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Brexit Coup d’Etat: Tracking the Overthrow of EU Rule of Law in Britain

Historical Note

This analysis was researched and written days before the snap June 8 UK election which was about to lock in the electoral minority of the ‘Brexit referendum’ with no public understanding of the immense historical stakes and dominant powers involved behind the political scenes. Least of all recognised was that the hard Brexit led by the now minority-government Tories allows massive de-regulation of the most powerful transnational private financial and agri-food interests in the UK and the EU. Yet no sooner had I completed the body of the following analysis than the London terror attack struck on Saturday night June 3, with PM Theresa May pointing at all opposition who sought causal understanding of the terrorist attacks as showing “far too much tolerance”.  The first pages of the analysis below bring this pre-election turn of events into explanation of the slow-motion ‘Brexit coup’ that continues today before it is fully understood. While the June 8 2017 election turned against the Tory-May government as anticipated by this June 5 diagnosis in media res,  the global struggle for life-protective law still remains under more systemic threat than since 1945. The purpose of this publication (the article has  been published widely in post-election form) is to share with fellow scholars how thinking-through within the immediacy of events can make an historic difference before a managed turning point of history is instituted into a no-turning back de-regulation attack on life-protective laws and common life assets to serve only very powerful financial interests with the public and opposition kept blind to, in fact, the biggest single attack on the civil commons of Britain in its history.

 

In the Midst of the London Terror Attack

It is June two days before the snap June 7 UK General Election is set to lock in a referendum to leave the European Union unsupported by a vast majority of British voters and – with little or no notice – reversing 50 years of evolved financial, labour rights and environmental regulations. These little discussed facts are spelled out in depth ahead. All the dots are joined from the start of the Leave campaign whose overthrow objective, strategists and behind-the-scenes money and interests are only beginning to be known.

It might seem too late for British voters to do anything about it, but much that is unexpected has occurred since the snap election was called and whited out in the press until recent days. The 24-point lead for new PM Theresa May and the Tories over grass-roots Labour and Jeremy Corbyn long seemed a sure thing, and so it was planned. But the lead has collapsed towards less than a few points and still dropping.  Then the London terrorist massacre on Saturday night June 3 struck on cue. For the public was awaking to the dressy mock-up Margaret Thatcher, and the rising Jeremy Corbyn opposing her is a near unique leader in British politics – an honest man based on a grass-roots movement for workers and the poor.

 

 

The Corbyn Labour Threat

Corbyn is not only honest, which none have denied. He has showed himself over a year capable of standing up to a non-stop corporate media barrage of official loathing. He has not backed down from the near public ruin of his grass-roots movement in which war-criminal Tony Blair and his ‘New Labour’ ilk have led in trying to sabotage his movement – barking out front, ostentatiously resigning from cabinet, tearing apart the reclamation of the Labour Party from the corporate boardrooms where it had become Blair’s Murdoch-press lap-dog and a neo-liberal shell. The reason Corbyn was and remains an enemy of the ruling castes in the media, politics and the boardrooms is that he unapologetically stands for traditional socialist values. His program is not contaminated as almost everywhere else by trendy post-modern culture, saucy relativism and politically correct diversions from economic life substance. Even worse to official media-and-political culture and its submergence in capitalist globalization with no alternative, Corbyn and his politically grounded movement actually stands for British workers’ interests, the public sector, social services, and environmental safeguards as developed within the European Union – all of which are on the chopping block now in Britain and across the world.

 

 

The Ruling Agenda

The problem is that majority of citizens in the world support these long-developed and popular social infrastructures and life standards. So the only way of continuing to defund, privatize and erase them is by pretending there are much more modern and flexible marketable versions for corporate and bank profit. One way or another, and there are many ways, this process consists in historical reversal and laying waste to over a century of social evolution and life standards as the ruling agenda of establishment political parties in power. This hidden agenda has increasingly spread and ruled the world. All the degenerate trends of extreme inequality, private money power over all, rising youth unemployment, pervasive state corruptions, massive dispossessions, override of long-established workers’ rights, and multiplying ecocidal production and products stem from it.  The vast profile of one-way degeneration of social systems across borders is, however, never connected across the dots by corporate media, states or the academy itself. Rather the underlying agenda euphemized as ‘globalization’ is put on fast-forward.

 

 

New Right-Wing Nationalism is Another Brand for the Same Hidden Agenda

It may seem that the erupting new ‘nationalist’ movements in US and Britain, Eastern Europe and Russia, and so on, are the great swing back against corporate and bank globalization. This is the Great Illusion of our time. What is hardly yet seen is that, in fact, these ‘nationalist’ movements, as in Tory Britain or Trump US racing ahead today, do nothing to connect or to solve any of these life-and-death social system problems and the cumulative pollutions and razzings of organic, social and ecological life organization across the globe. They are only a speed up of the global eco-genocidal processes under new operations and pretexts of new national recovery and freedom. Yet always the same transnational corporations and banks make even more money than before, mostly from transferring public wealth to themselves by vast tax-cuts, increased subsidies, steep cut-backs on social services and spending, and elimination of everything that is not needed for short-term profit cycles. Of course the opposite is pretended in many ways varying with cultures, but always good for the working people. Still, one can always tell the real agenda by whether or not the ecocidal processes and products are effectively ruled out rather than accelerated in fact, and whether or not societies are so governed that more citizens become better off in life work security and free development rather than the opposite in fact.  This is where the facts as opposed to pervasive system rhetoric and claims show systemic degeneration and dispossession in human and ecological life terms. Seek exception in scientific fact. Seek anywhere that Tory (or Republican) rule meets even one of these problems rather than diverting from them in endless ways – most of all today, by Islamic terrorists. They are the ever-recurring Enemy to be waged war against – and typically is when the popularity of the ruling party is dangerously in question.

 

 

London Terror Spectacle 5 Days before Election as Brexit-Tory Polls Collapse  

The June 3 massacre of innocent and unarmed Saturday revellers on iconic London Bridge and Borough Market came at such a time. PM Theresa May and Tory party polls for the snap June 8 national election were in free fall as Corbyn Labour support unexpectedly and dramatically rose by over 20 points from the surprise Spring date that the new and secretively advised PM May had called against all prior commitment and earlier schedule of May 7 2020. Although only 7 people died – in Moscow at the same 9 people were murdered without much notice – the absolute panic of the central city of London and Europe was unprecedented.  A white van ran over people on London Bridge’s festive and pub-crowded Saturday night, and many were seriously injured – though fewer than in US drone or air strikes happening in Arab countries on a regular basis. The modus operandi was quintessentially monstrous in action. It could have come from an ISIS video – of which there has been many with no evident interruption by the immense counter-terrorist operations, advanced electronic capabilities, and ever-rising budgets for war upon ISIS terrorists.  The three soon-dead men were maniacal as if drugged, but no drug tests were ever reported. They not only viciously ran over as many people as they could with the signature white ISIS van in the 10 PM Saturday night happy hour, but they leapt out of this careening kill van with long Arab stabbing, cutting, slitting throats, multiply stabbing one young women, and – in short embodying the most murderous nightmare conceivable on all in London and around the world soon watching the globally televised aftermath including the dead bodies.

