Monday 23 October 2017

Iceland's economic glasnost is something we sorely need in this country

Thomas Molloy

Thomas Molloy

OFFICIAL figures showed this week that Iceland's economy grew 1.2pc in the third quarter and is set to rebound next year, a timely reminder that there are many more differences between Iceland and Ireland than a single letter and a couple of months.

With an unemployment rate of 7.3pc, an expanding economy and robust settlements with many bondholders, Iceland is in a very different place to Ireland these days.

As Finance Minister Brian Lenihan prepared Tuesday's budget, Iceland's winner of the country's reporter of the year award was in Dublin for a week to report on the crisis for her listeners back in Reykjavik.

Those who don't speak Icelandic can get a flavour of what Sigrun Davidsdottir saw here by reading her English-language blog at, which includes an interesting post called What the Irish Don't Know.

Davidsdottir is clearly surprised by the corruption in Ireland and our failure to face up to the origins of our crisis. That failure can perhaps be best seen in the difference between the report produced by the 1,000-year-old Icelandic parliament known as the Althingi and the two reports produced here.

The published Icelandic report is 2,600 pages while a longer online version comes to around 3000 pages. Contrast that with Klaus Regling and Max Watson's report of just 49 pages and Central Bank Governor Patrick Honohan's report of 177 pages.

Another report by Peter Nyberg, a Finnish government official, is due to be published here, but what is really interesting is that the Icelandic report was compiled after the Althingi changed the law to scrap banking secrecy rules.

This allowed interviews with bankers, civil servants, politicians, academics, journalists and allowed the reports to reveal exactly how the banks operated, how much they lent to their major shareholders and how the web of holding companies and companies was used to draw money from the banks and publicly listed companies.

This sort of information created a very detailed picture of the financial ecosystem that brought Iceland to its knees. It has also paved the way for the prosecution of bankers, businessmen and politicians including former Icelandic prime minister Geir Haarde.

No report written on the Irish banking crisis will be able to offer this sort of information.

Of course, there are many other important differences between Ireland and Iceland.

Iceland has been able to devalue its currency, impose currency controls and burn bondholders.

This means that Iceland now has a budget deficit of 6.3pc of gross domestic product despite high inflation. The result? The International Monetary Fund reckons Iceland has "turned a corner".

Ireland is unable to resort to some of these measures, such as devaluation and renegotiation of senior debt, without leaving the euro and triggering an even bigger crisis in neighbouring economies.

We have made our bed and must lie in it. But perhaps we can learn something from the other small, insolvent island nation in northern Europe and commission a report that would finally tell us what really happened and which members of the banking and political class deserve to spend the next few years in jail.

Irish Independent

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