Iceland in the news

For some reason, Iceland has been cropping up in a few recent stories. For those who like unusual places and offbeat news, I thought I’d pass along small nibbles and a few bigger bites for a weekend read.

Can you name the only NATO country that has no army? Well, I gave it away, of course. It’s Iceland. According to this story in the National Post, Iceland dissolved its “defence force” in 2006

Ever since, Iceland has hosted what NATO calls “peacetime preparedness missions” in which, several times a year, a NATO country bunks down at Keflavik and takes charge of air defence. At any point, Iceland’s 300,000 citizens could see their skies patrolled by Germans, Norwegians, Danes, Portuguese, French or Americans.

If Iceland should ever find itself embroiled in “crisis or conflict,” however, the island nation’s game plan is to immediately put the United States in charge of defence.

Canada is now in the middle of “Operation Ignition“, a 5-week “turn” to patrol and defend Iceland, something it also did in 2011.

437 Squadron crew members fly a Polaris CC-150 aircraft during OP IGNITION as Canada takes on patrolling Iceland in March and April. Photo: Cpl Pierre Habib, 3 Wing Bagotville, © 2013 DND-MDN Canada

 

Would Iceland ever need defending? Well, that’s a good question, one that certainly concerns the U.S. If you like extensive background, here’s a detailed but readable paper from the  Strategic Studies Institute of the U.S. Army War College “At Crossroads: Iceland’s Defense and Security Relations 1940-2011“.

Which brings me to the next item of curiosity.

According to a fascinating 3/22 account in the New York Times, a former communist party official from China has been trying to buy or lease land a far-flung corner of Iceland “…to build a luxury hotel and an ‘eco golf course’ for wealthy Chinese seeking clean air and solitude.” The area in question is Grimsstadir. It’s an isolated, barren and windswept expanse of next-to-nothing in the north-east. One might think it among the least likely spots for such development on earth.

It’s quite the tale, and generates much speculation:

A proposal by the Zhongkun Group to renovate a small landing strip in the Grimsstadir area and buy 10 aircraft led to anxious talk of a Chinese air base. The area’s relative proximity to deep fjords on Iceland’s northeast coast near offshore oil reserves fueled speculation about a Chinese push for a naval facility and access to the Arctic’s bountiful supplies of natural resources. Far-fetched rumors about Chinese missiles and listening posts led to worries about military personnel pouring in disguised as hoteliers and golf caddies.

Truly, stranger than fiction.

Lastly, in the Iceland file, with each new fiscal/banking crisis in the European Union, I go back and wonder about what life is like in Iceland, after that nation was in the center of its own bank collapse.

Given a choice between democracy and serving the financial industry, Iceland said democracy matters more. Their economy took some lumps, but seems to be muddling along. Ireland took a different route (austerity), which some have come to regret. Paul Krugman takes a whack at this comparison now and then, as with this blog from 2011 in the New York Times.

According to this 1/29/13 article in the Telegraph, a recent ruling bolstered Iceland’s decision, even while it raised new worries about European banking on the whole:

The European Free Trade Association (EFTA) court on Monday ruled that Iceland did not break European free trade laws on deposit guarantee schemes by refusing to compensate foreign depositors after Icesave’s owner, Lansbanki, collapsed in 2008.

The judgment obliterates any hopes the UK government had of pursuing Reykjavik for interest on the £2.35bn bail-out. It also raises grave questions about Europe’s cross-border banking arrangements, which allow overseas lenders to “passport” into a country without being subjected to local financial regulation

I’m no economist. Much of the financial mess is beyond my understanding. I couldn’t find much on how Iceland and Ireland compare now, in 2013. Also, observers are still arguing about the net effect of each country’s responses.

But how different places react – and what they chose to value – is both interesting and instructive. Especially as the crisis is far from over and many other countries are also facing hard choices.

It turns out that Iceland is worth watching for all sorts of reasons.

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13 Comments on “Iceland in the news”

  1. Alan Gregory says:

    The U.S. once kept a sizable force of interceptor jets sationed at Keflavik. And in the 1980s, the 552nd Airborne Warning and Control Wing, U.S. Air Force, at Tinker AFB, Okla., kept an E-3 AWACS aircraft at Keflavik. I was serving with the 552nd for three years in the 80s and remember well the time I got to accompany an aircrew and their E-3 to Iceland. I hope to revisit the country.

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  2. Peter Hahn says:

    I tend to believe Paul Krugman on Iceland vs Ireland.

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  3. knuckleheadedliberal says:

    “I’m no economist. Much of the financial mess is beyond my understanding.”

