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Come clean on Iceland recovery

Madam -- Dermot Scott ('Iceland model not for Ireland', Sunday Independent, May 27, 2012) is economical with the truth in relation to Iceland's handling of its financial crisis since 2008.

Iceland's Prime Minister Siguroardottir ensured -- when she became leader in 2009 -- that the feeble attempts of her predecessors to control financial chaos would be strengthened and set firmly in place. By late 2010, economic contraction and the rise of unemployment had been virtually halted -- and growth was under way from 2011 to the present.

A number of rational policy drives undertaken by Siguroardottir's Social Democratic Alliance, and Left-Green Movement government, were responsible for Iceland's rise from the ashes of right-wing economics. First, the Financial Supervisory Authority of Iceland gained permission to take over the domestic operations of the three largest banks. Second, the IMF-Stand-By-Arrangement, (SAB) which included medium-term fiscal consolidation (harsh austerity drives), stabilised central government debts to 80 per cent to 90 per cent of GDP. The resurrection of viable, but downsized, domestic banking then came into play.

This was followed by the enactment of 'capital controls' and the work to gradually lift and restore normal financial connections with the outside world. The SAB ensured that Iceland's economy would not be seriously affected by the European sovereign debt crisis. The last brick in the wall of Iceland's projected full recovery is ironically dependent on its desire to join the EU. A request welcomed by that body.

Now international investors have given Iceland a clean bill of health. Not exactly the disastrous picture depicted by Mr Scott in his neoliberal agenda-driven distortion of Iceland's fight back from the grave of unregulated capitalism. This resurrection could only have been achieved under a social democratic government, led incidentally by a majority front-bench female cabinet and the highly popular Johanna Siguroardottir.

Pierce Martin,

Celbridge, Co Kildare

Sunday Independent