Iceland's Failure: Not All Banana Republics Deal in Bananas

Here is a nice snapshot of an oligarchy at work in a small country. It is a microcosm of the United States. One only has to substitute "major corporations" for power individuals and the parallel becomes more obvious.

It appears to outsiders that in the US, rather than reform or change, rival organizations are in conflict with each other in the US for the spoils of corruption, and alternatively exchange political power to provide the appearance of change, but never relinquishing the primary mission of transferring wealth from the many to their own particular constituents.

The solution in Iceland is for a third party, a progressive party, to rise up and be supported in the elections, despite the stiff opposition from the status quo. Iceland is a small country and its citizens on average reasonably well educated and easily reached. They simply need to get seriously concerned for the future of their children and grandchildren and take control of their country back from the political elite.

It is a much more daunting task for a third party to bring reform to a large country with diverse population, often easily managed into conflict with each other by propaganda from a co-opted mainstream media. Potential leaders often have large egos, and in the States bloggers too often tend to enjoy squabbling with each other over relatively inconsequential things, rather than the primary task at hand. I wonder if it is the same way in Iceland?

UK Telegraph
David Oddsson's ascent to Iceland's editor in chief splits opinion as bloggers gain ground
By Rowena Mason
September 29th, 2009

Plus ca change! And I thought Iceland was moving on from a society where the same elite that caused the financial crash held an iron grip on public life,” groaned one resident of Reykjavik.

The cause of her dismay was the news that David Oddsson, the former prime minister and central bank governor has been appointed editor of the country’s best-respected newspaper.

Only six months ago, shortly after a change in government, he was forced out of the central bank as campaigners lobbied for a new order to help the country recover from the failure of its banking system a year ago.

Mr Oddsson – whose Thatcherite policies led to the privatisation of Iceland’s three big banks in the 1990s – inspires both extreme devotion and antipathy in his home country.

Many blame him for de-regulation of the financial system in the years before the collapse that sparked a domino of corporate bankruptcies, rising unemployment and an investigation into “suspicions of criminal activity” at the failed banks.

Others, including one reader who emailed me this morning, believe the appointment of Mr Oddsson will be a steady force for good behind the many excellent reporters uncovering suspected corruption in Iceland’s financial system.

A couple of Morgunbladid journalists I spoke to were ambivalent – surprised by the choice, but willing to give Mr Oddsson a chance as an editor who must hold those who contributed to the crash responsible.

However this flamboyant politician chooses to sit in his editorial chair, the fact remains that almost a year after the crash Iceland has not yet quite escaped the financial and political powers who have a strong interest in maintaining the status quo and protecting their reputations.

One of the main factors behind Iceland’s financial implosion – an extreme microcosm for the problems in the rest of the world – is the secrecy, interconnection and conflicts of interest in its public life.

That the major shareholders of the banks also owned much of the non-state media undoubtedly helped to perpetuate many myths about Iceland’s economic strength.

Frettabladid, a free newspaper distributed to every home, and Channel 2 television, are both still owned by Jon Asgeir Johannesson – whose companies are strongly linked to Glitnir, one of the collapsed banks, and Baugur, the failed retail giant that owned dozens of British high street shops.

Another television channel, Skjareinn, is backed by the brothers that owned the biggest share of Kaupthing, Iceland’s biggest failed bank.

And Morgunbladid itself was previously owned by Bjorgolfur Gudmundsson, one of a billionaire father and son team behind the third collapsed bank, Landsbanki. It is now in the hands of fishing magnates, who fiercely oppose Iceland’s entry to the European Union out of fear that quotas may be restricted.

One consequence of the links between big business and the media has been that the Icelandic public’s faith in traditional and official sources of news has started to erode, increasing reliance on blogs to provide news services, spread gossip and provide a discussion forum.

This has increasingly irritated some of Iceland’s financiers. Lydur Gudmundsson, one of the two brothers who backed Kaupthing, has publicly blamed bloggers for creating a negative atmosphere and pointing too many fingers.

It’s a sure sign that these new media journalists, empowered by the internet, are digging around in the right back yards.