The Icelandic media have naturally been paying a lot of attention to the British parliamentary committee’s conclusions on the Icelandic banking collapse. The fact that Chancellor Alistair Darling comes in for criticism from a committee of British MPs is being seen as something of a vindication: the British made Iceland’s crisis worse than it needed to have been. But then nothing is ever that black and white.
The fact that the media is all over this report comes as no surprise; but the Icelandic and British media are choosing to focus on different sections of it.
British papers are flagging the committee’s recommendation that charities should be reimbursed by the UK government for lost savings in Icelandic banks, but that local councils should not (because they should, apparently, have known better).
Meanwhile the Icelandic media are focusing their attention on the recommendation that the UK should create a specific law to deal with such cases, because using the Anti-Terrorism Crime and Security Act 2001: “inevitably stigmatises those subject to it and a less blunt instrument would be more appropriate”. Last autumn the British argued that they did the right thing to protect their national interest, while the Icelanders argued that the terrorist act being used against them did little but sour diplomatic relations, damage Icelandic businesses and severely worsen an already bad situation. Both points-of-view seem to be right: Using the ‘terrorist laws’ against Iceland did do a lot of damage, but it was still the most appropriate thing to do – but only due to the lack of a better and more relevant alternative.
The committee also recognises that although the law was only used against Landsbanki (and also the Icelandic government itself for a short while), the public perception was that all of Iceland was being targeted – something which inevitably had a serious effect on Kaupthing, which the Icelanders hoped might not need to be nationalised.
Chancellor Alistair Darling comes in for particular criticism for his ill-chosen words and possible wrong conclusions, upon which the decision to use the Act was partially based.
At the most sensitive time possible, at the height of the crisis, the Chancellor went on BBC radio and told the British nation: “The Icelandic Government have told me, believe it or not, have told me yesterday they have no intention of honouring their obligations there”. The Icelanders have protested ever since – not just the accuracy of the statement, but also the motivation for choosing to make such an inflammatory statement at that time and in such a public way.
When the Financial Times later published a transcript of the telephone call between Darling and his then Icelandic counterpart, Arni Mathiesen, it caused yet another debate (on this very website, among many others).
The fact is that Mathiesen was having a telephone conversation in a foreign language during which he was being put under tremendous pressure. Even if he had said that the Icelandic government “have no intention of honouring their obligations there”, Darling would still have been better advised to wait for further confirmation than a hastily arranged telephone conversation before going public with the news. As it happens, Mathiesen did not say any such thing anyway.
The phone call’s basic conclusion was that Iceland would do all it could to meet its Landsbanki (Icesave) obligations in the UK; but that it was just too big an amount to be able to fully guarantee at that precise moment. The committee’s conclusion states: “We note that the published transcript of the Chancellor’s conversation with the Icelandic Finance Minister does not confirm that the Icelandic Government had stated that it would not honour its obligations but we have seen no evidence to contradict the Chancellor’s view that UK depositors and creditors were unlikely to be protected to the same extent as Icelandic ones.” October was an unprecedentedly panicky time in banks and government offices the world over and rash decisions can maybe therefore be partially forgiven under the circumstances; but who could possibly have benefitted from trashing excellent bilateral relations between two neighbouring and allied nations over a piece of evidence so monumentally flimsy? The answer is ‘nobody’.
Did the British government force the collapse of Kaupthing? “We (…) have seen no evidence that Kaupthing would have survived if the Chancellor had not expressed his views,” the committee concludes. That is to say that there is no direct evidence to prove that Darling killed Kaupthing; but also no evidence that he did not.
The deposed former Finance Minister Arni Mathiesen is gleeful today. Talking of “serious blows to Darling’s political career” and implying that he should resign. Misery does indeed seem to love company.
But this transcends mere personal reputations and intergovernmental feuds. There are huge lessons to be learned on all sides: on how to treat smaller friends in need, on how a bad situation can be improved with honest and clear communication, on not assuming everybody is as comfortable speaking English as an Englishman, and (as the whole world is now getting to grips with) the fact that there needs to be proper regulation of a responsible and sustainable global banking industry.