 

 

The Most Basic Questions Are Never Asked

Strangely, the suicide murderers wore fake suicide vests, never explained. Certainly the theatrical touch fitted the stereotype for both sides. Yet no-one in all the total coverage everywhere ever mentioned the abundant evidence of US-led funding, arming and orchestration of ISIS – although the mystery still remained of how their original appearance in spanking-new white vans lined to the horizon waving machine guns could have escaped the notice over the endless parade in a highly surveilled open desert area not far from Israel’s borders. In any case, the horrific downstream event and mysterious origins and orchestrated funding, training and arming of the very same terrorist organization perpetrating one atrocity after another with uninterrupted e-video broadcasts and propaganda over years were all unmentioned in all the allied analysis from the major networks across the globe. Only the international outrage and absolute denunciation pouring in and out from every quarter continued around the clock for days all the way to the two days left before the election. Since the main question was and remains how to stop these horrible terrorist spectacles, there was no time for causal analysis. There never is. Somehow the evidentiary matters of including who funded, armed, trained and orchestrated the terrorists are never investigated by those who report on and benefit from the terror attacks. Somehow the terrorists’ very accessible propaganda, videoed columns of ferocious operatives, internet movies of killings, and strange coincidence of attacks with falling popularity of state leaders are not connected by anyone in official society or mainstream media or even scholarly journals.

That all this has kept happening from years ago in full view of television and internet audiences around the highly militarized Western world is not an issue which is publicly raised. Even when the murderous terrorists have been known and identified immediately afterwards, from the 9-11 bombings on, still there are no questions in the pervasive media coverage of the events, including in the June 3 London massacre. How they were and are identified so very quickly, even after such an historic surprise attack as 9-11 and even when the bodies of the alleged terrorists have been completely incinerated, how and why are these issues never mentioned?  Cui bono? – the first question of forensic justice – is never posed of anyone after the murderous terrorist spectacles. Failing parties and leaders who benefit enormously from such show-stopping distractions which put them in far more command of popular support and power than before the attacks, are never even slightly exposed to this question.  It is taboo to do so. Not even opposing politicians dare to ask the question. This gives us the clue to why all the other issues are not raised.  No such basic forensic question is ever posed because it cannot be publicly asked without every media of record accusing the questioner of folly or menace, thus perfectly diverting the issue again from the ruling taboo subject. There is no evident way through this closed circle. It is foolproof. So it follows that this is well known in ruling circles as well as by those interested in truth. Why would it not be used by a national regime whose public support is falling just before an election?

Free-Falling Tory and PM Polls and the London Terrorist Attack

Scientific hypothesis looks for disconfirming evidence more than confirming evidence in order to test it. This is why science works when it does. It takes all the relevant facts into account, forms an hypothesis, and tests it against the best possible counter-evidence.  (Corporate science and regime propaganda do the opposite. They look only for what confirms their claims to profit them. So coming just 5 days before the snap British general election which her regime called when it was 24 points ahead in the polls – now continuously falling days before election – this  regime has very good cui bono reason to re-set the polls upwards.  The known best way to do this with no questions asked is for a terrorist attack to occur on the regime. A terrorist attack usually guarantees a spike of citizen solidarity with national government, from France to Turkey to 9-11 Bush US. No-one dare pose the cui bono? Question in any case. It is known that a grisly terrorist attack, and a strong condemnation of it from the regime in power, along with allied regimes in unanimity, will produce a significant rise in the next poll. In this case, the poll of the June 8 British general election comes less than 5 days later.  This does not mean that the front political leader, now – PM Theresa May, the longest Home Affairs minister in memory, plans the terrorist attack, or even knows about it. It would be better that she did not, so as to carry through without compromise or leak. But she knows the territory of Home Affairs very well and the dark state’s capabilities, as well as British public opinion over many years as a cabinet minister.

If her polls are suddenly collapsing, as the polls of the long-belittled Labour leader Jeremy Corbyn rise just as fast, it makes very good sense for her regime to find a terrorist attack incomparably useful just before the election. She can stand tall and resolute as the lead warrior of the British people, like Margaret Thatcher against the Generals of Argentina over the Falklands. But here the enemy is far more immediate, visibly evil and mass murderous before our eyes – the archetypal enemy of Islamic terrorism, threatening and murdering Britons inside the very celebrating centre of their most populous and globally popular city, spreading mass panic to thousands in a barbarously brutal killing and wounding rampage that no-one will ever forget. It also provides the ideal opportunity to excoriate the poll-closing Jeremy Corbyn and Labour, who can be insinuated into the terrorist menace by his connection of terrorism to past government actions.

 

 

PM May Leaps to Attack Democracy as the Unseen Brexit Coup Closes In

PM May has all the credentials and image to rise to this occasion, and to pull off what no-one has really yet seen –the greatest reverse of British social and environmental standards and law in history that is about to be locked in by the June 8 election. The half century of evolved EU workers’ rights, life-protective laws, and scientific environmental norms is about to be overthrown. The London terror massacre occurs on June 3 as Tory and PM May polls  relentlessly slide down and the turning-point snap election is just hours away. State authority is restored in a blinding flash of action. Police command people “to run for your lives and hide”. They  command people to lie down in the areas they control, and to hold their hands over their heads as they are herded in large obedient numbers. Loud explosions are heard all over the place where there are no terrorists, and it is only 8 minutes before the terrorists are all dead for all to see on TV. Dead men cannot speak. PM May is strict and aggressive to rally the masses against the Enemy – and to reverse the Labour opposition’s rising polls. Election campaigning is suspended. PM May accuses those who sought have causal   understanding of the terrorist attacks as showing “far too much tolerance”. She warns that there is “a new trend in the threat we face” – although there is none evident, except raising the indisputable facts of its causation, as Corbyn had done just before his polls began to overtake her. PM May scolds, “Enough is Enough”.  The same old circle of blame-the-enemy while doing nothing effective to stop it is redrawn deeper than before. But she darkly warns others that things “cannot continue as they are”. She suggests that “pluralistic British values” are at fault. She leaves the cause of the endless terrorist spectacles behind to accuse the free internet itself, demanding once again the new Tory policy of sweeping new state regulations across citizens and borders, rather than honing in on ISIS and other long scot-free channels. “There is”, she says, “to be frank, far too much tolerance of extremism in our country”. “So we need to become far more robust in identifying it”, she proclaims in police-state code, “and stamping it out across the public sector and across society”.

Public sector? Across society? Is this a declaration of war against those in the public sector who dissent from the program? Is this a foreshadowing of the social-sector stripping to come with the Brexit coup d’etat? Where does the attack end? It does not. There are no definitions, no criteria, no evidence. There only more insinuations of who must be labelled and stamped out as ‘too tolerant’. There are only more demands for more state powers diverting completely from every issue involved not only in terrorist killing, but in the end of EU rights and laws in Britain. Most of all and most profoundly, every word and position of PM May, the Tory party and the forces behind them have distracted from the ultimate geostrategic game afoot that the London terrorist spectacle has diverted from and covered up. What could the huge and unexamined stakes be here that none discuss? Who alone stands to benefit from every step since PM May was promoted?

 

 

Why Brexit?

