeirsdottir, a professor of politics at the University of Iceland, told me with some bitterness, “In four or five hours, some people set up big pension funds for themselves overseas.”

One difference with the US and Europe is that Iceland did put some of their banksters on trial; more than 20 were convicted and some are still in prison.

Iceland’s experience should prompt some humility in the rich world. There is a strong tendency in America and Europe to blame poverty in the Global South on cultural backwardness, on uneducated, superstitious people, inexperienced in democracy, who permit the rise of greedy, corrupt leaders.

By contrast, Iceland is a highly educated nation, which supposedly incarnates Protestant virtues of rationality and honesty. The striking 240-foot spire of the Hallgrimskirkja Lutheran church is the most prominent landmark in Reykjavik, visible from 15 miles away. But for some years now, many in the Icelandic elite have turned out to be just as greedy and dishonest as their criminal counterparts in Mexico or the Democratic Republic of Congo.

James North
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22 Responses

  1. hophmi
    hophmi
    April 6, 2016, 1:32 pm

    “But for some years now, many in the Icelandic elite have turned out to be just as greedy and dishonest as their criminal counterparts in Mexico or the Democratic Republic of Congo.”

    Transparency International measures corruption by country. The DRC is 147 of the 168 countries ranked and scores a 22. Mexico is 95th and scores a 35. Iceland is 13th and scores a 79. There is certainly corruption in the West, but until we are paying militiamen bribes to travel from town to town, or have entire municipalities run by drug lords, as is the case in Mexico, comparisons like these are unhelpful.

    I’ll grant you that by Scandinavian standards, Iceland is a cesspool of corruption. Denmark, Finland, and Sweden are 1, 2, and 3 in the world, and Norway is 5th.

    • John O
      John O
      April 7, 2016, 11:37 am

      @hophmi

      “I’ll grant you that by Scandinavian standards, Iceland is a cesspool of corruption.”

      Far from a cesspool. When I was there last year, the prison population was 156 (in a population of c. 350,000), of whom about 20% were the bankers who wrecked its economy some years ago. The fury with which the Icelandic people reacted to the prime minister’s actions – resulting in his stepping down and fresh elections likely in a few months – shows a pretty robust democratic society at work.

      • hophmi
        hophmi
        April 7, 2016, 12:31 pm

        Obviously. That’s my point. To compare the corruption in Iceland (which is not at all corrupt), and places like the DRC, which is almost completely so, is really silly.

      • James North
        James North
        April 7, 2016, 12:35 pm

        How can you say Iceland is not corrupt? The elite nearly destroyed the country in 2008, doing great damage to the world economy at the same time, and the Panama Papers show that elite corruption continues.

      • eljay
        eljay
        April 7, 2016, 12:35 pm

        || John O: … The fury with which the Icelandic people reacted to the prime minister’s actions … shows a pretty robust democratic society at work. ||

        I wonder if Icelanders ever feel the need to defend their country – which, as far as I know, is neither a “moral beacon” nor a “light unto the nations” – by comparing it to Saudi Arabia, Mali and African “hell-holes”.

      • hophmi
        hophmi
        April 7, 2016, 1:08 pm

        The banks were deregulated and became very highly leveraged, and there was a credit crunch. The banking industry is a very big part of the Icelandic economy, so Iceland was hit very hard by the worldwide recession. There was certainly a share of corruption involved, as there always is in the incestuous financial services industry, but that’s hardly the whole story.

        For left-wingers who wish that the US had let the banks fail and prosecuted more bad actors, Iceland is an example. Iceland’s actually let the banks fail, which went against conventional wisdom, and actually put 20 people in jail, and the country bounced back very quickly.

        In any case, overall, this is not a corrupt society (Transparency International is one of the most reputable NGO’s in the world), and the corruption issues it faces are in no way comparable to the complete corruption that some countries in the global South experience, which has helped contribute to overwhelming poverty and danger in those countries.

