Iceland on the Brink
Iceland is the first major political victim of the worldwide financial crisis as its conservative coalition government collapsed in the wake of the country’s economic devastation. Iceland’s banks failed after accumulating large debts during the recent period of rapid economic growth. Its economy is expected to shrink by about 10% in 2009 and 2010,and an inflation rate of 13% is projected.
A $2.1 billion loan package from the International Monetary Fund, rates hikes to halt runaway inflation and campaigns by local celebrities such as singer Bjork, have had little impact. The IMF predicts Iceland’s economy is facing its biggest slump since the country won its independence from Denmark in 1944. Millions are also owed to depositors around the world.
In an unusual move for this peace-loving country, rioting erupted outside the parliament building in Reykjavik, where people of all ages turned out with pots and pans as well as musical instruments. Demonstrators have accused the government of leading their once-prosperous island nation of 320,000 people into economic ruin. Police used tear gas for the first time since 1949, when Icelanders protested the country’s decision to join NATO.
Demonstrators threw eggs and soda cans at the car in which Prime Minister Geir Haarde was riding but he escaped unhurt. He was also burned in effigy and shortly afterward announced that he would step down.
Iceland is expected to appoint Johanna Sigurdardottir as interim prime minister. Now social affairs minister, she is the choice of the Social Democratic Alliance Party to lead the government until May when an election will be held. She entered politics through the labor movement, serving as a labor organizer while working as a flight attendant with Loftleidir Airlines, now Icelandair. She would be the world’s first openly gay woman to become a head of state. Iceland gave women the vote in 1915, two years before the U.S. and elected a woman president in 1980.
Iceland was one of the most prosperous countries in the world a short time ago.“The standard of living is among the highest in the world with a per capita income of over US$35,575 as of 2000. Life expectancy rivals that of Japan despite being a nation of drinkers and meat eaters. One of the safest countries in the world, Iceland has a crime rate is so low the police don’t carry guns.” This is from our earlier article at liveabroad.com/articles/iceland/