There has been endless commentary on Britain’s “Stay or Leave the EU” referendum and the narrow victory of the ‘Leave’ side after 44 years of partnership in which Britain’s GDP, human and workers’ rights,  and environmental protections have only increased, and by far more than the US. Even in gross market money terms, the record is clear in fact. In a letter to the London Times one year ago, Oxford researchers Professor Sir David Hendry, Professor Doyne Farmer, and Dr Max Roser refuted with no reply the Leave EU campaign led by financial and political playboy Boris Johnson. “Since 1973, the  year in which the UK joined the EU, the per capita GDP of the UK economy grew by 103%, exceeding the 97% growth of the US. Within the EU, the UK edged out Germany (99%) and clobbered France (74%). The UK’s growth has exceeded the US while tracking it, even since the crisis of 2008”.

Yet Leave the EU still narrowly won the UK referendum a year ago with nothing to go on except propaganda, and its very dubious result is about to be cemented into British government and history by the June 8 election in 3 days. On every level on which we analyse this decision now being led by PM May and the Tory state, it is a fails every smell test. But the real motive force and private money-party interests behind it are all but invisible to the public – not only in Britain, but around the world. There is virtually no recognition that the snap June 8 election in three days is going to reverse every life-serving law and regulation that has lifted Britain up over half a century from the doldrums of the early 1970’s when Britain was regarded as ‘the sick man of Europe’ in economic performance. How could this happen?

To begin with the referendum itself, the original wording of the ‘Brexit’ referendum was (italics added) “Britain should remain in the EU – Yes or No”. Few observed that this framing of the Tory question appeals directly to the tidal wave of popular resentments that have built up against transnational trade treaties and mass immigration everywhere, Britain included. “Should remain” is re-set to “Leave” as the dominant choice in this negative social context with, in fact, no connection to life co-ordinates. On the surface, the visible movement of foreign-speaking cultures into everyday rural Britain for new benefits and low-wage competition with British workers has widely inflamed anti-passions, as anyone familiar with British culture knows.  The near daily featuring of Islamic ‘terrorist attacks’ has stigmatized the EU system along with such continuous disorders as the torturous financial ruin of Greece. Leave on the ballot in a mysteriously well-funded and media-captivated campaign triggered enough of a primordial anti-EU sentiment that a very slim majority was won. It did not matter that false claims and demagogic showmen were given immense publicity in the Leave campaign in which the most important issues were completely out of the discussion. Nor did it not matter that the Leave vote was mainly rural England, nor that remaining Scotland was thereby propelled into breaking up Great Britain itself. There were no editorials exposing the facts that the new-PM Theresa May had herself warned UK voters that Brexit was “dangerous” and could have seriously damaging effects on the economy, the security, and the survival of the United Kingdom.  There was no media memory that she had said that leaving the EU would be “fatal for the Union with Scotland” and that she had formerly proclaimed “as Home Secretary [that] remaining a member of the European Union means we will be more secure from crime and terrorism”. Nothing seemed to matter except the new fait accompli of Britain ending its half-century partnership in the European Union on the flimsy basis of a referendum for which the overwhelming majority of citizens did not vote or approve.

 

 

Minority Brexit Vote = Massive De-Regulation of Finance and Food 

No-one seemed to report that this Leave vote itself (17, 410,742) represented only 37% of the total electorate (46,500, 001) as enumerated by the Electoral Commission. No mainstream media featured the 12, 948,018 voters left out of the count, over two-thirds the number of those who voted Leave. Only one source clearly reported that those whose votes were not cast in the single June 23 event voted 2:1 against leaving once the results were known (cf. http://blogs.lse.ac.uk/brexit/2016/10/24/brexit-is-not-the-will-of-the-british-people-it-never-has-been/). Most deeply and unspeakably, there was no hint of media attention to the first question of forensic inquiry, cui bono or who stands to gain most from British government leaving the European Union all its common regulation? Even up to June 2,  no-one has joined the dots that show the Leave EU referendum and vote has been an ideal political bludgeon to force Britain’s departure from the historical European Union just as its long-evolved Directives are in the process of enforcing policies and regulations on all-powerful London private banks and finance, and on industrial Big Agriculture and GMO-contaminating crops and fake foods . What no-one has evidently understood is that Brexit ensures that the very same dominant financialization forces that have hollowed out Britain’s working people, the productive economy and its green environment since 1979 are now freed from any EU regulation or accountability just as effective new financial oversight mechanisms as well as organic agricultural and food policies are due to be further implemented, monitored and enforced. This is the undertow historical meaning of the near-hate campaign that has been waged for endless months on the ‘EU bureaucracy’ larded in selective anecdotes without principled substance. Such is the standard method of big-money campaigns against public regulation for the public life good. If more private profit is not fixed into the new regime, it is relentlessly attacked and denounced as ‘suffocating red tape’ and a ‘ruinous burden on business’. This is the signature demand and condition of transnational corporate rule.

 

 

Cui Bono? Remembering the Past to Now

The rootless global money party centred in London has long run Britain with flagrant Thatcherite governance for transnational banks and corporations, overthrowing the post-War labour-capital settlement in Britain. Big London money backed by the Murdoch press was then consolidated in Blair’s ‘New Labour’ capitulation to corporate power through Gordon Brown Labour-light to the election of financier-scion David Cameron. PM Cameron then took the Brexit spectacle as the occasion to resign to avoid, insiders say, the outing of his unexposed financial fraud as PM. Now the government of Great Britain is in the hands of a secretively advised Theresa May. Although as Home Secretary she was unequivocally anti-Brexit, something happened. Despite the very dubious results of the leave-the-EU referendum, she reversed field from support of the EU once in the PM office, and was instantly re-branded as full-square behind Leave as “Brexit is Brexit” and “the irreversible decision of the British people”. Now-PM  May has led official erasure of the fact that the winning vote was only by (official Electoral Commission tally) 37 % minority of voters. In the same vein of memory-hole command, PM May and her backers  ignored the LSE scientific survey reporting that non-voters polled 2-to-1 against Leave once they learned the outcome. The reigning protocol, as with Trump with whom she became bonded in ‘the special relationship’ of the US and the UK that runs British politics, is to annihilate life-protective regulations as new freedom, and enforce follow a bigger corporate tax-cut than Reagan or Trump to a 10% level. Where did the mandate come from for such radical hollowing out of government capacities to govern on behalf of the common interests of society, citizens and their environment? There has been no mandate, but only a one-off 37% popular referendum result with no legally binding force until it is locked into the ‘Great Repeal Act’ and June 8 UK election to legitimate it with no public understanding of the meaning.

