Europe should follow Iceland’s model of winning public support for austerity measures and returning to economic growth after a crisis, according to Iceland Prime Minister Johanna Sigurdardottir. Speaking in an interview with Reuters, the union activist-turned-politician said the euro zone should learn lessons, such as how to mix unorthodox policies with measured austerity, from the tiny island nation.
“We believe, and so does the IMF, that our case can be a role model for some of the countries in crisis now,” she told Reuters. “I’ve met with several leaders over the past years, some from Greece, and many prime ministers have been surprised by our economic turnaround and asked how we did it.”
The IMF was forced to bail out Iceland after its banking sector collapsed in 2008. After the country’s economy shrunk by more than 10 percent between 2009 and 2010, however, it has now bounced back and is growing at a faster rate than any other in Europe.
After gaining power with the Social Democrat’s shortly after the crash, Sigurdardottir cut public spending and introduced austerity measures that hurt, but were accepted by, the majority of the country’s 320,000 citizens. In comparison, Greece, now struggling through its fifth recession year, has seen a violent backlash from its people and increasing support for a radical left-wing opposition party.
“Becoming more disciplined and lowering state expenses, while at the same time keeping the welfare system strong, is what needs to be done to have wide support from the public for such measures,” said Sigurdardottir. She added that capital controls will now start to be eased as Iceland gets back on its feet.