An important Icelandic referendum and the media remains silent

by Mauro Santayana

The citizens of Iceland voted in a referendum, on Saturday (20th), with about 70% of the voters.  The basic text of its new constitution, drafted by 25 delegates, almost all ordinary men, chosen by direct vote of the people, included the nationalization of its natural resources. Iceland is one of those enigmas of history. Situated in an area warmed by the Gulf Stream, which winds in the North Atlantic, the island of 103,000 km2, is inhabited only along its coast.

The interior of high hills, with 200 active volcanoes, is entirely hostile - but this is one of the oldest democracies in the world, with its parliament (Althingi) running for over a thousand years. Even under the sovereignty of Norway and Denmark, until the late 19th century, Icelanders have always kept comfortable autonomy in their internal affairs.

In 2003, under pressure from neoliberals, Iceland privatized its banking system, up to that time state-owned. As they pleased major U.S. and British banks, already operating in the derivative market, in the spiral of subprimes, Reykjavik turned into a great international financial center and one of the biggest victims of neoliberalism. With only 320.000 inhabitants, the island became a comfortable fiscal paradise for the great banks.

Institutions like Lehman Brothers used the country's international credit in order to attract European investments, particularly British. That money was applied to the financial casino, commanded by U.S. banks. The bankruptcy of Lehman Brothers exposed that Iceland therefore has taken debt exceeding ten times its gross domestic product. The government was forced to re-nationalize its three banks, whose executives were prosecuted and sentenced to prison.

In order to tackle the huge debt, the government decided that each of the Icelanders - of all ages - would pay 130 euros monthly for 15 years. The people demanded a referendum and, with 93% of the vote, decided not to pay that debt as it was the responsibility of the international financial system from Wall Street and the City of London.

The country's external debt, built by the irresponsibility of banks associated with the largest global financial institutions, led the nation to insolvency and Icelanders to despair. The crisis has become political, with the decision of its people to change everything. A popular assembly spontaneously gathered and decided to elect a constituent body of 25 citizens, who didn't have any partisan activity in order to draft the Constitutional Charter of the country.

To apply to the legislative body, the  selecttion of 30 people was enough. There were 500 applicants. The chosen heard the adult population, who spoke via internet, with suggestions for the text. The government took over the initiative and formalized the committee to submit the document to the referendum held yesterday.

Upon being approved yesterday by more than two-thirds of the population, the constitution must be ratified by Parliament.

While Iceland is a small nation, away from Europe and America, and with an economy reliant on foreign markets (exports of fish, mainly cod), their example may serve other people, overwhelmed by the irrationality of the financial dictatorship.

During these few years, in which the Icelanders resisted against the harassment of large international banks, the international media have been conveniently silent about what is happening in Reykjavik. It is an eloquent sign that Icelanders may be paving the way to a peaceful world revolution of the people.

Translated from the Portuguese version by:

Lisa Karpova


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Author`s name Timothy Bancroft-Hinchey