Icelandic Myths
Peter Geoghegan
In April, a video entitled ‘Iceland forgives mortgage debt of its population’ went viral. The 30-second clip, a Spanish-language news broadcast by the Latin American TV network teleSUR with English subtitles, reported that the mortgage relief was ‘a response to citizens’ demands’. Within 24 hours of being uploaded, the report had been watched tens of thousands of times (videos on teleSUR’s English-language YouTube channel often struggle for double digit viewing figures). Activists on Twitter and Facebook hailed Iceland as an example to the world, reposting as they went.
The teleSUR video was not the first story characterising Iceland as David standing up to the Goliath of international finance to go global since the 2008 crash. Last year, an article claiming that ‘this little-known member of the European Union’ had defied the 'FMI' and recovered ‘their sovereign rights’ appeared on the popular liberal US blog Daily Kos. The piece was ‘liked’ more than 1200 times on Facebook and reposted on countless blogs.
Like the teleSUR video, the Daily Kos article tells an uplifting story of the population of a small country asserting their collective rights and refusing to kowtow to the demands of bankers and profiteers. If only the stories were true.
Take the claim that Iceland has forgiven mortgage debt en masse. The Social Democratic-Left-Green coalition in the Althingi did indeed introduce a relief package for indebted homeowners, in response to the wave of negative equity and repossessions after Iceland’s housing bubble burst. Under the scheme, mortgage debt cannot exceed 110 per cent of the value of a property (in Icelandic kroner). Any excess is written off. It is a reasonable, well-intentioned policy. But it is not a Biblical debt jubilee. Many Icelanders are still struggling under huge monthly repayments they cannot afford.
Misinformation about Iceland has proved remarkably resistant to correction. Between 2008 and the end of 2010, as the economic crisis unfolded, Alda Sigmundsdóttir regularly responded to inaccurate reports on the Iceland Weather Report. ‘It was like shouting in the desert,’ she says. ‘I was so frustrated, it was just far too much work, it was almost like a full-time job.’
Sigmundsdóttir, a former stringer for Associated Press in Reykjavik, no longer blogs at the Iceland Weather Report, but she still receives emails from all over the world asking about the way Iceland ‘crowd-sourced’ its constitution or let its banks fail (a story that is, at best, only partially true). A man in Greece recently wanted to know if shops in Reykjavik still conducted business in Kroner: an article in the Greek press had claimed that the Icelandic currency was no longer accepted by retailers.
Maybe it’s a language problem: not enough foreign journalists speak Icelandic. Haukur Magnússon, the editor-in-chief of the Reykjavik Grapevine, one of Iceland’s few English-language publications, says ‘that’s a lazy excuse.’ Journalists – whether citizen or professional – should check their facts. ‘People think of Iceland as a Shangri-la, which it isn’t.’
In February, the televangelist Pat Robertson hailed Iceland’s decision to jail bankers and politicians for their role in the finanicial crisis: ‘Iceland is leading the way and their GDP is growing, and all of a sudden, they were in a terrible mess, terrible mess, and look what is happening!’
Prosecutions are ongoing, with mixed results so far. In April, the former prime minister Geir Haarde was found guilty of one out of the four charges against him: not holding enough cabinet meetings. He received no penalty for the offence. There have been more successful prosecutions, though: on 8 June, two former executives at Byr Savings Bank, Jon Thorsteinn Jonsson and Ragnar Zophonias Gudjonsson, were found guilty of fraud and sentenced to four and half years in prison by Iceland’s Supreme Court.
On 30 June, Iceland goes to the polls to elect a president. The incumbent, Ólafur Ragnar Grímsson, once close to the Viking financiers, has spent much of his last term rebranding himself as the man who faced down the might of global capital.
The Reykjavik Grapevine, meanwhile, after it ran a piece pointing out the errors in the Daily Kos story, was, Magnússon says, ‘accused of being a corporate lackey for trying to debunk these stories.’