      • bryan
        bryan
        April 7, 2016, 1:54 pm

        James North: “The [Icelandic] elite nearly destroyed the country in 2008, doing great damage to the world economy at the same time”

        Prima facie, that appears to be an absurd statement: each of 50 US states has an overwhelmingly larger population than the entire population of Iceland; Iceland’s GDP was less than 1/1000th of that of the USA; Iceland is a fishing port, with a couple of hotels nearby, and an airport that gets closed down by volcanic eruptions. The problems that appear to have caused the second (third, fourth or fifth – whose counting?) great modern world recession (dodgy mortgages, sub-prime lending, derivatives, CDOs and related financial instruments, obscene bonuses for investment bankers, crazy deregulation) would all appear to have been developed within the USA (with a bit of help from the UK). These derived primarily from the powerhouse ideologies developed under Reagan and Thatcher and subsequently refined by a host of criminals such as Alan Greenspan, Mervyn King, Hank Paulsen, Kathleen Corbet (and the ratings agencies in general), Phil Gramm, Fred Goodwin, Stan O’Neil, Andy Hornby, Bernanke etc. Not too many Icelanders here, and also, surely, the severity of the crisis in Iceland was a reflection of the weakness of its economy in global terms. But go ahead in building the mythology that a banana republic on the Arctic Circle caused the global meltdown and economic ideologues of both democratic and republican parties, (and conservative and labour and liberal, in a British context) had no responsibility for this, nor of course had the fundamental contradictions of capitalism.

      • ToivoS
        ToivoS
        April 8, 2016, 12:50 am

        For once, hard to believe, I have to agree with Hophmi. Iceland does have a very robust civil political system. After the financial fiasco in 2008 the people made demands and their government responded. They defied the international finance establishment and they are better off today because of their resistance. It is relatively free of the corruption that is prevalent in wall street and the citi in London.

      • John O
        John O
        April 8, 2016, 9:15 am

        @ToivoS

        “Robust” was my term, not Hophmi’s.

  2. lysias
    lysias
    April 6, 2016, 5:27 pm

    There has been a lot of commentary on the Panama Papers on Craig Murray’s Web site, craigmurray.org.uk.

    Here’s a good piece in blackagendareport.com: Freedom Rider: The Panama Papers Problem.

  3. just
    just
    April 7, 2016, 4:27 am

    I am sorry that you thought this important enough to print while the US has been on a rampage all of my life.

    The man (PM) in Iceland stepped down.

    (btw, why is everybody in this crazy world making a big old deal of this but not of Putin’s and Assad’s rescue of Palmyra, his people, and the defeat of Isis there?)

  4. eljay
    eljay
    April 7, 2016, 8:12 am

    … There is a strong tendency in America and Europe to blame poverty in the Global South on cultural backwardness, on uneducated, superstitious people, inexperienced in democracy, who permit the rise of greedy, corrupt leaders. …

    It beats blaming our political, corporate, military and financial leaders for doing whatever it takes to secure our interests in the Global South, including:
    – keeping people only as culturally advanced and educated as we need them to be able to work for us and buy from us;
    – securing their resources for ourselves;
    – overthrowing democracies; and
    – propping up greedy, corrupt leaders.

    • just
      just
      April 7, 2016, 9:17 am

      Hear, hear and a big bingo to you, eljay!

      “But for some years now, many in the Icelandic elite have turned out to be just as greedy and dishonest as their criminal counterparts in Mexico or the Democratic Republic of Congo.”

      Hello? The US has more than its share of “greedy and dishonest” folks and so do other nations…… why this focus On Iceland and comparison with? I happen to believe that the scandal was revealed b/c of the success of Putin/Assad in Syria. A success that only some are whispering about…

      • hophmi
        hophmi
        April 7, 2016, 10:02 am

        LOL. Another reason why you can’t trust BDSers who proclaim themselves for international law and human rights. This guy “just” is celebrating Putin and Assad, two war criminals who have together killed hundreds of thousands of people.

        Yeah, yeah, that’s why someone leaked the Panama Papers. It was all a plot to get back at Putin and Assad. Because before now, nobody had any clue that Putin was corrupt.