The fact that the always-ready-to-attack-the-government British press is not ripping Darling to shreds over this report is something of a mystery. Could it be a question of solidarity? With British charities still in trouble because of Icelandic banks, maybe the Icelanders are the bad guys. And if the Icelanders are the bad guys, then the logical extension is that the British government are the good guys (for a rare change) – and to criticise the good guys is simply not cricket. But surely this entire calamity has already taught us that nothing is ever that black and white?
(Perhaps now is the best time to flag the fact that this is an editorial column and not intended as an impartial news article, in case there was any doubt remaining. Therefore (as always) reader comments are very welcome.)
Very even-handed summary Alex.
The committee’s report seems factually correct and the conclusions balanced. The real core problem was misunderstandings in one phone call (everything else led from that). And the British media doesn’t care anymore about that phone call because of the more important news (such as finding out the titles of the porn films that their Home Secretary’s husband claimed as government expenses)…
All irrevelant.
One phone call changed nothing. The banks had been doomed for a long time and would have failed anyway. Some people just prefer to blame Darling for one phone call, when the problem had been building for a decade. If Iceland is so offended at the suggestion that it wouldn’t honour it’s committments then the easiest answer is to honour those committments. It not yet done so.
A British parliamentary committee finds fault with a party in power, indeed this is indeed newsworthy!
Let this be a prime lesson to Iceland’s political class. It’s alright to be self-critical and find fault when due. Very rare to find such outcomes happening in Iceland during the last ten years.
Who will find fault and name – names in Iceland for the collapse of it’s financial services sector by domestic players?
@realist
“One phone call changed nothing” – This phone call changed a lot. I know that Icelandic companies got into problems in the UK because of this (not banks) and also the UK should not have used “terrorist laws” against a small neighbouring friendly island. Setting aside the banks, this is just one of the things that you do not do.
@question ?
Has this not been done already?
And you call yourself ‘realist’. Poorly chosen nickname.
>I know that Icelandic companies got into problems in the UK because of this (not banks)
I’ve seen this mentioned a lot, but never in any detail. Not that I’m disbelieving, but can anyone flesh this out?
Also, would it have made any difference to the general confusion if the law allowing the feezing of funds had been decoupled? The committee seemed to think so, but did the problems mentioned by Polar Mania come from the “terrorist” tag or from the inclusion of the Icelandic government on a freezing order?
but who could possibly have benefitted from trashing excellent bilateral relations between two neighbouring and allied nations over a piece of evidence so monumentally flimsy? The answer is ‘nobody’. NOBODY??????????
MAYBE SOME PEOPLE WHANTED TO GET THE INTERESTS OF LANDSBANKI AND KAUPTHING FOR FREE.
Dont belive that this story was just small mistake, they knew very weell what they where doing.
No bank will resist if the clients get panic, and start to take all the money they have.
GOOD JOB.
I THINK THAT NEWS LIKE THIS ARE VERY MUCH DISTRACTING PEOPLE OF WHAT IS REALLY GOING ON IN ICELAND. WHY WASTE OUR TIME IN WHAT IS GOING ON BETWEEN ICELAND AND UK?? POLITICIANS WILL FIND THEIR WAY OUT OF THAT MESS, BUT WHAT ABOUT US?? WHAT IS HAPPENING “IN ICELAND” AT THE END… THEY ROB HUGE AMOUNTS OF MONEY OUT OF THE COUNTRY AND NOW THEY WANT US ALL BELIEVE THAT IT IS THE BRITISH´S FAULT…
HAHAHAHA, BRING MORE DANCING HORSES AND CLOWNS TO THE CIRCUS!!
HAHAHAHAHA,
No one can blame Darling for the colapse of the icelandic banks, they where not in a bad situation long before, but the way the things whent coud be diferent, not whith a strong and direct impact.
@Polar Mania said:
“Setting aside the banks, this is just one of the things that you do not do.”
Sunday, twelth of October 2009 in Norway
http://www.kaupthing.no/
http://www.telegraph.co.uk/finance/financetopics/financialcrisis/5111136/Iceland-investigators-turn-to-SFO.html
also very interresting
http://eyjan.is/silfuregils/
look at 58. þáttur – 05. apr minute 38
Polar Mania,
By all accounts the independent consel looking into the domestic collapse of Iceland’s financial services sector will face bank secrecy laws to prevent a balanced disclosure of players and events.
