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Prime Minister's Office

Address by Prime Minister Geir H. Haarde on the occasion of the National Day of Iceland.

Fellow Icelanders!

 I send my best wishes to all my compatriots from Austurvellir on this National Day.  I would also like to greet our foreign guests, and in particular diplomatic representatives who have come here today in honour of Iceland, her history and independence.

 June 17th, the National Day of Independence of all Icelanders, is characterised by rejoicing and anticipation. This goes for young and old. That is why people in their droves flock into downtown Reykjavik to celebrate this occasion, to see and be seen. Most conspicuous among the throng in the Parliament Square is Jón Sigurðsson. He looms above us, his statue apropriately standing tall.

It is remarkable how the memory of Jón Sigurðsson lives on bright in the national consciousness. Even though he rests in the cemetery of Sudurgata nearby, and has done for almost 130 years, reference is continually made to him in the national political debate. Not long ago the President of the Althingi in a speech in Jón's House in Copenhagen, asked how Jón would have reacted to the question of membership of the European Union. Whatever the answer to that might have been, this illustrates how present the memory of Jón Sigurðsson is in the minds and hearts of Icelanders.

It is indeed extraordinary how unanimous was the respect and admiration for Jón Sigurðsson in his own day; even over-excited students in Copenhagen, who were pretty unafraid to speak their minds in letters home to Iceland, pen hardly a bad word about Jón Sigurðsson, even though there were differences of opinion on policy in various matters. So undisputed was he, such a point of reference of his time, and his home like a refuge for Icelanders.

We can, indeed, be proud of Jón Sigurðsson, both of the man, the politician and scholar, as well as of his efforts on our behalf.
 Earlier this year we marked the 100th anniversary of the birth of former Prime Minister Bjarni Benediktsson. He was both a remarkable politician and scholar. Over a period of many years he stood in this very same spot and addressed the nation on the 17th of June. I would like to quote directly from his address of 1969, the 25th anniversary of the republic, and make them mine.  Bjarni's words were addressed not the least to young people:

“No-one will get on well in life, unless they are active citizens themselves, make their own minds up, have the courage to think independently, follow up their decisions and realise that little is achieved without effort. People must be ready both to use their minds and to work, if they really wish to bring about those improvements which they long for.

 We were given the power of reason in order to use it.  In this matter, there is no more striking example than that of Jón Sigurðsson with his tireless application to the good of the nation, his debate and explication of the issues, together with his unhesitating application of lawful decisions, when put to the test. If we follow his healthy example, then we will ensure that a free and sovereign republic will flourish in Iceland for future generations.”
Fellow countrymen!

 The Government which was formed following the last parliamentary elections has completed its first year of work and its first parliamentary session. Many significant tasks have been completed: important fundamental legal frameworks have been established in some areas, for example in education and justice; important amendments regarding social and welfare matters and on the organisation of the nation's defence have been made. Other issues await coming parliamentary sessions, during which the policies agreed upon by the governing parties at Thingvellir last year and laid down in the Government Policy Statement will be put into action.
 The Government inherited a good state of affairs, indeed, exceptionally good. However, shortly after the formation of the Government the world economy was hit by  considerable turbulence, which continues, but which we hope is beginning to settle.  Foreign financial markets have undergone crises greater than for many decades, and the resulting credit squeeze has made itself apparent everywhere. Some of the world's most respected and venerable financial companies have had major difficulties, lost vast sums of money and in some cases gone bankrupt.  Given the developments in the Icelandic economy in the last few years, and how it has become more open, liberal and globalised, it was to be expected that that these events would have their effect here too. This is the new era which cannot be reversed.

 One aspect of this new world-wide problem, with which we are faced, is evident in large price hikes of various products on world markets, such as fuel and food.  It is clear that such changes are like a tax on our national economy and undeniably reduces the living standard for everyone in the country. In addition, there has been a greater depreciation of the krona than was expected, partly because of fluctuations in the flow of capital in and out of the country. We must all adjust ourselves to these changed external circumstances, whether companies or individuals or the public sector. But let us not forget that these developments have far more serious consequences for many other nations, and in particular for those who can least endure further setbacks.
 In such circumstances we are fortunate to have prepared ourselves well over the past few years. The facts that the state treasury is more or less debt free and that the pension system is very strong, with large assets both at home and abroad, are crucial. Although inflation is unacceptably high at the moment, there is a high probability that it will fall over a fairly short period.  The most important task for the Government at this time is to ensure a new equilibrium in the economy and to reinforce the basis for industry and commerce so that we do not suffer serious unemployment.