      • bryan
        bryan
        April 7, 2016, 10:21 am

        “I happen to believe that the scandal was revealed b/c of the success of Putin/Assad in Syria”

        I think the documents were originally handed over in 2014, (and the trawl is so vast that it required extensive analysis before publication) so someone was enormously prescient. But just as most people on this site want justice for Palestine, most people outside government, the lobbies and the elites want transparency and fairness, so I don’t think we have to assume ulterior motives. Even within the media, where many seek to pervert the truth, there are some remaining beacons of light. My faith as a Guardian reader is partly restored – if only they could rectify the issues I have with them on Sanders / Corbyn and the Middle East.

      • eljay
        eljay
        April 7, 2016, 10:34 am

        || just: … why this focus On Iceland and comparison with? I happen to believe that the scandal was revealed b/c of the success of Putin/Assad in Syria. A success that only some are whispering about… ||

        || hophmi: LOL. Another reason why you can’t trust BDSers who proclaim themselves for international law and human rights. This guy “just” is celebrating Putin and Assad … ||

        Please explain how your hate-filled Zio-supremacist mind:
        – twisted just‘s assertion that the focus on Iceland and the P.P. is a distraction from Putin’s/Assad’s success in Syria against ISIS;
        – into just “celebrating Putin and Assad”.

        (And just so you don’t use my comment as a springboard for further deflection and spittle-spraying, let me make it clear that:
        – I don’t consider his assertion to be correct; and
        – I do consider Putin and Assad to be despots and (war) criminals who should be tried and held accountable for their actions.)

      • oldgeezer
        oldgeezer
        April 7, 2016, 12:05 pm

        Actually both Nevada and Delaware are considered to be better places to hide your wealth than Panama. And Putin is only being targetted by inference as his name isn’t in the papers anywhere. David Cameron gets relatively less press despite his father having been one of the key players in setting up the scam and his family making use of it. The west needs both it’s scapegoats (Iceland) and bogeymen in order to hide what’s behind the curtain.

      • annie
        annie
        April 10, 2016, 2:32 am

        celebrating Putin and Assad

        yesterday some pro israel tweeter complained activist supporters of palestine didn’t care about the crimes and victims of isis. but if you mention them getting their butt kicked you’re celebrating putin and assad. oy vey.

    • oldgeezer
      oldgeezer
      April 7, 2016, 10:23 am

      What’s your point hoppy? You defend the rogue state of Israel and it’s war criminal leader every day. Your criminal is somehow better than the others?

      • just
        just
        April 7, 2016, 10:55 am

        Well written, “og”.

  5. ToivoS
    ToivoS
    April 7, 2016, 7:38 pm

    Sigmundur David Gunnlaugsson came to power because he strongly opposed holding the state of Iceland responsible for the incredible losses that their banks experienced in 2007 and 2008. During that same time the governments of Ireland and Latvia assumed the losses that their banks had incurred during that period. International banks were absolutely furious with Iceland for not backing their banks with future taxes. Whereas, as we all know, the governments of the US, UK and EU countries all jumped in to bail out their failing banks. The US alone, through the federal reserve bank, created 3 to 4 trillion dollars, to bail out US banks. Iceland was the only Western nation to just let their banks fail and then suffer the consequences. What is interesting Iceland, very slowly to be sure, was the first country to begin recovering from that calamity. Today Ireland and Lavia are still severely burdened with paying back the money their banks lost.

    What is interesting to me is that the first political casualty from these Panama leeks happens to be one of the only political leaders that actually protected his nation’s people from the crippling payments that came from “saving” their national banks. Somehow, I think Gunnlaugsson is being punished for defying the dictates of international finance. Of course, I cannot defend his actions in trying to preserve his personal wealth while the rest of Iceland suffered. The message that is being sent to leaders of other countries is to not defy the interests of international finance because they have ways to get even.

  6. Boomer
    Boomer
    April 8, 2016, 6:29 am

    excerpt from WaPo:

    “Contrary to popular belief, notorious tax havens such as the Cayman Islands, Jersey and the Bahamas were far less permissive in offering the researchers shell companies than states such as Nevada, Delaware, Montana, South Dakota, Wyoming and New York, the researchers found.”

    from: https://www.washingtonpost.com/news/wonk/wp/2016/04/05/how-the-u-s-became-one-of-the-worlds-biggest-tax-havens/

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