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Sunday 5 April, 2020
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Icelanders are still feeling angry, hurt and disappointed after a bizarre few weeks

In the wake of the Panama Papers controversy, what’s the national mood in Iceland? TheJournal.ie visited, to find out.

EXASPERATED ICELANDERS MAY have run out of patience with their politicians in the wake of the Panama Papers controversy, but it appears unlikely they’ll run out of ways to describe snow any time soon.

As in most Nordic societies, there are dozens of words (as many as 46, by some accounts) for the white stuff in Icelandic. Mjöll, for instance, is the term used to describe a fresh snowfall. Frozen, icy snow is Hjarn.

Further down the list, you wouldn’t want to encounter the wet and deep Bleytuslag without a good pair of boots. Even less desirable is Krap – a half-melted rain-sodden slush that forms deep puddles across roadways, making travel miserable.

If you were to try and sum up how most Icelanders are feeling right now, weeks after seeing their country hit the international headlines again for all the wrong reasons, ‘Krap’ would probably do nicely.

Iceland Volcano A horse walks through falling snow near the town of Hvolsvollur, Iceland. Source: Associated Press

“Angry” and “frustrated” were words that came up again and again in conversations with Icelanders on the streets of Reykjavik, as TheJournal.ie paid a visit last week.

After an improvement in its fortunes in recent years following the disastrous 2008 crash, there had been a sense in the country that Iceland’s days of international financial scandal were firmly in the past.

That was before their prime minister, Sigmundur David Gunnlaugsson, became the first political scalp of the Panama Papers saga – spectacularly imploding under the TV lights when grilled about an offshore company with links to failed banks, then resigning in a huff after days of messy meetings and confusing public announcements.

david1

The fact that the PM had been a staunch campaigner against the foreign creditors haunting Iceland in the years following the crash underscored the public shock and anger at the disclosures about his finances.

Some 20,000 furious voters (almost 10% of the country’s adult population) staged a mass demonstration outside the parliament building in central Reykjavik, pelting the building with eggs, yoghurt and fish heads.

The ‘miracle’ of Iceland? 

Articles touting the ‘miracle’ of the Icelandic recovery have appeared in a number of major newspapers and financial magazines in the years since the depths of a crisis that saw unemployment soar, the currency crash and the country’s stock market all but wiped out.

And while it’s true that the tiny Nordic country bounced back from disaster in startlingly quick fashion after letting its three major banks fail, Icelanders also had to endure years of political turmoil in the meantime.

In the aftermath of the Panama Papers controversy, support for the unlikely-sounding Pirate Party, which campaigns for greater transparency in public life, surged to 43% in an opinion poll – signalling yet more drama ahead for Iceland.

So – as the dust settles on the offshore scandal and their disgraced former PM prepares for a return to the spotlight, how are our friends in the north feeling about being dragged into the international headlines once again?

Will voters take up the Pirate flag? And what are the implications for the rest of Europe?

pirates Smári McCarthy, Helgi Hrafn Gunnarsson and Jón Þór Ólafsson of the Pirates. Source: Pirate Party Iceland

A particular hypocrisy

So why were Icelanders so angry at the Panama revelations?

Gunnlaugsson, the former PM, had been a champion of the Icelandic Krona and a fierce critic of foreign creditors in the years before taking office.

As the country fought its way back to prosperity in the years after the crash, the ex-TV journalist rose to prominence as one of the leaders of the InDefence group, which was opposed to using public cash to reimburse British and Dutch depositors in failed banking operation Icesave.

The public twice rejected repayment terms for the British and Dutch governments, and a European court eventually found in Iceland’s favour in 2013 after years of diplomatic wrangling – essentially proving Gunnlaugsson right.

Iceland Offshore Accounts Thousands of people took part in protests outside parliament in Reykjavik in the wake of the Panama Papers revelations. Source: Associated Press

After narrowly winning a vote to lead the centre-right Progressives in 2009, the political neophyte built up his experience and increased support for his party during four years in opposition – leading them into coalition with another centre-right grouping, the Independence Party, to become the country’s youngest ever leader at the age of 38.

“He managed to take the party from having something like 14% in the polls to 25% – a solid performance,” politics lecturer at the University of Iceland Stefania Oskarsdottir explained.

From the outside it seemed to many people he was a very attractive person… What he stood for was mortgage relief and screw the foreigners – the banks.

Iceland Election Sigmundur David Gunnlaugsson, left, and Independence leader Party Bjarni Benediktsson pictured in the wake of the 2013 election. Source: Associated Press

The leaked Panama Papers, details of which were revealed by the International Consortium of Journalists last month, showed that the campaigner-turned-prime minister had hidden a major conflict of interest throughout his years as an MP.