And to think, this sounds a lot like an excuse one would hear from a tax haven nation – according to Össur Iceland is not one.
Who will account to players from the political class of the Social Democrates and others who played a key role in the collapse?
The change in government was only a first phase of a deeper democratic change that will hopefully happen. This means naming names in a small-close knit society even when we all have something to lose.
@realist
“One phone call changed nothing”
Actually thats pretty true. The report mentions that Kaputhing should have never been allowed to buy a British bank but the FSA were unable to prevent it as it was supposed to be regulated by the Icelandic authorities. Iceland’s situation was known be be dire from at least 2006 and the EU central bank had killed the Icelandic banks before Darling spoke out by demanding a return of loans. There was also a run on Icelandic banks BEFORE Darling spoke. The banks were doomed and the Icelandic government were well know to be incapable of bailing them out.
There will be no criticism of Darling for his treatment of Iceland because protecting UK savers from foreigners is always applauded by the press.
The negative effect of offending another country is precisely nil, especially one that used force to impose its will against the UK in the past..
Good work Alex, far better that any other news sites.
The Uk Parliamentary report criticises the UK FSA for not heeding strong warnings from the Singer & Friedlander chief exec at the time of Kaupthing’s takeover.
The UK FSA said as much as “thats not our job, that’s the job of the Icelandic FSA”.
It would be black comedy at its finest if it wasn’t so pathetic.
I wonder was it within the UK FSA’s job description to send a postcard to their Icelandic counterparts about these warnings? ::)
Not that it would have made much difference, prob would have been interpreted as a dastardly attempt to tarnish the hunky dory image of the modern day heroes.
we all know british didn ´t behave properly. they caused a lot of damage on Iceland. icelandic are by nature proud but naive people. the think they are the elite in the world, when they are just a bunch of frozen losers.
Hahaha, anti-terrorist laws against Iceland!
Icelanders, you should not give an öre to these people. They are all crooks. From top to bottom. No foregner can make you pay for icelandic land and homes.
I beleive the relationship between Iceland and the UK had been soured long before the phone call, and that kind of sour didn’t help things either,but lets use common sence. Would you want to do bussiness with people labled “terrorists”? Iceland did grow in size and they were loved by many that traveled to Iceland, and maybe there wasn’t enough to sustain all of them. Yes it did cause a panic in all the other banks to follow even though it was only with the UK that there was an issue.Personally I would like to thank him for finally throwing out the last straw, I just am sorry for all thows people that got bashed at the airports and abroad. I don’t think the citizens deserved it! They need to make changes to the law.
There is a quote from the transcript that I’d like to draw attention to.
“Darling: What I … I take it therefore that the promise Landsbanki gave us, that is was going to get 200 million pounds of liquidity back into it, has gone as well.
Mathiesen: Yes, they didn’t get that liquidity.”
Your readers may like to be reminded that, according to Björgólfur Thor Björgólfsson, the British Government had offered to take over the Icesave obligations in return for £200 million collateral but that good old Davíð Oddsson had turned down Landsbanki when they asked Seðlabanki for the loan. That looks like quite a friendly act to me.
I think it was at that point that Gordon Brown decided, in a fit of pique, that Icelandic bankers and politicians are a load of unreliable shysters who can’t deliver, and put the boot in on Icelandic banks operating in the UK.
It pains me slightly to say that since the collapse of the Icelandic banks I haven’t seen very much in the English pages of Morgunblaðið and Iceland Review to disabuse me of that notion.
The jobsworth UK FSA powerless to prevent a foreign bank buying up a UK Bank? start playing the violins.
Powerless to even have a cursory examination after the Singer & Friedlander was taken over.
The spineless UK FSA was powerless to prevent a foreign bank coming in, buying up a UK Bank, breaking established rules of UK company accounting.
Instead the UK FSA give Kaupthing the full certificate of investment health.
That reads like blatant reckless complicity to me.
On Apr 7, 2009, Asa said:
” Yes it did cause a panic in all the other banks to follow even though it was only with the UK that there was an issue.”
This is where Icelanders like to keep as their happy place. Evil British were unfair to us because they are **** and we are pure and good.
