Iceland: Referendum over Icesave deal

‘Can’t pay, won’t pay!’ must be the response

Massive anger erupted in Iceland as the New Year started. An attempt by parliament to get outstanding debts paid to the governments of Britain and the Netherlands provoked a new round of street protests and a political crisis in the country. The figure involved amounts to a massive 14,000 euros for every man, woman and child. “Let the bankers pay; we won’t” was the defiant mood outside parliament.

A mass petition to stop the payment led to a veto of the measure by the president and the promise of a referendum on the issue, originally expected on the 20 February. A ‘no’ vote could well lead to the collapse of the government after just one year.

The scare campaign and blackmail from capitalist powers and media has already begun. They want to force Iceland to ‘obey the rules’; a default would set the wrong example for other states and borrowers. The government is working hard to get the referendum delayed or possibly cancelled, with some kind of mediation leading to a revised Icesave deal. Polls still show outright hostility to bailing out the ‘risk-takers’.

Financial casino

For ten years, Iceland was a neo-liberal experiment, a financial casino. In that period, it was a shining example, not criticised by politicians anywhere in Europe. The global finance crisis, however, led to a crash for the country’s banks and its currency.

The crisis turned economic wealth into collapse. On 5 October 2008, Iceland went from being the sixth richest country, per capita, to bordering on national bankruptcy. The banks collapsed like a house of cards and were nationalised.

Bank shares became worthless. Ten per cent of the population, 30,000 people, owned shares and pension funds were closely linked to the stock market.

The international effects were clearest in Britain, where, for example, 100 councils had invested in Icelandic businesses alongside thousands of individual savings accounts. Premier Gordon Brown accused Iceland of acting ”illegally” when not compensating those affected and used anti-terror laws to freeze assets in Landsbanki/Icesave.

In Iceland, there was a wave of company bankruptcies and 40 per cent of households could not pay their housing bills. Pensioners lost their life savings. This caused the revolt including several massive confrontations with the police that overthrew the right-wing government in the beginning of 2009.


When the Landsbankis internet-bank, Icesave, crashed, thousands of bank costumers in Britain and the Netherlands lost their money. The governments in these countries compensated the savers according to national guarantee laws. Since, the governments of Britain and the Netherlands have demanded Iceland to pay the total amount of 3.8 billion euros.

The Icesave law is about Iceland fulfilling this request. The fact that the Icelandic parliament, Alltinget, is prepared to pay this huge amount to the British and Dutch states in the middle of an historic crisis for workers, old peoples, youth and the former middle class triggered a new wave of mass protests.

Parliament first voted yes to the law in August, but added a few conditions, such as economic growth and a time limit. This was not accepted by London and The Hague, and a new deal was negotiated in October. In a sign of fear of pubic outrage, the Icelandic parliament did not vote on it until now, in January, and it was carried only with 33 votes against 30.

In a show of massive opposition, 60,000 people, a quarter of the population of Iceland, signed a petition against the law. Opinion polls showed 70 per cent of Icelandic people opposed it.

With a knife against his throat, because of the popular protests, the president, Ólafur Ragnar Grímsson, felt obliged to veto the law, which automatically leads to a referendum on the issue. The president was not against paying the money but feared the anger from below.


The president’s veto forced parliament to accept a referendum which should be held by March 6th. This means a strong politicisation and polarisation in society, but also gives the government and the capitalists a possibility to conduct a scare campaign.

International capitalists and their media fear a ’no’ and campaign heavily for a ’yes’ victory, in a similar way as they did in the Irish referendum over the Lisbon Treaty.

The British minister for banking and financial services, Lord Myners, warned that Iceland would be put outside the international financial system if not paying. Others warn of pariah status and say Iceland cannot become a member of the European Union.

”If the people say no, if Iceland does not pay its debts to British and Dutch tax payers there will be no more pay-out from the IMF or any loans from Sweden”, the Swedish daily, Expressen, wrote on 10 January. The government of Finland is also among those threatening to withhold loans to Iceland.

The Swedish press talks of “the risk of a ’no’, a new political crisis and further delay of the rescue plans that Iceland is in need of” and, ”Without restoring normal relations to the rest of the world, Iceland will not get the dollars and euros needed to import goods and services”.

What alternative?

What is the alternative for workers and youth in Iceland?

”First of all, we have to say no to a law that, if implemented, would ruin ordinary people for generations. 3.8 billion euros – the equivalent of a third of the GDP, to be paid by the year 2024 would drastically undermine the economy. For the British state it’s pocket money but not for Iceland”, says Skúli Jón Kristinsson from Sósíalískt Réttlæti (CWI Iceland). The entire amount is equivalent to only one per cent of the British government’s loans in 2010 and 2011, according to the Financial Times.

The question is, how strong is the resistance? Will the scare campaign succeed? And what happens if there is a ’no’ victory?

The mass of the population still feels its strength from the weeks that brought down the previous government. Street protests have reappeared. Most people correctly believe that taxpayers should not pay the bill of the banks and the speculators.

The weakness is the political leadership of the protests, unclear of what they want to achieve. The right-wing parties, whose government was brought down last year, are now in opposition to the Icesave law, while the new social democratic and left-green government is responsible for it! This shows none of the established parties can defend living standards or hold those responsible for the crisis accountable. The protest movement must go further and discuss a workers’ alternative.

The point of departure is of course the Icesave deal and the referendum. The rage of workers, youth and pensioners should be channelled into mobilisations and mass meetings about the alternative, with the battle cry, ‘Can’t pay; won’t pay!’.

Sósíalískt Réttlæti (CWI Iceland) stands for:

– A ’no’ vote on the Icesave law.

– Non-repayment of the debts. Compensation (by governments concerned) to small savers only.

– Bankers and speculators to pay for the crisis.

– A moratorium on personal debt payments, for all working class people.

– A mass campaign for non-payment of mortgage interest.

– Iceland to refuse to obey orders from the EU, the IMF and other global capitalist institutions.

– All books of account to be opened to show where the bank billions have gone?

– Nationalisation under democratic workers’ control and management of the banks, big companies and big fortunes.

– A mass movement with elected committees and formulating its own political demands and programme. A mass campaign with meetings in workplaces, schools and estates, including big mobilisations.

– No trust in the established parties. Build the genuine workers’ party so acutely needed.

– For a democratic socialist Iceland, for a voluntary socialist united Europe.

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January 2010