He and his wife had bought the offshore company Wintris in 2007 to invest millions of dollars of money she had inherited. Gunnlaugsson sold his share of the company to his wife months after entering parliament.

At the heart of the controversy is the fact that the company had significant investments in the bonds of the three major Icelandic banks that collapsed during the financial crisis, which began in 2008.

Wintris was listed as a creditor with millions of dollars of claims in the failed banks’ estates. As prime minister, Gunnlaugsson’s involvement in negotiations about the banks could have affected the value of the bonds held by Wintris.

Responding to the revelations, Gunnlaugsson’s spokesman said the former leader’s policies had put the interests of the Icelandic people ahead of the interests of the failed banks’ creditors. However, it’s unclear what impact his actions would have had. The question “is a real tricky one” Thorolfur Matthiasson, an economist at the University of Iceland, told the International Consortium of Journalists.

Last month, his inept response to questions on the company in what amounted to an ‘ambush’ interview by Swedish public television did him no favours, and quickly went viral as the Panama revelations made their initial impact.

Source: euronews (in English)/YouTube

Mismanaged

What really confounded observers in Iceland was the fact that that interview had been recorded almost a full month before it was aired, in full, as part of a hard-hitting documentary – and that Gunnlaugsson had made no serious attempts to put forward his side of the story in the intervening weeks.

His wife, Anna Sigurlaug Palsdóttir, apparently out of the blue, had put out a statement on 15 March announcing she owned a company “registered abroad” and saying her husband had mistakenly once been registered as a co-owner.

But the PM studiously avoided all questions.

The matter came to a head on the evening of Sunday 3 April, when 98% of TV viewers (literally half the nation) tuned in to watch that explosive documentary.

“He mismanaged the whole affair,” according to Oskarsdottir.

Maybe it could not be managed – but he did not do a very good job.

20160517_113424 Politics lecturer at the University of Iceland Stefania Oskarsdottir. Source: Daragh Brophy

The prime minister, Oskarsdottir explained, had always had a combative relationship with the media – and may have thought he could talk his way out of the situation. But the damage was irreversible.

“People were emotionally affected… These emotions, they hit the media people as well as the public – And he felt it.

“What he might have done – he had all this time – he might have just shown his tax records like Cameron did or something.

He didn’t. On Monday he just came back and said ‘oh yeah, I’m sorry I messed up, I gave a lousy interview’.

A bizarre sequence of events followed over the next few days – and the Icelandic and international media struggled to follow what was going on.

resign1 Slate's take on the confusion in Iceland in the wake of the PM's departure. Source: Slate

First came the mass protests. Shortly afterwards, an attempt by Gunnlaugsson to dissolve the government and call fresh elections was rejected by the country’s president.

Later, his party announced that their embattled leader would be stepping aside as prime minister and that the agriculture and fisheries minister Sigurdur Ingi Johannsson would be taking over.

But a statement from the outgoing PM threw the entire nation into a state of confusion the same evening – as he insisted he had not “resigned” but that Johannsson was merely taking over as leader for the moment.

It eventually became clear that Gunnlaugsson intended to stay on as party leader – and as talks continued, it was confirmed the coalition of Progressives and Independents would remain in power.

Elections, which had been due to take place next year, have been brought forward to October.

car1 Gunnlaugsson dodges cameras to make his way to his car. Source: Screengrab

It was a tawdry turn of events, according to Oskarsdottir. Yet again, the combative leader failed to cover himself in glory.

“After the meeting with the president, he got into his car and went to a meeting with his own parliamentary grouping. When he got out of that meeting he was no longer the prime minister. But he did not stop and tell anybody.

“There was no announcement, no press conference.

“He just said something has been decided and you will learn about it and then he ran down the stairs and into his car.

“Reporters were chasing him. There was no dignity in his departure. So by [that] evening we knew that he had been replaced by his deputy chairman – but there was a press release that came out of the prime minister’s office that he was still the prime minister, which was technically right. He was still the prime minister until the next day

That was confusing. It was very mishandled, the whole thing.

After a month essentially ‘on vacation’ and away from the spotlight Gunnlaugsson said this week he intends to travel the country and drum up support as he attempts a political comeback.

His party will need to arrange an early conference to replace him as leader – but if they don’t, the consensus appears to be that they’re in line for an electoral wipeout.

Iceland Offshore Accounts Source: Associated Press

What happens next?

