Jonathan Fryer

Writer, Lecturer, Broadcaster and Liberal Democrat Politician

Will Iceland Sink or Save the World?

Posted by jonathanfryer on Thursday, 9th October, 2008

Iceland rarely hits the world’s headlines, except when it launches a Bjork or hosts a Cold War summit. But now it stands accused (by the British) of starting a Cold War itself, with its sudden freezing of nearly nine hundred million pounds worth of British assets in Icelandic banks, much of these deposited by local authorities in the UK. Kent County Council is particularly exposed, while in London, the borough of Barnet has substantial holdings which it might not be able to get its hands on. In retaliation, Gordon Brown has ordered the freezing of Icelandic assets in Britain, though James Purnell, Secretary of State for Work and Pensions, was singularly unable to specify on ‘Newsnight’ tonight the scale of what those might be. This all brings back memories of the Cod Wars between Britain and Iceland over fishing rights in the 1950s and 1970s, though this new Cold War is potentialy far more serious. The LibDems have rightly said that the local authorities need to be reassured by the British government that their money in Iceland will be covered by some compensation scheme, otherwise Councils might start start withdrawing money from all banks everywhere, which would dangerously exacerbate the financial crisis here.

By supreme irony, tonight’s ‘Newsnight’ programme also screened a feature by the Science Editor, Susan Watts, on the possiblity of using Iceland’s basalt rock as a giant carbon sink — to suck in carbon dioxide from the atmopshere and thereby help save the planet from global warming. This is all a weird coincidence, of course, but I am sure I won’t be the only person going to bed tonight wondering whether there isn’t some way of profiting from this juxtaposition to make what Karl Popper would have called a ‘leap of the imagination’ to combine the two things, so Iceland can help save us rather than sink us.


4 Responses to “Will Iceland Sink or Save the World?”

  1. Isn’t the ansa to yr question – neither? I know it’s a big deal to UK/Iceland – but in the great scheme of things the Icelandic economy is of slightly less important than say, Germany, or Russia?

  2. I have written a post summarising the impending problems in Europe Do read it and post your views

  3. jonathanfryer said

    In principle you are right, Tim, but the ramifications potentially go much further than Iceland itself. Iceland’s move can further undermine confidence in the wider banking system. And Gordon Brown’s extraodinary response — using anti-terrorism laws! — is in my view as destabilising.


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