The die had been cast behind the scenes. A 37% vote against the considered will of the majority to stay in the EU was going to be used as a no-alternative mandate for massive deregulation and de-taxation of big money powers across the UK without public debate on these issues or even recognition of them.  An Orwellian erasure of facts and totalitarian silencing beneath conscious choice continued right up to the election without anyone evidently knowing it. The PR cover-up since the ever-more lavishly suited Theresa May became PM  has been to brand her office in Maggie-2 resonance as a resolute and honourable defender of the democratic will  of the British people and an anchor of stability to steer Britain’s new future. PM May and advisers have accordingly changed the 2017 general election –she had committed to 2020 before her behind-the-scenes management took over – to an ad hominem vote over her character as PM, not about the radical de-regulation of finance, the environment and the tax code to, in essence, serve the rich while dispossessing the great majority of their labour, social and environmental protections and rights. It is the sort of action from the top that the original Magna Carta stopped by regulating an out-of-control King, only now the unaccountable ruler is bank and corporate money profit seeking even more unequal and total rights over the soon- to-be rump England. The money party cares nothing for nation including  Great Britain except as it fits their divide-and-rule agenda over the trillions of dollars they control daily in play for more asset control over the world. Now firmly in the supreme office with cabinet and media support, PM May’s office has masterfully managed transition to doing the opposite of what she formerly stood for. The Brexit program for private money control over public forces and rules of how society is to live has remained unflagged by even the Opposition and radical left voices.  None see through to the ultimate ruling party behind political scenes, nor to the ultimate fact that it is not economically efficient or even productively capitalist. Its hidden financialization forces and anti-labour-and-ecological agenda of radical de-regulation are, in principle, counter-productive, parasitic and self-multiplying against the common interest of its social and environmental life hosts.

 

The Unasked Questio: Who Wins Now?

On the PR face of it, Theresa May is the clergyman’s daughter soundly risen to PM office. But she is, more deeply, the perfect foil behind which to sneak a Brexit end to the threat of EU regulation of the most life-destructive private money powers of Britain. Brexit is in sinister parallel with the life-blind deregulatory forces of the Trump/Republican forces letting the ruling money party run free to become multiply richer while stripping scientific environmental regulations, monitoring and prevention of cumulatively ecocidal externalities of global financialization and environmental toxification. The difference is that the English financial and factory-food lords are far stealthier and unseen in their demonstrable strategic plan to Leave the EU because it leads the world in scientific method, life-protective regulation and implementation. No-one seems yet to recognise this in the UK, unlike the rising US awareness of at least the Trump-Republican threat to the US and global environment and – more specifically – the Environmental Protection Agency and even the century-evolved and world-leading US national parks. “Making America great again” excludes the life ground. When PM Theresa May now hard-presses Leave the EU even when formerly opposed to it – most of all because of its weakening of Britain’s defences against terrorism – who can doubt something has re-motivated her to reverse the agenda.

The tell-tale avoidance of truth is seen when she lashes Jeremy Corbyn for even  connecting the terrorist operation of Manchester back to the facts of Britain’s war-waging in poor foreign nations from which the suicide bombers come. “Many experts, including professionals in our intelligence and security services,” Labour leader Corbyn  observes, “have pointed to the connections between wars our government has supported or fought in other countries, such as Libya, and terrorism here at home.  Joining the dots is taboo.  In such closure to facts, PM May implicitly justifies government actions on the basis of the legitimacy of past state actions which are war-criminal under international law, and – beneath notice again – stopped Libya specifically from its gold-dinar Bank of Africa plan based on oil revenues to lend to other African countries without the debt enslavement long coveted by London-connected private financing of states (including the British government itself). Who do these actions of repression of war-criminal facts and seizure of other people’s assets serve?

In this light, consider PM May’s capacity to carry Leave the EU as PM compared to its most charismatic leader on the ground, Boris Johnson. Although he has long been London finance’s man as Mayor as well as leader of the Brexit campaign, the master plan cannot go forward with him any further because, as a known liar and bounder, he is completely unfit as a credible finisher in PM office. Those who lead here know very well how to rule behind effective public relations to keep their control acceptable on the public stage– as Wall Street has done with one elected US president after another. This is why the known libertine and shameless US-born self-promoter Boris Johnson was – however charming and useful – stopped for the job of ‘Prime Minister of Great Britain’. He might indeed provoke cross-party reaction against pushing a onetime minority poll into a reversal of modern British history which took away the EU passports and future opportunities of England’s young professional classes.

There is much to cover up here that needs a steady woman ruler with a better manner and more socially just in bearing. So Prime Minister Theresa May it was. Thus the sole regulatory powers in place keeping the private financial superpower of London in check against another 2008 emptying of the public treasury and pensioners’ incomes – not to mention the deregulation de-greening of England by an industrial factory frankenfood system – escaped the public’s attention. To credibly cover up what nobody knows while believing in her mission is made-to- order for PM May, and so the Trump-like mega de-regulation and de-tax agenda has gone all the way to days before the June 8 British general election with far less fuss. Boris was meanwhile made Foreign Minister to insult the EU onto their heels in England’s revolution backwards for the unproductively and villainously rich. Few noticed that all these political shenanigans served a unifying function. The new EU financial regulations on London’s big banks could not be implemented, monitored or enforced with Brexit stopping it all in its tracks.  EU Organic Agriculture Regulations protecting the environment and natural ecosystems from genetic contaminations and industrial clearances of green life was simultaneously terminated with hardly any notice. That foods themselves are released from safe and scientific EU standards has remained a non-issue. For poignant household example, British demands for hygiene standards to be changed to US rules so as to permit chicken meat sanitized only by chlorinated water, to allow beef raised with growth hormones, and to free genetically engineered substitute foods or GMO’s from production and label restrictions have all been stopped dead by Brexit.

With London finance as well as industrial agriculture and false foods freed from codified norms of responsibility to the common life interest long evolved, tested and instituted within Britain and the European Union, the most predatory and counter-productive forces in Britain are allowed to run free with no public notice before the June 8 general election.  EU labour rights (eg., 48-hour week), human rights (e.g., employees’ and prisoners’ rights), financial oversight of any independent kind (as we have seen), and virtually all environmental standards developed beyond the US model, all  are discontinued by  the Great Repeal Act. With no evolved EU standards of economic, social or environmental protection legally obligatory and enforceable any more, the June 8 election will lock it all into the future with no way back that can be reasonably relied on without electoral reversal. With all the historical bearings and force of precedent, independent adjudication and law left behind by Leave, a US-UK deregulation and de-taxation orgy can proceed as ‘democratic’ if PM May wins the election. This is why PM Theresa May as the first head of state to visit the White House came out of their private meeting holding hands with Donald Trump. Demonstrating its confidence in the liberated financial rule of Britain as the Great Repeal Bill proceeded, Goldman-Sachs simultaneously committed to a $500-million headquarters in central London.

 

 

London Finance with Goldman-Sachs Escapes All EU Financial Regulation

The very definition of the EU Central Bank’s mandate to investigate and supervise “the business model, risk management, and capital, liquidity and funding”of private-profit bank and financial institutions including London  (via a rigorous Supervisory Review and Evaluation Process by elite teams of professional accountants)  is anathema to the long unregulated US-UK financial system. London finance like Wall Street is very used to increasingly devouring public treasuries, pensions and savings to become 40% and rising of the entire economy. They have done this through the global financial meltdown they have caused to multiply their money-demand control of the planet in a myriad of algebraically concealed ways with no oversight supervision, no independently verifiable standards, and no real reforms. The European Central Bank has finally moved to institute common standards across the Union – what was done after the Great Depression but has been reversed since. Private London-Wall Street banks and finance will do anything to stop this regulatory reform to protect their many trillions of assets and liabilities running free to continue unimpeded in the greatest unearned and still rising transfer of wealth to the rich in history. The economic stakes are unprecedentedly high, and so the silencing of any notice of the reforms to regulate them has in the UK been total in the mass media and even in Labour policy recognition. Consider the vast treasure involved. “Existing financial rules” in London banks have been officially judged by independent experts as “woefully inadequate”, and all of London’s foreign currency trading (globally dominant and largest in Euros) remains unregulated and untaxed.