Well, sorry but The EU central bank (according to your ex-head of the Icelandic bank) pulled several billion in loans from the Icelandic banks and publicised it. This caused the failure of all three.
The Netherlands were also extremely pissed to Icesave for collected twice the deposits they agreed to collect and then failing to provide the funds to cover the depositors protection.
Germany is down Billions. They surely love you.
10,000 IoM and several thousand from Guernsey depositors have lost their entire life saving after KSF reneged on the guarantee to protect them. Note that as Iceland nationalised the bank they are liable for the £900million owe to the IoM depositors.
This article gives another view point of the Viking bankers as in-bred, arrogant, idiots who had no idea what they were doing and would buy the very worst assets at the highest price.
http://www.vanityfair.com/politics/features/2009/04/iceland200904
@ Peter-London:
If you read the Vanity Fair article, then at least read this one too:
http://nymag.com/daily/intel/2009/03/reality_check_vanity_fairs_fis.html
The Vanity Fair one made some good points; but was mostly an exercise in how to exaggerate and how to offend.
hahaha
look at all those brits trying to stir the cauldron of hate.
at uno de españa
guess having an ego is a taboo where you come from. why dont you drop the hypocrisy, im pretty sure that you think your own country rocks. if not then your the selfhating looser.
KAJ, YOU HAVE NO IDEA OF WHAT YOU ARE SAYING. WE ARE TALKING HERE ABOUT THE LAWS APPLIED TO ICELANDIC BANKS. NOT THE ICELANDIC CITIZENS…
ICELAND ( AS THE GOBERMENT IS ALSO THE BANKS NOW) HAS A LOT LEFT NOT ONLY WITH UK BUT WITH MANY OTHER COUNTRIES DUE TO THE WAY BANKS WHERE BEHAVING… ICELANDIC BANKERS AND CORRUPTED BUSINESS MEN ROBBED HUDREDS OF BILLIONS FROM THE ICELANDIC NATION… THEY WANTED TO DO THE SAME IN OTHER COUNTRIES, AND EVERYTHING WAS DONE TO STOP THEM…
ICELANDIC MAFIA OF BANKERS AND POLITICIANS TERRORIST?? NO, I THINK WE NEED TO INVENT A NEW WORD TO CALL THEM, BECAUSE THEY ARE WORSE THAN TERRORISTS!! LOOK WHAT THEY HAVE DONE TO THE ICELANDIC NATION AND WHAT THEY HAVE ALSO DONE TO INNOCENT SAVERS ALL AROUND THE WORLD.
THEY HAVE SPREAD A FAME OF ICELAND AS A CORRUPTED COUNTRY OF INCOMPETENT POLITICIANS AND MAFIA OF BANKERS… THREW THE COUNTRY TO MISERY AND DEPENDING ON INTERNATIONAL MONETARY FUND AND OTHER COUNTRIES HELP.
NO, THEY ARE NOT TERRORIST, THEY ARE WORSE THAN THAT!!
CRIMINALS!!
my country doesn ´t rock, and will never with the left country in the goverment. Be aware of that, left parties do nothing at all. Anyway, icelanders thought their country was the marvellous of the world, the land with no poors, the perfect economy… finally the dream is over… and the reality is a country with no future, no present, just debts and a populations on the verge of starvation.
*Peter London* “said Well, sorry but The EU central bank (according to your ex-head of the Icelandic bank) pulled several billion in loans from the Icelandic banks and publicised it. This caused the failure of all three.”
T would like to Thank You for bringing this to my attention. I have been googeling and googeling, I have printed out hundreds of pages of info to piece this all together.
This may sound insane but I think there is a huge glitch in this computer age and with foreign business commimg in and out of Iceland, and such a complex of cross holdongs that much of this info traveling through cyberspace seams to be getting lost, however through time that it will or would have come back eventually. Though not everyone has that much time to wait for there money, I have been doing alot of research for a while and my #no. don’t add up unless I waite 10 days, this can be a serious problem for most. After the fall of Enron Americans were explained as to how this system works( as many were left pennyless after years of employment and money saved), So maybe building up ones economy to fast may not be a good thing. Of course all those banks collapsed and there is no way for it to come back, Unless these criminal bankers can but together a bank to collect all the money. There is still an onging investigation as to were it all went. There is one thing we do know and that there were alarge amount of loans granted to these citizens whether Icelandic or foreiners(most of them had good paying jobs at the time) so it will take time to find it all. There is no doubt that there needs to be a global awareness and assistance. Hope fully they will be able to find it and charge the criminals soon. Now if people Borrow and others grant loans than everyone including the bankers are criminals, than we can than accuse everyone of stealing right?. I guess no one has an outstanding loan right?