Even before the Panama Papers controversy, Gunnlaugsson and his party had started to slide in the polls. As journalist Sigrun Davidsdottir notes in the English-language Iceland Review, the former PM had caused a surge in support in 2013 “by promising billions for the public purse from the resolution of the old banks’ estates”.

It quickly showed to be a feeble promise: household loans were not reduced as greatly as promised and not, as promised, financed by funds from the failed banks but by a levy on all banks and borrowers’s own private savings.

The coalition immediately preceding this one was made up of the Left-Greens and Social Democrats – meaning voters in the country have taken a punt on pretty much all of the available government-forming options in the years since the crash.

That fact, combined with a growing sense that real power in Iceland rests within a small well-connected coterie of families within the traditional ruling class, has led to a surge in support for the Pirates – previously a fringe concern, at best – over the last year or so.

Though it currently has just three MPs, support for the grouping has been hovering around the 30% mark since April of last year – and surged to over 40% in the wake of the Panama revelations.

Formed in the wake of the international anti-copyright Pirate movement four years ago, the party had its first legislative triumph last year with the repeal of the country’s blasphemy laws.

In an interview at the Althingi parliament building, Pirate MP Asta Helgadottir summed up the national mood as one of “disappointment and hurt”.

That’s more or less how people are feeling – betrayed promises, disappointment. That your kid was lying to you about their homework and then they’d dropped out of school – something like that… A sense that ‘why can’t we just do things properly’.

There was a clear conflict of interest at play, Helgadottir said – adding that the former prime minister’s behaviour showed that he was not just hypocritical, but out of touch with the experience of the average person.

“Look at what he has been saying for the last few years – that we should not join the EU, that we should use the Icelandic Kroner, that the Icelandic Kroner is great and that it will help us. But they – they don’t really have to live by those standards.

“They have gold somewhere else. This is not normal for the normal Icelander.”

The credit controls brought in in the wake of the crash mean that, for most people, financial planning is a little more mundane.

I have to have a flight ticket to prove that I’m going out of the country to get… I think six thousand euros is the max? And I have to order it in advance, because of course they’re trying to limit the flow of cash in this country.

20160517_163025 Asta Helgadóttir Source: Daragh Brophy

According to another veteran activist – if there are any positives to take away from Iceland’s latest political drama, it’s that people are becoming far more engaged in public affairs.

Hördur Torfason, who led the ‘Kitchenware’ protests of 2008/2009 that culminated in the fall of the crisis-era government, said he was not surprised by the revelations.

“I’ve spoken to many people and they’ve all said that this would never have happened before 2008 –  because people before that time people didn’t believe in protests, they didn’t believe they could work.

Nothing happens unless the majority of people understand what’s going on, and it takes time. And I think that time is coming now that people are really understanding what’s going on, if you see how things are going with the Pirate Party.

20160517_150041 Hördur Torfason Source: Daragh Brophy

The next few months will be critical for the Pirates, as they prepare for the autumn elections.

While some commentators contend the movement’s success could have an impact far beyond Iceland’s borders, the three MPs leading the party have to adjust to the realities of having a far bigger organisation to manage.

“Regular people have support for direct democracy and more transparency,” Oskarsdottir, the university lecturer, said.

The rest [of the Pirate's policies are] sort of shrouded in mystery – you don’t know if it’s left or right.

Helgadottir, the Pirate MP, concedes some of their new support “is just protest”. But they’re having an impact on government already, she says.

Other parties have actually adopted a more liberal stance when it comes to things like decriminalisation of drugs, about things like transparency.

Iceland Offshore Accounts Source: Associated Press

Icelanders are bracing themselves for more possible financial controversies in the months to come, meanwhile.

They don’t really seem to have the expression “the dogs in the street…” in Reykjavik – but locals who gave us their take on the situation said they wouldn’t be particularly surprised to hear of further revelations from the ranks of the ruling class.

A poll last month found that two thirds of voters trust the new government “very little or not at all”.

Torfason, the man who led the 2008-9 protests, said that while the downfall of the former prime minister may have generated some spectacular headlines – it really shouldn’t have come as any major surprise, given what the country has been through.

This is something that before 2009,  a long time before, we have grown up with in this society and have been dealing with it.

Iceland’s business and ruling elites had, for generations, moved in the same circles and gone to the same schools, he said.

So when it came to the PM’s prime-time TV implosion: “I was waiting for it.”

Read: Iceland’s prime minister is gone and now protesters want the whole government to resign

Read: Iceland’s prime minister resigns in wake of Panama Papers controversy

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