Former British Chancellor of the Exchequer, Alistair Darling, has revealed in his new book that he was unnerved by the Icelanders during the banking crash and did not trust them…even when it came to his own life.
Darling’s new book, Back from the Brink, is about the life of the British finance minister during one of the toughest periods in world economic history. In it he relives many of his (and Britain’s) toughest moments; including the collapse of the Icelandic banks – and especially that of Icesave, courtesy of its parent, Landsbanki.
Alistair Darling not only reveals that he did not like or trust his Icelandic colleagues at the time; but even implies that he would not even trust them not to kill or kidnap him: when he was on the way home from the G7 summit in Canada in autumn 2008, he told his pilot not to enter Icelandic airspace under any circumstances.
Darling writes that he first caught wind of the fact that the FSA (Financial Services Authority) feared for the Icelandic banks operating in the UK in September 2008, mbl.is reports. He was informed that an Icelandic delegation wanted to meet with him and that the FSA was very enthusiastic for the meeting to go ahead because they had been unable to persuade the Icelanders to put more capital into the unstable Landsbanki.
His first reaction was surprise at how big the Icelandic delegation was. Bjorgvin G. Sigurdsson, the then-trade minister was part of the group, along with his permanent secretary, ministry section chiefs, representatives of the Icelandic financial regulator, and others.
“The minister held a speech and complained about the FSA assessment. He argued that Iceland was being bullied. A representative of the financial regulator spoke eloquently and at length about the strength of the bank and how we were being unreasonable. I was told that national pride backed up Landsbanki. I wondered to myself that if they didn’t know how bad Landsbanki’s position was then they didn’t know what they were doing. Or, that they did,” Darling writes (ed. translated back into English from Icelandic).
He continues that the impression of glossing over a worsening situation he gleaned from that meeting would come to represent all his future dealings with the Icelandic government during the crisis.
Darling says he imposed a freezing order on Landsbanki in the UK to try and stop British deposits disappearing into a black hole in Iceland; and says it was unfortunate that the law used was one also intended to prevent terrorist financing. From that point on, it was possible to accuse the British government of treating Landsbanki, and all of Iceland, as if they were terrorist organisations. Something that proved most unhelpful in the ensuing diplomatic and public-opinion wrangles.
Towards the end of the book, Darling writes that Iceland finally had its revenge on him by forcing him to take a 10-hour train ride from Plymouth to Edinburgh during the 2010 election campaign, because Eyjafjallajokull had closed British airports.
The “everything’s alright” attitude of the former Icelandic government is something that has been discussed at length in the media following the crisis and Darling’s scepticism served him well in many ways. But questions are still being asked about his unwillingness to believe anything the Icelanders said at all. His aversion to flying through Icelandic airspace is being seen by many in Iceland as both funny and sad: “What were we going to do? Shoot him down? We don’t even have an army!” one Icelandic journalist quipped.