Vast investment banking, cross-border sales of securities, Euro liquidity to clearing houses, non-performing loan recognition, coverage and write-offs also escape independent regulation by Brexit and the Great Repeal Act. Revenue-cap norms on skyrocketed financial pay to executives, standards of internal audit, deferred tax assets and credits masked as capital, capital adequacy, liquidity requirements and ability to pay liabilities are all also blocked by post-referendum laws. Unnoticed too are overdue binding norms on regulating the competence of new members of management and key function holders (say, Boris Johnson) and oversight of collective investments in transferable securities by captive states and unilateral tax advantages gained by their public issue and sale for profit. In sum, the Capital Requirements Directive and Regulations are set on fire by the Great Repeal of European Union obligations, now to be locked in by the June 8 election. What are boasted as ‘elegant and sophisticated innovations of investment instruments’ and so on, are in fact systemic methods of fraudulent diversion with no qualified, independent accounting authority allowed into check their schemes fixed to maximally profit powerful private financial dealers against transparency and liability, elected government accountability, and the common interests of everyone else.

 

 

The Great Silencing

This whole joining of fateful dots has been covered in silence. Big London bank and finance has so far got away with veiled abolition of all the overdue EU financial rules, monitoring and enforcement to regulate them after the 2008 financial meltdown in which an estimated $26 trillion of public money has been swallowed by the transnational private banking system led by Wall Street and London. In faint contrast, there has been a slight exposure of the Brexit reverse of evolved EU environment protections, monitoring sciences, directive laws, and feed-back enforcement processes. But here too any information has occurred only in fragments, with no connections to the EU’s life-protective binding rules on industrial farming, GMO products, and industrial chemical pollutions and toxins. For example, you will not see in any government press release or corporate mass media any mention of the European Union’s world-leading environmental protection by its Organic Agriculture Regulations setting out “the principles, aims and rules of food production and labelling”. No-one mentions in the media or government that these regulations are precisely what are eliminated from monitoring, feedback and enforcement in Britain once the Great Repeal Act is legitimated by the June 8 election.   In similar vein, there is a white-out of pre-and-post-Brexit reference to EU’s historic and definitive Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH). It is by far the most advanced environmental and human health protection system scientifically validated in existing government and the world. But it too is made invisible in the ruling discussions and debates. Such jam-it-through strategy with no public understanding and almost all the primary life-protective common legislation effectively concealed has been shrouded throughout in the pervasive media image of PM May vs. hapless Corbyn Labour. This is the only issue raised for voters in the June 8 election. The global media too have consciously or unconsciously collaborated in making this most important election in British history in financial and environmental terms, a non-issue. Yet even all this has not been enough for the great cover-up still in motion. There has been a Lobbying Act to stop informed NGO’s – but not any of the London-based big transnational banks and corporations – from lobbying before the June 8 election, a new law which has frightened them into silence with Greenpeace already convicted and fined.

 

 

What Does Not Fit the Life-Blind Program?

One underlying principle governs beneath the political scenes, speeches and choral commentaries on stage. It also governs the UK-US ‘special relationship’ and Wall Street-London axis at the same time, in different ways: De-fund and de-regulate all life-protective laws, agencies and enforcements that cost public and corporate money, and subsidize instead the unproductive or counter-productive private money party’s multiplying growth.

The method is the same at base. Private Wall-Street and London banks behind the scenes print the world’s money by debt issue for maximum profit to the top while producing nothing but multiplying their private money demand over all that exists.   Transnational corporate money sequences funded by the banks, in turn, strip and pollute life bases on all levels to produce and sell profit ever more commodities priced for maximum private profit with few or no life standards to govern their extractions, productive processes, products, wastes and life-destructive externalities. For all its faults, the European Union has gone much further than any other unified jurisdiction in human and ecological regulations of these material phases, and the financial drivers behind them. This is ultimately why the UK private money party, especially its non-productive and counter-productive investors, have repudiated EU regulations of them on other pretexts. In general, the connected global forces of life and life means destruction are screened out by the established framework of meaning which is in principle life-blind. In consequence, private financial and corporate forces are released from what modest public regulation has developed to protect organic, social and ecological life systems, and the systemic despoliation of global life-organisation continues to run down biodiverse energy capacities on all levels. The UN Paris Agreement on ‘climate change’ is intended to meet the most dangerous consequences of this system. But it is selective, and ‘climate change’ euphemises hydrological-cycle destabilization and pollution that is the baseline force of world life and life means destruction. Again unifying principles and concepts are screened out of public discussion as well as silo disciplines.

Jeremy Corbyn’s back-to-the basics Labour movement is hopeful in that it is not bound like Tony Blair’s ‘New Labour’ to the dominant Murdoch media and big corporations controlling the agenda via government committees and PFI’s.  And this is why Corbyn’s grass-roots leadership is pervasively belittled in the dominant media, and also why the while historic stakes of the June 8 election have been systematically blinkered out. The ruling framework of meaning presupposes the life-blind system, rules out what does not conform to its money-value logic, and attacks what seeks to reform it. So as the stakes keep getting higher as June 8 approaches, they are kept out of the discussion. There has been a systemic blocking out of all the momentous issues in the campaign before ‘Brexit’ and after it to today. The meta program is mind-locked, and compulsively proceeds even when its political leaders have no legitimate ground to proceed, but only a transient minority vote for Leave the EU in a largely apathetic and cynical referendum with no binding force. The Great Repeal Act of  EU regulations follows in lockstep fulfilment of the meta program, and an unscheduled snap election while Tory polls are still far ahead is set to cement it all in before the public wakes up to the meaning. Thus proceeds the greatest system-wide reverse and financial boondoggle in modern English-speaking economic history and social-ecological evolution.

 

 

There is No Alternative

The re-grounded Labour movement does the best it can for the working people and dispossessed across Great Britain, the only organised institution to do so in the country. But this too is ridiculed and condescended to in the corporate press. And still the deeper and historic issues remain completely out of view. In recent days, nonetheless, Labour has stood for returning the looted national railway system and other privatized utilities to a productive public direction, for taxing the rich more to fund falling public services, and for connecting Britain’s terrorist problem to its armed-force actions in other countries.  This has given a spike in the polls to Corbyn labour. Yet still the profound major issues of ‘Brexit’ itself remain covered over. The dots of the essentially phoney Leave the EU referendum are not yet joined. The holus-bolus financial and environmental deregulation by the Brexit scheme remains undefined. The basic outline for the historic hoax has remained undetected into June. “There is no alternative” has thus been reconstituted into the 2017 election. The underlying driver to cement the unaccountable private money power demanding ever more into a de-regulation bonanza remains unnamed. Not even the master slogan of ‘Brexit’ is deconstructed as a public relations mask of the greatest backward move in life-protective norms in historical record: all to serve life-means destroying or unproductive money-party powers that are fronted by photogenic leaders on all planes. The rationally self-maximizing growth of private-profit power over all existing assets is built into the meta program. But it is not comprehended. It exactly follows the inner logic of ruling economic, military and strategic game theory in models and calculations, but there is no linking across the simultaneous phenomena which are life blindly forming the future. The conversion of organic, social and ecological life organisation into more money demand for fewer is now being rapidly instituted into place.

