Hoppa yfir valmynd
Ministry of Finance and Economic Affairs

Rising from the Ruins 5

Steingrímur J. SigfússonIceland and the surrounding world, Part 5.

Iceland is an independent, sovereign state which controls its own destiny. That's the way we want to have it and that's the policy of the Left-Green Movement. But no man is alone in the world, nor is any country. Political and economic relations, participation in various types of bilateral and multilateral co-operation, membership of international organisations and conventions are all an integral part of existence and development as an independent state alongside other states, a nation among nations. In resolving issues following the economic collapse, independence continues to be an important point of departure for all our work. We intend, as an independent nation, not least economically independent, to rebuild what collapsed here and prove ourselves once more to be conscientious and responsible people. Here we have our work cut out for us, as our reputation is badly damaged. To echo an historical comment, one could say that seldom have so few done so many (i.e. an entire nation) so much damage.  We are in fact fighting a struggle for independence, which now and likely for the next few years will be aimed primarily at ensuring the country's full economic independence. Without rebuilding a strong economy, ensuring a good standard of living and full employment we will not in fact be independent, at least not in the way we want to be.

Iceland and the European Union  

To many people, these words may seem to contradict the fact that the majority of MPs, including this author, supported Iceland's application for EU membership a year ago.  This was a difficult decision to take but the main argument at that time – apart from the political reasons, i.e. a compromise between coalition parties – was to have the options clearly laid out and to bring to a conclusion decades of discussion as to how Iceland's future relations with the EU should be structured. At the same time, this will clarify our future environment as far as currency matters are concerned, and we can proceed with our economic reconstruction accordingly.  Should the negotiations result in an agreement worthy of consideration, it will be up to the nation itself to determine the outcome in a referendum. This is the democratic approach to this major issue, and which should be followed in other similar issues, in the estimation of the LG Movement. To eliminate any doubt, however, there has not been any change in the LG position on European issues. We are opposed to Iceland's EU membership but we do not fear open and democratic discussion nor the outcome of such discussion.

Icesave one part of a large package

A settlement has yet to be finalised between the Depositors' and Investors' Guarantee Fund in Iceland and its UK and Dutch counterparties. The Icesave issue has certainly proven to be a trial for all of us, but we have to agree that the issue has to be dealt with as an independent nation should. Part of being independent is resolving disputes with other nations responsibly. Independence conveys both rights and obligations. The victories are ours when they are won, and the defeats and mistakes are ours as well. We cannot claim one and reject the other.

This author still remains as convinced as he was in the late winter of 2009, after having examined this issue thoroughly, that negotiations are the most advantageous and least hazardous route for Iceland. The issue has caused, and will cause us, if it remains unresolved, difficulties on many fronts. Those cocksure voices who now maintain that we have done quite well up until now despite failing to resolve the Icesave issue know little of the struggle that has been required behind the scene to keep things on track, e.g. to push through the second review of the co-operation programme with the IMF despite the situation in the Icesave dispute. One of the tasks of the current government has been to rebuild Iceland's credibility abroad and demonstrate that a responsible government is at work here. The report of the parliamentary Special Investigation Committee shows unequivocally that Iceland's reputation was ruined in part because the country's government failed to listen to friendly countries and its actions completely destroyed its credibility.

Resolving the Icesave dispute, naturally on terms and conditions as favourable as possible, is a crucial premise for continuing economic reconstruction and one aspect of normalising our relations with the outside world, opening access to foreign financial markets and rebuilding our reputation. Icesave is therefore not an isolated problem but rather part of a much larger issue, that of getting Iceland moving again.


Iceland has been a member of the International Monetary Fund ever since its establishment in 1946. The Fund has a somewhat chequered history internationally. Iceland's current co-operation with the IMF has proceeded smoothly, with the exception of delays due to unrelated issues which we naturally could not agree with.  The Fund is naturally conscious that in Iceland's case it is collaborating with a Nordic welfare state and that it has much at stake, no less than we do, in making this a success. Its proposals in tax matters are evidence of this. They are aimed at maintaining public consumption at a Nordic level and achieving social equality. Our co-operation with the IMF up until now has been effective and focused on substance, and it has proven possible to adapt various aspects of the original programme to our situation. If everything proceeds as hoped, the joint recovery programme will conclude in a year's time and we will naturally welcome this turning point.

Environmental issues are the future

The Left-Green Movement is, as its name suggests, a green party, an environmental party. We do not emphasise environmental issues merely because of our own ideals or national interests. Environmental issues and the progress of sustainable development are the leading international issue of our time. Future global conflicts will centre on resources, such as water. These conflicts will be most severe where environmental concerns have been neglected. Environmental issues therefore concern the fate of humankind. It is crucial for Iceland, both as a country and as part of the larger world, to be a staunch proponent of the cause of environmental responsibility and sustainable development in government and in the Althingi. The best option to do so is the Left-Green Movement, and continuing co-operation within the current coalition, which has given environmental issues a higher priority than any other government in Iceland.

Cornerstones of foreign policy

The cornerstones of our foreign policy are national independence, with membership in the United Nations, in West-Nordic, Nordic and European co-operation, and in the international sphere in a time of global integration. Regional co-operation in the North Atlantic and Arctic will be important undertakings in coming decades. This co-operation must be based on a forward-looking environmental strategy, respect for the independence of individual countries, the endeavour for peace for all mankind and a more equitable division of the qualities of life. Neither we nor all mankind will survive otherwise.

Steingrímur J. Sigfússon
The author is Minister of Finance in Iceland.

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