The Althingi has granted the Government additional borrowing authority, either on domestic or external markets in 2008. Foreign loans would not be used to finance current public expenditure or investment projects, but rather would be used to strengthen the national foreign reserves. The new agreement between the Nordic central banks has the same aim and illustrates at the same time nordic friendship in action.  These measures reinforce our external defences in times of turbulence. 

 Given the current situation on international financial markets, it is clear that there are few commodities more valuable than trust and credibility. Such characteristics are not only valuable for individuals, but also for nations and companies. Iceland enjoys trust and it is important that our companies do so as well, not least companies in the financial sector.  Banking is based on mutual trust.

 We Icelanders were well prepared for the backlash, indeed better than most other countries, particularly those which produce electricity and heat their houses with fossil fuels.  It is, nevertheless, clear that we will now have to brace ourselves and we will all feel it. As a nation we will have to take account of the massive rises in the cost of imported fuel.  The only long term solution to this is to reduce our consumption with less and more efficient driving, the use of more efficient vehicles, conversion to other types of fuel, etc.  We have various options in these matters. We need to increase awareness of so-called fuel efficient driving. It might also be sensible to change the tax arrangements on vehicles and fuel along these lines also to reduce emissions of green house gases. Vehicles which are fuelled by alternative means already receive tax benefits. I encourage the public to look carefully at all possible options in this matter. The nation must change its consumption patterns and the contribution of each and everyone of us matters, both for the individual concerned and for the community at large.
 We Icelanders are used to a high standard of living, and this will of course continue. Even though living standards may drop for a while they will, nevertheless, remain much higher than they were just a few years ago and better than in most other countries. The foundations of our economy are strong and the nation ready for the struggle. Icelanders have shown on numerous occasions that they can overcome difficulties far more serious than those which we believe might face us in the coming months. We can step into the future not just with hope, but also with the certainty that success awaits us. Such certainty is grounded in the maturity which our society has achieved and the tremendous energy which resides in the nation.

Earlier in my speech I referred to the year 1969. At that time Icelanders faced one of the most difficult economic crises of the last decades, due to the collapse of both the fish catch and world prices. The difficulties then were much greater than now. But with a joint effort the nation overcame the problems and successful years followed. I am confident that this will be the case now.

 Wage contracts in the private sector earlier this year show that we Icelanders can work together for responsible development of the labour market and that we will work our way out of the present difficulties with good sense and caution. Recent wage contracts with the public sector employees are also confirmation of this. The Government has stressed that wage contracts should be based on modest general wage increases, but that there should also be considerable increases for the lowest paid. Such an approach will support both increased equality and more stability in economic matters.

 Fellow Icelanders!

At the end of May we were once again reminded of the forces of nature by the earthquake in Ölfus and elsewhere in the south of the country. We have all followed closely the effects of the earthquake on the property of people in that part of the country and their stoicism in the face of this calamity.  Following the earthquake on May 29th I stated that the Government would do all in its power to assist those who have suffered. Financial resources have already been set aside and emergency legislation passed to benefit victims. It was a great blessing that there were no fatalities, though it is clear that many have suffered damage to property and there are many things which need to be replaced in many homes. We underline the importance of ensuring the safety of those who live in regions prone to earthquakes and we plan to increase research so that it is possible to provide as much protection and warning as is possible. We warmly thank the staff of the civil defence and Red Cross, the police, rescue teams, health workers and everyone who came to help during this event. In such circumstances we Icelanders stand together as one. This has a long tradition. This characteristic was expressed in verse by Jakob Jóhannesson Smári in his poem of 17 June 1944:

Vor þjóð er margþætt, en þó ein,  
 og eins manns böl er sérhvers mein, 
 en takmark allra og innstu þrá
 með einum rómi túlka má.

[“Our Nation is manifold, and yet one,
And the affliction of one man is the suffering of each one,
Indeed, the goal of everyone and deepest desire
With one accord can be interpreted. “]

 I wish you all a happy national day.

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