 

 

Summary

The June 8 British election is set to lock in the big-money coup against long- evolved regulations and norms protecting human, social and environmental life.  The crisis is incomprehension of the meaning. A corrosive cynicism of EU capacity to govern for the public interest (Greece the continuous demonstration), media-debased public perceptions suppressing the historic stakes involved, a US presidency demonized in all the corporate media,  NATO-supported Nazism in Ukraine as Western freedom, and other degenerate trends have not been connected in their unifying pattern – within which UK money-party reversal of post-War socio-economic evolution is taking place. PM Theresa May is the political face of the great leap backwards.  So far the ruling politics of one distracting spectacle after another has worked right up to the June 8 election, fortified by a diabolical terrorist attack on London 5 days before the vote. y.. Yet there is a growing intuition of the fast slippage of social and ecological life order into chaos with no human centre of gravity in charge.  The British public may still see through to the underlying radical program of government de-regulation, de-taxation, and de-funding to further empower the financial looting and life-despoiling forces at work. Joining the dots behind the scenes reveals the emerging plot of meaning. The Great Brexit:

(1) stops the EU Central Bank Regulators and Supervisors from finally checking out the models, risk culture methods, inadequate reserves and so on of big London banks involved including Goldman-Sachs in the 2007-8 financial collapse, and

(2) eliminates the binding force of all the long-evolved and scientific EU regulations structured to prevent, in particular, the corporate industrial food system’s polluting and despoiling US-led methods undermining the British people’s health and environment.  

Brexit’s Great Repeal Act and PM May’s snap June election is the only way to achieve (1) and (2) without negotiation or exposing public issue. London financial accountability has most of all been silenced as an issue. Its growing trillions of nano-second fast-dealing to enrich the already rich by unregulated methods and calculations remain immune from any independent oversight. Similarly, the very aims and principles of the binding, monitored and still developing Organic Agriculture Directive are anathema to Britain’s US-led Big Agriculture and Food lobbies, not only around GMO restrictions – which US trade authorities and British GMO ‘science’ have made war on for over 15 years – but around every EU restriction on pesticides and herbicides to clear-cutting environments for monocultural factory methods to commodity motor rackets and pollutions to norms of licensed “food quality” in the corporate market. The very governing EU objectives of “biodiversity”, “animal protection”, and “organic natural systems and cycles” are a threat to Big Food production and products when attached to exactly defined, inspected and enforceable life standards. Long used to pervasive public relations sales pitches of “feeding the world” in place of accountable, life-protective environmental and nutrition standards, this very powerful British lobby is next to London Big Finance as the covertly moving major profit-first force behind the Brexit coup d’etat. Both are in principle life-blind in their mechanical financial models. Both are governed only by self-maximizing private money sequencing in exponential growth with no life-coherent ground or norms to stop their march across the world through organic, social and ecological life hosts. Both have led the Great Repeal of developed EU life standards beneath the radar of media coverage, parliamentary diagnosis, and academic silos. The June 8 2017 UK general election will open or close Britain’s life future under the rule of life-protective law.

The Icesave Dispute: A Case Study into the Crisis of Diplomacy during the Credit Crunch

Introduction* 

The legal and political dispute Iceland fought with the UK and Dutch governments over responsibilities of deposits in the fallen cross-border Icesave Bank in wake of the international financial crisis – which hit Iceland severely hard in autumn 2008 when its three oversized international banks fell – not only revealed inhered weakness of the European financial system but also led to profound crisis of diplomacy during the Credit Crunch. The legal ambiguity of responsibilities was testing understandings and interpretations of international law in cross-border finance. Not fitting squarely within EU- diplomatic- or financial law it can be argued that the case in its process illustrates contested and hybrid construction of legality as here is explored. Rajkovic et al, (2016) understand international legality as interrelated processes of social and interpretive contestation in the construction of what is understood as (legal) rule in the world. In this regard the Icesave dispute illustrates how larger and more powerful countries were politically able to pressure a much smaller state in time of crisis into abiding to their own interpretation of law and in doing so rallying behind them support of international organizations like the EU and the IMF.

The Icesave dispute was thus not only a matter of international law, but rather also a case of contestation between cross border actors over determination of authority during the crisis. By empirically studying the Icesave dispute this paper discusses a profound crisis of diplomacy and the political processes of international legality of the financial sector during the Credit Crunch. This can be coined as case of perfect legal storm in international relations; a crisis of public international law, diplomatic law, EU law and finance law. This case study traces the dynamics of how international legality is produced and remade during the course of this particular inter-state crisis and in doing so thus contributes to analysis of political construction of international legality.

The study deals with interpretive contest in international relations on what is considered legal, in this particular instance dispute of responsibility over guarantying deposits of a fallen cross border bank. In this case intersecting practices and expertise were to revolve in a struggle over cross border insolvency law. By pressuring the Icelandic government into accepting responsibility of the fallen bank in UK and the Netherlands this was an international push towards sovereign socialization of private debt through twists of circumstances and practise.

At its core, perhaps, this is a study of struggle over who decides authoritative interpretations, of what in this particular instance is understood as international legality, which is constructed, construed and contested through multi-actor and multi-level interaction of multi-national relations.

The Crisis

Iceland was the first victim of the of the global Credit Crunch when its three international banks came tumbling down in October 2008, amounting to one of the world’s greatest national financial crises. This was a financial tsunami without precedent. Glitnir Bank was the first to run into trouble when planned nationalization was announced on 29. September 2008. On the basis of emergency laws rushed through Parliament, Landsbanki was taken into administration On October 7th. The following day then British Prime Minister Gordon Brown invoked the UK Anti-Terrorism, Crime and Security Act 2001 (passed after ‘9/11’ in 2001) to freeze all Icelandic assets in the UK. Operating with little information and in a climate of confusion this was, he argued, to protect UK depositors in the bank. That act served as the final blow to Iceland’s last and largest bank still standing, Kaupthing. The vastly oversized Icelandic financial system was wiped out. Iceland is one of the smallest countries in the world and borders on being a microstate with just over 300,000 inhabitants. However, this experience ranks third in the history of the world’s greatest bankruptcies (Halldórsson & Zoega, 2010). Iceland also responded significantly differently to the troubles than most other states, allowing its financial system to default rather than throwing good money after bad.

Iceland had few good options. The IMF would not consider Iceland’s loan application until the dispute with the UK and Dutch governments over the Icesave deposits accounts was settled. The fallen Landsbanki had set up these deposit accounts in those countries, leaving many of their citizens without access to their money. Even though the Icelandic government steadfastly argued that it wasn’t legally at fault and that the state would fulfil all its legal obligations regarding Icesave, the IMF wouldn’t budge. Iceland was being pressured by the UK and Dutch governments, which were backed by the whole EU apparatus.