I really didn’t want to sound sarcastic but there is alot of hostility running around the world. I can’t posibly explain to anyone what it feels like to be Labeled a “terrorist”, the fear and turmoil that runs through my heart is just very painfull.There are alot of angry people out there and I can’t immagine leaving my kids this way. I guess perhaps getting hit by a buss is better.
What if he is right, if Iceland is a experiment i would bet the next target is Britain,
people are already talking about the possibility that imf may step in help Britain, its already in similar situation we are in and falling deeper in debt, G20 just decided to put 1 trillion $ into imf, why would they need so much money ?.
http://www.youtube.com/watch?v=ushMvvN8y-I
http://www.youtube.com/watch?v=dUF25wNQDHg
Alex:”Did the British government force the collapse of Kaupthing? “We (…) have seen no evidence that Kaupthing would have survived if the Chancellor had not expressed his views,” the committee concludes. That is to say that there is no direct evidence to prove that Darling killed Kaupthing; but also no evidence that he did not”
You have Jumped to a conclusion that simply isn’t there.
“We (…) have seen no evidence that Kaupthing would have survived if the Chancellor had not expressed his views”
This means, as I understand it in English, that the Chancellors words MADE NO DIFFERANCE to the survival of Kaputhing. Kaputhing would have failed no matter what.
Alex:”The fact is that Mathiesen was having a telephone conversation in a foreign language during which he was being put under tremendous pressure. Even if he had said that the Icelandic government “have no intention of honouring their obligations there”, Darling would still have been better advised to wait for further confirmation than a hastily arranged telephone conversation before going public with the news. As it happens, Mathiesen did not say any such thing anyway.”
Another lesson in English. There is two answers to the question “will you guarantee protection”; Yes or No.
ANY other answer is not a Guarantee.
“Maybe we will, we hope, we will try, its difficult but we will attempt to… Guarantee”
All of these mean “We will NOT Guarantee”.
The finance minister should of course fully understand that a Guarantee is an unequivocal, non-negotiable commitment that must be clearly stated.
He didn’t do this. If he didn’t understand English then few words should have learnt to perform as a banker are:” Yes, I promise to fully support our commitments to honour our guarantee’s”.
Instead He said ‘we will seem what we can do’ and ‘its difficult’ and watched his country’s economy destroyed. It wasn’t Darling responsibility to make a clear commitment, its was Mathiesen’s and he had the responsibility to say so when asked.
But the real proof that they were unwilling to back their guarantee’s was Mathiesen refusal (in the same call) to provide the £200million in passing the Icesave protection over to the UK. This was more solid evidence they were not even willing to pay less that 5% of the balance to save it.
I read the transcript and its very obvious that Iceland wasn’t going to guarantee anything. There is no ambiguity at all, there was no commitment, promise or guarantee from Iceland and that was that.
It is inescapable that even the Parliamentary committee, containing a majority of the British Government, found that using the emergency powers of ATA was a wholly inappropriate legal tool against the Iceland banks.
I am far from convinced that the British Gov had proper communication with the Iceland government before using this extraordinary measure.
Darling was not told in no uncertain term what he claimed he was told.
The definition of “no uncertain terms” is a ‘strong and direct manner
with great clarity, emphasis, or exactness; without any ambiguity’.
Darling lied in the BBC report when he claimed he had been told in uncertain terms.
Typical Labour Government attempt to spin.
.
Here are a couple of videos which may prove interesting to some:
Part 1: http://video.google.com/videoplay?docid=-5595182360829048829
Part 2: http://video.google.com/videoplay?docid=-1877050852404764371
Regards,
Alex, editor
I’ve said what need to be said with Brumely86 conversations in detail many posts and particulerly here in two thread —
http://www.icenews.is/index.php/2009/02/16/kaupthing-sweden-sold-to-finns/#comment-67865
http://www.icenews.is/index.php/2009/02/13/former-icelandic-pm-haarde-on-hardtalk/#comment-64707
As to Peter — London and other ones that post suddenlly wenever Labour party gets bad press on this — wont bother wasting my time as you so clearly are either mental challenged despite holding down job or simply part of Brown administration online spin machine. (Who is this Derek Draper?)