    Don’t feel bad, most of the financial mess was beyond the understanding of most economists including some Nobel Prize winners and pretty much everyone from a school in Chicago.

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  4. Ken Hall says:

    I too am no economic “expert”;however, the admittedly little I have read about the economic crisis suffered in Iceland during the worldwide meltdown (2007-2008) indicates that the “right” thing the Icelanders elected to do was let the “too big to fail” banks FAIL. I seem to recall that a number of European investors took, in the vernacular, “haircuts” (lost substantial wealth). Currently the devaluation of the Icelandic kronur has effectively given all Icelanders about a 50% cut in pay versus what they were earning prior to the collapse. I recall that the Brits were really really irritated at the haircuts they were given; I know not the current status between the two countries presently. The Icelandic stock market plummeted from a high of 9016K in July 2007 to less than 300K in 2008 rebounding to roughly 1150K today. As I said I am no economist but, today’s 1150/9016 appears to me to be about 12.7% of its’ high water mark and 300/9000=3.33% at its’ lowest.

    Personally I would have preferred that we had given our “TBTF” banksters the same treatment the Icelanders did but, I reckon our banksters owned so many politicians as well as the MSM they were able to convince we Americans that we would all go down the drain if those at the top of the economic ladder went down the drain. The fact that Iceland’s human population is only about 0.1% of the US or 0.0000043% of the Earths may have mitigated the economic impact letting their banks collapse would have on the total world economy.

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  5. Mervel says:

    How much are we charging Iceland to provide their defense?

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  6. mervel says:

    “Currently the devaluation of the Icelandic kronur has effectively given all Icelanders about a 50% cut in pay versus what they were earning prior to the collapse.”

    If this is accurate, I can tell you right there is probably one major reason we did not respond in the same way Iceland did, however I agree with your sentiments overall. We have to let these banks go down when they are run by incompetent and immoral individuals. What is the point of having a free market system if we subsidize incompetence and criminal actions? If we are not going to have a free market system than we should just nationalize all of the banks and be done with it. Right now we still have the worst of both worlds, private gains and public losses.

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  7. tootightmike says:

    ” Incompetent or Immoral”. Hmmmm Let me think on this question a bit………….. Incompetent, I think not. These very highly paid professionals did exactly what they were hired to do, and that was to fill the pockets of the worlds most wealthy and powerful folks. In the end they all claimed incompetence, but that was a convenient lie. It was immoral, and they laughed all the way to the bank.

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  8. mervel says:

    toot, yes for some of them I would agree. But others honestly didn’t know what they were doing, they would have made more money by buying, investing in and creating fraudulent mortgage loan packages.

    There is a myth of meritocracy both for Corporate and Government in America that I think is being slowly removed. We all would like to believe that these guys were the brightest, those running our government and those running our corporations, some are very bright, but I am coming to believe it is truly random, the right family, the right connections, being in the right place at the right time, and pure luck. Anyway I do think Iceland took the correct approach to the financial crisis, I don’t know if we could have pulled it off however.

    I think however it is another case of a well off country relying on the US to defend them, we have more poverty than Iceland by far, and yet instead of taking care of our poverty we are spending our money defending them while they just disband their army and say let the US do it.

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  9. Walker says:

    “…I am coming to believe it is truly random, the right family, the right connections, being in the right place at the right time, and pure luck.”

    That’s a funny kind of random. It’s called oligarchy.

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  10. Mervel says:

    Yeah, I mean I am not sure about it, I think we still have some meritocracy going on; more than in many places. I just think we have some problems we should look at when it comes to protecting large financial institutions from their own bad decision making. If these Boards of Directors want to appoint the idiot sons and daughters of their rich friends than the companies including the shareholders should have to live with the consequences of their stupid decisions. The Left and the Right were both correct on not bailing these guys out in my opinion.

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  11. If Clapton is God, Warren Haynes is Jesus says:

    Yeah, by all means, don’t pay to defend yourselves, just look to good old Uncle Sam as he’s more than willing. Even if it means putting his citizens further and further into debt. Being the world’s policeman is so tiring….and expensive!

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  12. Walker says:

    Yes, but it’s good for those military industrial CEOs, and helps fuel their lobbying activities. Who cares about anything else?

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  13. mervel says:

    Well it would be Ok if we simply charged them, they owe us a pretty big debt. Yet when we drive around the north country we see hungry kids, rotting homes and no jobs, but gee Iceland is just fine and our dollars are helping them pay ZERO for their own defense.

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