This was a staring contest Iceland could not afford to drag out as the state was running out of foreign currency. Early agreements in October and November 2008, first so-called Memorandum of Understanding with the Dutch government and then a more broad based Brussels Guidelines, which included EU involvement, were signed by Icelandic ministers in order for the IMF to be allowed to be brought in to stabilize the economy, not least through the introduction of capital controls and the co-funding of a loan package with the Nordic and Polish governments. By mid 2009, after change in government, these early agreements were abandoned for bilateral agreements with the finance ministries of the Netherlands and the UK, where Iceland accepted responsibilities for deposits of the fallen bank. In an extraordinary move the President, however, refused to sign the bills, referring them to referendums, in which they were rejected by large majority, spurring one of the greatest international disputes Iceland had ever fought.

Not only was Iceland denied any access to united efforts within Europe to bailout banks but the UK and the Netherlands were able use their position within the EU to pressure Iceland to accept their own interpretation of EU laws Iceland was to follow. Though ambiguity still remained as to who was legally liable for the loss, the UK government was using all means available to pressure Iceland to accept responsibility, as is documented later in this paper.

On 28 January 2013, the EFTA Court finally ruled on the case, concluding that no state guaranties were in place on the deposits and, thus, dismissing the claim of the British and Dutch authorities (Judgment of the Court, 2013). The ruling vindicated the Icelandic state of any wrongdoing. In early 2014 the Dutch and the Brits filed claim against only the privately held Icelandic Depositors Guaranty Fund before the District Court of Reykjavik.

A Systemic Flaw

The collapse of the Icelandic banks clearly revealed a serious weakness in the European banking passport system, a macroeconomic imbalance within the Single European Market. It was a weakness that some of the more established banking nations had warned against when the system was being constructed (for more, see Benediktsdottir, Danielsson, & Zoega, 2011). The main flaw lay in the fragmented nature of supervision on an otherwise common market – European-wide regulation but only state level supervision resulting in a tapestry of schemes and insurance levels across the EU. This had caused a mismatch between access to market and adequate supervision.

There was also an inhered flaw in the setup of Iceland’s link to the EU through the EEA agreement. Being in the Single European Market through the European Economic Area agreement (EEA) but outside the fence of EU institutions left Iceland without shelter when the crisis hit. This neither-in-nor-out arrangement – with one foot in the Single European Market, with all the obligations that entailed, and the other foot outside the EU institutions, and therefore without access to back-up from, for example, the European Central Bank – proved to be flawed when the country was faced with a crisis of this magnitude: The oversized Icelandic banks were operating in a market that included 500 million people but with a currency and a Central Bank that was backed up by only roughly 330,000 inhabitants. As a participant in the EU Single Market, Iceland was inside the European passport system so the banks were able to operate almost like domestic entities throughout the continent.

Landsbanki had in 2002 acquired the British Heritable Bank and in 2005 furthermore opened a separate subsidiary in London. However, when marketing the Icesave deposit accounts in October 2006 Landsbanki decided to bypass both and instead opened a branch from the Icelandic Landsbanki collecting the deposits. This was done to be able to transfer the money upstream to the mother company in Iceland (SIC 2010, Vol. 6, Ch. 18: 8), something the subsidiary system does not allow. Furthermore, branches were under general surveillance in the home country of the parent bank, while subsidiaries were subject to such monitoring in the host country. However, according to this setup, liquidity surveillance should have been in the hands of the British FSA, which also had authority to intervene in marketing of the deposit scheme in the UK. Interestingly, however, when setting up the accounts, Landsbanki had negotiated exemption from the FSA liquidity surveillance until 2011 – liquidity surveillance of Icesave was thus only in the hands of the mother company in Iceland.

At the time no one seemed to even contemplate the risk involved. Without any objections from either Icelandic or UK authorities, the bank quoted the EU/EEA Directive 94/19/EC on Depositors Guarantee Schemes, they insisted was in place in Iceland, which, they said, would protect all deposits up to €20,887. Then they referred to the British top up guaranty for the rest – British authorities were by then promising to cover up to 50.000 Pounds per account. This was however always very ambiguous.

Kaupthing opened a similar high-yielding Internet deposits scheme, named Kaupthing Edge. However, unlike Landsbanki with Icesave, Kaupthing used its subsidiary, Kaupthing Singer & Friedlander, to host the deposits. Edge deposits therefore had to be kept in the UK and were under British banking regime surveillance. At the time, few noticed the difference, which after The Crash left those involved in the two cases a world apart.

Playing on an Icelandic symbol, Icesave was marketed to tap into the trust associated with Nordic economies. Soon attracting the favourable attention of the financial media, the scheme became an instant success. The Sunday Times, for example, wrote enthusiastically about the scheme under the headline: ‘Icesave looks like a hot deal’ (Hussain, 2006). Before the end, Icesave had attracted almost as many savers as there were inhabitants in Iceland. Landsbanki had for a while enjoyed better ratings than the other two because it was able to tap into the Icesave deposits to keep liquidity flowing. This was, however, a mixed blessing, as reliance on deposits leaves a bank much more vulnerable to bad news than if it is funded in the wholesale market. Even a minor issue can result in a run on a bank with avalanche of withdrawals if it is portrayed in the wrong light. Still, all three banks were passing the Icelandic Financial Supervisory Authorities (FME) stress tests with flying colours. In theory, the banks were all doing well. Amongst those buying this story was the Financial Times, which as late as August 2008 wrote that ‘fears of a systemic financial crisis in Iceland have dissipated after the country’s three main banks announced second-quarter results showing that they are suffering amid the downturn – but not too badly’ (Ibson, 2008).

The Central Bank stretched itself to the limit to keep the banks liquid in domestic króna, for example accepting their own bonds as collateral – the so-called love letters. However, to back up the overinflated banking system in such dire straits it needed a sizable sum in foreign currency. The Central Bank thus went knocking on doors in the neighbouring countries asking to open similar swap lines as others were negotiating, that could be drawn on in time of need. This was meant to boost confidence in Iceland’s capacity to back up the financial system. To the surprise of the government, however, apart from earlier limited swap-lines with the Nordics, Iceland met with closed doors in most places. This was at a time when the neighbouring states were still upholding much more extensive currency swapping agreements.

Not only had the banks been pushed out of the international capital market, but the government had as well. For the international financial system tiny Iceland was as a state not thought to be too big to fail. Iceland first approached the Bank of England in March 2008 for a swap-line agreement. Initially, the request was positively received, but with a suggestion that the IMF would analyse the need. A month later, the climate had changed. It had become clear that the central banks of Europe, the US and the UK had collectively decided not to assist Iceland. Later it became known that the governor of the Bank of England, Mervin King, offered instead to co-ordinate a multinational effort to help scale down our financial system. His offer was instantly turned down by the leading governor of the Icelandic Central Bank, Mr. Davíð Oddsson (See for example, Wade & Sigurgeirsdottir, 2010.

UK Concerns

When Northern Rock was running into trouble in late 2007 and taken into receivership in February 2008 worries over further volatility in the banking system were spreading in the UK, raising concerns of health of many other banks. By 2008 Landsbanki had collected around 4 billion pounds through the Icesave scheme. With the International Financial Crisis now blazing and the apparent wide exposure of Iceland’s oversized banking system this was causing increasing concerns in the UK, especially because of the poor state of the Icelandic Depositors Guaranty Fund holding only around 1 per cent of the liabilities of the Icelandic banks now facing headwind (Jónsson, 2009). This caused an avalanche of negative reporting in the UK media on the Icelandic banks. On 5th February 2008 The Daily Telegraph for example asked in a headline: “Is Iceland headed for meltdown?”(“Is Iceland headed for meltdown?,” 2008). Subsequently increased withdrawals were almost amounting to a run on the bank, which the bank was barely able to withstand, before deposits started picking up again in April.

