Britain Blamed for Worsening Iceland’s Crisis

Icelandic Prime Minister Geir Hilmar Haarde (1951- )

Iceland’s prime minister accused Britain of “bullying a small neighbour”, as the British government froze the British assets of a troubled Icelandic bank operating in the UK. The immediate effect of the British action was to trigger an almost complete freeze on any banking transactions between Iceland and abroad. There’s no question that Iceland’s economic troubles are largely its own fault. But, in the view of Iceland’s government, its citizens, and even some outsiders, there’s more to the story that meets the eye.

The troubles between Britain and Iceland began about three weeks ago when Britain took the extraordinary step of using its 2001 anti-terrorism laws to freeze the British assets of a failing Icelandic bank. That appeared to brand Iceland a terrorist state. “I admit that I was absolutely appalled”, Icelandic Foreign Minister Ingibjorg Solrun Gisladóttir said in an interview, describing her amazement at opening the British treasury department’s home page at the time and finding Iceland on a list of terrorist entities along with al-Qaeda and North Korea, amongst others.

In the panic-prone economic environment rampant these days, being associated with terrorism, however misplaced that notion might be in Iceland’s case, spells immediate trouble. Sure enough, trouble came almost instantaneously. According to Jon Danielsson, an economist at the London School of Economics, “When you’re labelled a terrorist, nobody does business with you”. The immediate effect was to trigger an almost complete freeze on any banking transactions between the island nation and the rest of the world. The British government, alarmed about thousands of accounts held by its citizens, companies, local governments, and charities, froze the British assets of one of the failed banks, Landsbanki. It also seized the assets of another Icelandic bank’s British subsidiary in London. The reaction was immediate and severe, particularly when Mr Brown said recently and inaccurately that London was “freezing the assets of Icelandic companies in the UK” wherever possible.

At a time when Britain and the other western allies of Iceland turned their backs on them, Reykjavik sought financial aid in Moscow, of all places. A delegation from Iceland launched talks in Moscow last month to secure an emergency loan from Russia of as much as 4 billion euros (5.07 billion USD. 137.312 billion roubles. 3.257 billion UK pounds). Thus, Iceland becomes the first NATO member to appeal for Russia aid after the global credit crunch led to chaos in its banking system. Icelandic Prime Minister Geir Haarde complained at the time that his country did not receive financial support from its allies in Europe and North America and was forced to seek aid elsewhere, including in Russia, which showed willingness to help it out.

6 November 2008

Yuri Reshetnikov

Voice of Russia World Service

http://www.ruvr.ru/main.php?lng=eng&q=34681&cid=87&p=06.11.2008

Editor’s Note:

The idiocy of this is breath-taking. Iceland sits in a VERY strategic location in the North Atlantic, and if Russia gains a foothold in the country due to this loan, it shall be very bothersome to NATO. What were George Bush and Gordon Brown thinking? Or, were they thinking at all? Or, is it simply that there is nothing left in the store-cupboard? The former NATO base at Keflavik could easily be used by aircraft of the AV-MF and VVS-DA in long-range patrols over the Atlantic or as a stopover point on the way to Cuba. No doubt, the Icelanders are going to remember who were their friends in their hour of need. They shall also remember who spat at them… I have one word for the neocons in the US and their European lickspittles:

DUMB!

Either it is hubris on a large scale or it is an impecuniousness that America and its Western allies refuse to divilge, or, more probably, a combination of the two (with the latter predominating). The sum of 4 billion euros is not great in the larger scheme of things. Therefore, the economic meltdown in the West due to the collapse of the credit bubble is far worse than is being reported in the mainstream media. Otherwise, there would be funds to aid Iceland, it is as simple as that.

God help us all.

BMD

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