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Iceland to Bankers: We Refuse to Pay

by Notsylvia Night

HERE IN ICELAND people say that if the country’s government agrees to give in to British and Dutch blackmail to pay the debts of the private Internet subsidiary Ice-Save of the private bank Landsbanki, we all will become Ice-Slaves. (ILLUSTRATION: Icelanders protest the fictitious “debts” of the bankers.)

So public opinion is forcing the parliament to refuse unconditional debt payments. According to a new agreement, payments are only to be made conditionally as a percentage of economic growth.

Already a large group of international banks have come together to sue Iceland for full and unconditional payments. Joseph Tirado, from the British law firm Norton Rose, said that a large group of banks will be part of this lawsuit. He did not want to give the names of those institutions; neither would he say in what court the case would be heard. EU officials and others are threatening Iceland with international isolation.

Michael Hudson, economic professor, researcher and economic adviser to the Icelandic government, calls the Parliament´s agreement a quantum leap, which might, if it succeeds, change the world’s financial environment.

He explains in his article “The Specter of Debt Revolt Is Haunting Europe -Why Iceland and Latvia Won’t (and Can’t) Pay for the Kleptocrats’ Ripoffs” how Iceland, like Latvia and other eastern European countries, was tricked into the neo-liberal model of debt-accumulation and how this led to the financial melt-down;
and how the Dutch and, most of all, the British government deliberately increased the damage and so the debt, which by now has become practically un-payable; how the demand to pay the debt would lead to inevitable economic destruction; how the British and Dutch government, subservient to their country´s private financial institutions, blackmailed the Icelandic government negotiators into a self-destructive agreement; how even EU and international financial and legal rules were broken in the process; and how this all – with the help of the Internet – was made public and so forced the Icelandic parliament to set tight limits on the debt-repayments, limits which connect the repayment with the real growth of the Icelandic economy, preventing also the wholesale gift of Icelandic resources to foreign creditors as collateral for these debts.

In Hudson’s opinion, if Iceland succeeds with this strategy, if the country can protect its sovereignty, then it will become a precedent for all other debtor countries all over the world and will end the unlimited powers of exploitation of the global banking kleptocracy.

Some excerpts from Hudson´s article:

The Althing (Icelandic Parliament) agreed to a deal which would severely restrict payments to the UK and Netherlands in compensation for their cost in bailing out their domestic Icesave depositors.

This agreement is, so far as I am aware, the first since the 1920s to subordinate foreign debt to the country’s ability to pay. Iceland’s payments will be limited to 6 per cent of growth in gross domestic product as of 2008. If creditors take actions that stifle the Icelandic economy with austerity and if emigration continues at current rates to escape from the debt-ridden economy, there will be no growth and they will not get paid….

Will Britain and the Netherlands accept this new reality? Or will they cling to neoliberal – that is, pro-creditor – ideology and keep on stubbornly insisting that “a debt is a debt” and that is that. Trying to squeeze out more debt service than a country could pay requires an oppressive and extractive fiscal and financial regime, Keynes warned, which in turn would inspire a nationalistic political reaction to break free of creditor-nation demands. This is what happened in the 1920s when Germany’s economy was wrecked by imposing the rigid ideology of the sanctity of debt.

A similar dynamic is occurring from Iceland to the Baltics. The EU is telling Iceland that in order to join, it must pay Britain and Holland for last autumn’s Icesave debts….

Of most serious concern are the long-term consequences of replacing defaults by debt pyramiders and outright kleptocrats with a new public debt to international government agencies – debt that is much less easy to write off….

In an environment that saw Northern Rock and the Royal Bank of Scotland fail, Iceland’s Commerce Ministry wrote to Clive Maxwell at Britain’s Treasury on October 5 to assure him that the government would stand behind the TIF in reimbursing Icesave depositors in accordance with EU directives. Yet three days later, Chancellor of the Exchequer Alistair Darling claimed that Iceland was refusing to pay. On this pretense Mr. Brown used emergency anti-terrorist laws enacted in 2001 to freeze Icelandic funds in Britain….

Iceland promises to be merely the first sovereign nation to lead the pendulum swing away from an ostensibly “real economy” ideology of free markets to an awareness that in practice, this rhetoric turns out to be a junk economics favorable to banks and global creditors.

Read the whole article here or here.

Of course, the international bankers know only too well that Iceland’s move will be imitated by others, and that’s the reason for the threats and the blackmail against the country….

The national economy has first and foremost to serve the people, the majority population of the country, and not the other way around. International trade and finance must be a tool to serve the needs of the people around the globe and not a tool for some megalomaniac corporate elites with the support of their intellectual and political lackeys to transfer most of the world’s wealth and resources into their own hands.

However the Icelandic stand has its risks. In the past countries which opposed the plans of the corporate and financial elites have experienced assassinations of their political leaders, false-flag terrorist attacks and all kinds of political destabilization tactics.

So friends around the world, please keep an eye on us. If something strange happens to us, you will know why it happens.

Read the full article at Notsylvia Night

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