Icelandic Terrorists — Cod Warriors and Bankers

Icelandic Terrorists -- Cod Warriors and Bankers

Using provisions of the Anti-terrorism, Crime and Security Act, Britain froze the U.K. assets of failed Icelandic bank Landsbanki Islands hf, and is threatening to sue Iceland on behalf of 300,000 British bank customers who have been blocked from accessing their accounts in Icesave, the bank’s online savings unit.

The British government justified use of the anti-terrorism statutes by claiming Landsbanki’s collapse might harm the U.K. economy. The British Treasury will guarantee customer deposits at Icesave, even those above the customary 50,000-pound ($87,800) deposit protection limit.

While official pronouncements emphasized support for small individual U.K. depositors, at least 45 local governments in Britain and Wales have invested public funds in Icelandic accounts, a situation reminiscent on Orange County, California’s investment in derivatives. Local UK authorities are asking the Chancellor to guarantee local government deposits in the offshore banks, and a deferment of tax payments to the central government for local governments that need to borrow because they cannot access funds in Icelandic banks.

Icelandic banks and investment companies were deregulated in the 1990s. Flush with foreign deposits, they acquired overseas assets, including British real estate and food, clothing, jewellery and toy stores. Iceland and its foreign investors were drunk on finance, but the crushing hangover is just starting. The worldwide credit collapse has hit Iceland heavily, and the government has seized the country’s three largest banks.

Twentieth-century relations between Britain and Iceland included three “Cod Wars,” conflicts over fishing limits. Trawlers were rammed, shots were fired, and NATO eventually mediated the disputes. Medieval Icelandic Viking raids on England will undoubtedly be mentioned in the popular press.

Image by Mike Licht. Download a copy here. Creative Commons license; credit Mike Licht, NotionsCapital.com.

6 Responses to “Icelandic Terrorists — Cod Warriors and Bankers”

  1. Rainbow Warrior Says:

    They only did what all the other banks did. They are not so special as to be treated as terrorists however. Brown is way out of line on this one. Iceland was trying to secure enough money to bail them out the same as everyone else was doing.

  2. Mike Licht Says:

    Rainbow Warrior Says: They only did what all the other banks did.

    Beg to differ. Icelandic banks owed 12 times the entire country’s GNP. That is a degree of uncontrolled speculation unmatched in the free-market fantasies of Newt, Phil and Wendy Gramm, and (until last week) John McCain.

  3. ICE Says:

    Dear People,

    I am from Iceland, please rember that this crises has nothing to do with Icelanders. We, the folks living in Iceland have lost our pension and savings also due to this “terrorists” or the capitalism in Iceland and other countries. Now Iceland is in deep shit due to this strange behavior of your PM. No money can be transferd to, or from Iceland. Not only from UK but also from other countries, this is just due to your PM act which have put us in the same category as terroists. We dont get paid for export any more and I realy mean we DONT get paid. This means that we cant buy any goods.

    We have some goods in stock that we can use for now, but I dont know how long they will last. I am serious this does not look good.

    Best regards
    The icelander.

  4. Mike Licht Says:

    ICE:

    I am a Yank, so the seizure of Icelandic assets in the UK are not an action of my government. The results of bank and financial services deregulation in Iceland serve as a laboratory case for the rest of the world, certainly for the USA.

    The deregulation of US financial services precipitated the global credit crisis, and political conditions here may prevent implementation thoroughgoing safeguards in the national economy. Let us hope the coming realignment of the global economic system takes this into account.

    I hope the EU and Russia come through to ease the immediate crisis in Iceland. I fear the current U.S. administration will be of no use whatsoever.

  5. Kenneth Balys Says:

    Dear Readers,

    For perspective on my opinions I feel it necessary to say that I am half Icelandic and half German living in Canada.

    People should keep in mind that the entire state of collapse in Iceland was really caused by the actions of approximately 20 people. I have always found the actions of Landsbanki distasteful and there were early (2006) indications that this bank was vulnerable to a credit collapse like what we have now.

    This being said, the actions of Brown in the U.K. have made it nearly impossible for Iceland’s government to respond in a responsible way to this situation. All of the banks in Europe were doing the same thing as Landsbanki and yet the Icelandic nation has been singled out. I personally feel that Brown struck an easy target in large part to show that he was “doing something”. His invocation of “terrorist” legislation has really made this whole situation an order of magnitude worse.

    I feel that it is a terrible error to tarnish a whole nation and people in the way Brown has Iceland. Similarly, I cannot feel anything other than repsect and love for the many great nations that make up the United Kingdom.

    This financial mess could better have been handled without this legislative vitriol.

  6. Björk Explains It All To You « NotionsCapital Says:

    […] and cannot access their funds. Icelandic companies bought British firms, and the U.K. government has seized these assets under an anti-terrorism […]

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