Knowless.
If the member of government is claiming porn video as government expenses – what should anyone expect in other cases from such government? ;-)
So I see no reason even to discuss what Darlin-Brown were/are/will be claiming.
Thanks Alex. Who else started listening to that before they realised it was an hour long? :D
I’ve seen him on Silfur Egils, which is far more digestible (second vid):
http://larahanna.blog.is/blog/larahanna/entry/846117/
Three questions for those that did wade through that hour-long one.
1. Is he suggesting that the creditors enticed the Icelandic banks into debt to gain access to the resources after they collapsed? Because if they did, they’re going to lose money on that deal whilst taking the risk that the government nationalises all the collateral before they can get their hands on it.
2. Does he analyse the possible economic consequences of defaulting on the IMF and other loans? (BTW, I might be confusing him with Micael Hudson on this, as he might just be saying that the IMF loans should be paid back immediately and all the assets nationalised).
3. Did he say anything else interesting?
Peter
?? ????? ??????? ??? ???????
Yes or No? Otherwise I will consider your answer as the declaration of war! :-)
Nice try Alexander, but it’s obvious that Arni was following the Icelandic government line. Geir also refused to state that the guarantee would be honoured in an interview with the BBC on the 7th or 8th.
Plus, if you’re trying to say that Arni didn’t understand the question, he managed to craft a very good evasive answer.
>Yes or No? Otherwise I will consider your answer as the declaration of war! :-)
Good job it wasn’t an important issue, eh?
Knowless said:
“It is inescapable that even the Parliamentary committee, containing a majority of the British Government, found that using the emergency powers of ATA was a wholly inappropriate legal tool against the Iceland banks.”
But it was the best tool to use and they don’t suggest it should not have been used.
The report is being put in a far different light to Icelandic readers than it reads to me in English. Basically all it says is thing need to be improved for the next time.
I afraid Icelanders are going to come to terms with the fact that that nobody (outside a few posters here) in the UK could give a damn about the consequences in Iceland of the collapse of their over leveraged and corruptly run banking system.
i will not share a tear for those icelanders that lose their jobs. not at all. These greedy people were ready to boast about their expensive cars and their houses in Spain. Not anymore. Now don ´t complain, you have what you deserve.
This Darling vs Matthiesen argument is not important, its water under the bridge,
time to start thinking bigger and stop focusing on smaller things, its like if you throw a ball to a dog it will run after it over a cliff if its not smart enoug to stop and think, its been 6 months already, time to look at the big picture,
Robert Wade and Michael Hudson are right about what they say in those interviews
a large part of the bankers and previous government were involved int this,
this is in fact a war, its a new type of war fought with money and corruption.
“Robert Wade and Michael Hudson ”
John Perkins not John Wade :)
When damanges aer done restitution is needed. It may take several years until it comes but justice needs to be seeked.
Kauthpgin Singer Friedlander case still to come –
http://www.icenews.is/index.php/2009/03/16/kaupthing-uk-legal-case-makes-high-court-progress/
John Perkins would have done best to write his book as movie script first.
He wrote that in the 1970s it would make nice film starring Robert Redford. Film between Days of Condor and Spy Game.
Dont doubt thesis that US interest was to make loans and get influence in countrys — and that IMF and World Bank were part of it. But too much drama from Perkins.
Loan form IMF not main problem although it true that natural resources are what people want from Iceland in future — it is that member state of EU want those resource and that they will get it if EU membership comes.
IMF loan is not main issue in taking of resources. EU membership is. Because then EU comission can regulate what it likes in that area.
IMF doesnt have that power, EU comission does and it push for “competence” in that area.
http://www.icenews.is/index.php/2009/01/23/oil-exploration-licences-on-sale-in-iceland/#comment-60997
http://www.icenews.is/index.php/2009/04/02/more-evidence-of-oil-near-iceland/#comment-70766