The Lesson of IceSave

Noting the recent and dramatic rise of citizen participation in our democracy here in the United States, it is interesting to look back to the beginning of the IceSave crisis. Is this perhaps a taste of what's to come in the US? Iceland's meltdown began in 2008 and the country has been a cauldron of political participation ever since. This article by Deena Stryker, writing for the Daily Kos, "Iceland's On-Going Revolution," is an excellent brief summary of the lesson of IceSave.

It was the so-called IceSave accounts, offered by private banks based in Iceland, that precipitated bankruptcy for the small European nation. Many of these accounts were held by citizens of Great Britain and other countries, and were covered by questionable levels of deposit insurance. When the private Icelandic banks folded, and non-Icelandic account holders were at risk of losing their money, the British government and others promised their citizens reimbursement. How did these governments propose to pay for this reimbursement? They came after the government of Iceland to make good the bill. The government of Iceland took it to the voters, and the voters of Iceland said "Nei" by a whopping 93%.

It wasn't quite that simple, though... along the way, Iceland had what Stryker and others call a revolution. The country went through bankruptcy, change of government, referendum, criminalization of the bankers involved, and a revision of the country's consitution complete with citizen participation over the internet. As Stryker writes, the original deal would have required "each Icelandic citizen to pay 100 Euros a month (or about $130) for fifteen years, at 5.5% interest, to pay off a debt incurred by private parties vis a vis other private parties. It was the straw that broke the reindeer’s back."

"What happened next," Stryker continues, "was extraordinary. The belief that citizens had to pay for the mistakes of a financial monopoly, that an entire nation must be taxed to pay off private debts was shattered, transforming the relationship between citizens and their political institutions."

The fallout from the IceSave crisis continues today. Just last month Johanna Sigurdardottir, Iceland's Prime Minister, announced that the new constitution will be voted on when the next Presidential elections take place in June 2012. And just yesterday a Reykjavik court ordered a former bank executive to repay EUR 16,624,415.12 to the now-defunct bank that used to employ him, which it will presumably use to help pay off its debts.

As I watch the daily Occupy updates posted to websites across our own country and observe ordinary US citizens become more and more emboldened to act, I wonder if we, too could go the way of Iceland's extraordinary populace and institute real, meaningful, citizen-driven reform.