These events lead the British FSA to push for restructuring of the online branch, for example proposing revoking an exemption Icesave had negotiated from liquidity surveillance in the UK. This was raised in meetings between governors of the Icelandic Central Bank and the Bank of England on 3d March 2008 and again in meeting the FSA had with Landsbanki management on 14th March 2008. In these meetings the FSA furthermore proposed moving the deposits to Landsbanki’s Heritable subsidiary and thus entirely under jurisdiction of the British Financial Services Compensation Scheme  (SIC 2010, Vol. 6, Ch. 18: 12, 13). For this, however, demands were made that assets had to follow from the parent bank in Iceland to the UK, which Landsbanki had trouble meeting (Ibid). The liability amounted to half Iceland’s GDP. Additionally such transfer would have to be with depositors consent, though force majeure situation might justify a quicker move. This was the start of increased tension between Iceland and the UK over the Icesave deposits, ultimately resulting in the UK authorities seizing the bank in October 2008 when the parent bank was falling in Iceland.

The tension was heightening in frequent exchange of letters over the coming weeks and months. In a letter dated 29th May 2008 the FSA finally revoked the exemption from UK liquidity surveillance and subsequently demanded that the Icesave deposits be moved to subsidiary (SIC 2010, Vol. 6, Ch. 18: 16). The FSA had concerns that neither the Icelandic Guaranty Fund nor the Central Bank had ability to back up the bank in times of crisis. The FSA also asked that the Icesave deposits would be capped at 5 billion pounds level which they were now reaching close to and that interests would be set below featuring on best buy tables (SIC 2010, Vol. 6, Ch. 18: 17). Landsbanki replied on 15th July 2008 agreeing with the general aim of moving the deposits to subsidiary but refusing both capping the deposits and the request of setting interest below best buy level. In the meantime the issue had been reported widely in the UK, for example discussed in the House of Commons were MPs quoted report in The Times on 5th July stating that collectively the deposits of the Icelandic banks in the UK were amounting to 13,6 Pounds or “twice the country’s entire GDP”  (SIC 2010, Vol. 6, Ch. 18: 19).

On July 22nd 2008 the FSA wrote back saying that Landsbanki’s reply was worrying, that risk of run on the bank was increasing and that the FSA would be forced to consider applying its legal measures against the bank if its requests were not being met. That is; a solid cap, solid liquidity buffer and firm time tabled intention of subsidiarisation. (SIC 2010, Vol. 6, Ch. 18: 19). Though Landsbanki voiced willingness to comply in its letter to the FSA on 28th July it also explained why it might have difficulties in implementing what was being requested unless the FSA would agree on flexibility regarding some of its conditions in the transition period. On these conditions Landsbanki and the FSA were never able to agree on. While the FSA was operating in order to protect UK based depositors the Landsbanki management was rather concerned with saving the mother bank in Iceland. These aims proved contradictory and caused prolonged frictions (see SIC 2010, Vol 6.).

The FSA was not only applying its pressure in letters and meetings with Landsbanki but also in ongoing correspondence with the Icelandic FME and Central Bank. In a letter to Landbanki on August 5th 2008 the British FSA demanded Landsbanki to confirm within a week how the bank would comply with conditions set by the FSA in order to move the Icesave deposits to its subsidiary in London, otherwise it might be forced to apply its formal legal measures (SIC 2010, Vol. 6, Ch. 18: 23). This was the second time the FSA threatened in a letter to directly intervene in the bank’s operations.

The Icelandic Central Bank was now directly involved. Reportedly it considered openly defying the FSA but decided against that approach as it might risk the stability of the entire Icelandic financial system (SIC 2010, Vol 6). On 11th August 2008 the Icelandic FME wrote back to the FSA pleading on behalf of Landsbanki for flexibility while transferring Icesave to the Heritable Bank in London. The two surveillance authorities talked in a teleconference a week later where the FSA suggested that Landsbanki might sell Icesave. In the meantime, the FSA had written Landsbanki once more on 15th August 2008, demanding increasing reserves to 20 per cent of deposits. At the end of the letter the FSA threatened for the third time that it might apply its formal authoritative legal measures against the bank and stop deposit collection into Icesave accounts (SIC 2010, Vol. 6, Ch. 18: 25). The Icelandic actors, that is, the Landsbanki, the Icelandic FME and the Central Bank however believed that would only trigger liquidity crisis – not only for Landsbanki but for all Icelandic banks and indeed also the UK fragile banking system (SIC 2010, Vol 6).

It was now clear that the British FSA considered Landsbanki being in non-compliance with its conditions and that it was already failing. The Landsbanki management pleaded with the Icelandic Minister of Commerce to intervene, who with a team of officials met with UK Chancellor of the Exchequer Alistair Darling in London on 2nd September 2008. Mr. Darling has since reported that he was disappointed with the Icelanders as he felt they did not appreciate the seriousness of the situation (SIC 2010, Vol. 6, Ch. 18: 31, 229). Following up on the meeting few days later, leading official in the British Treasury dealing with the Icelandic case, Clive Maxwell, called the Icelandic Ambassador in London, expressing the Chancellors concerns and explaining how politically difficult the relationship with Iceland had become in the UK. This was perhaps a warning that tougher measure might be taken against Iceland.

In a letter on 3d September 2008 the FSA once again wrote to Landsbanki saying it was considering applying its formal legal measures if the bank would not before 8th September 2008 explain how it would comply with the conditions. Before the deadline Landsbanki replied by again voicing willingness to comply but explaining why it might be difficult to meet all the requests. In wake of several subsequent meetings and correspondence between agencies in the two countries the FSA wrote back on 17th August 2008 announcing that it would apply its legal measures. It was now ordering the bank to fully comply with bringing assets to the UK to underpin withdrawals from Icesave accounts and in order for them being transferred into the British financial space (SIC 2010, Vol. 6, Ch. 18: 33). The state of the international financial system had by then gone from bad to worse when Lehman Brothers collapsed in the US on 15th September 2008.

In a desperate reply on 19th September 2008 Landsbanki indicated that it would comply before turning straight to the Icelandic FME asking for help. The two surveillance authorities were still in correspondence on the issue when further trouble arose for the Icelandic banks, which I turn to next.

Heightening Pressure

When a planned nationalization of one of the three banks, Glitnir, was announced in Reykjavik on Monday September 29th depositors were flocking to nearest branch and withdrawing their savings. When the news travelled abroad, many of the 300,000 Icesave depositors in the UK, also rushed online to withdraw their money from the Icesave accounts. Throughout the continent, central banks and governments were harmonizing their response to the crisis. The ECB and the Bank of England, for example, were providing massive liquidity to European banks, but despite a wide-ranging emergency plea, Iceland would not be allowed access to these funds. The same was also to become true in Washington. Iceland was flatly refused as neighbouring governments collectively opposed a bailout, referring it instead to the IMF. Being the first Western country in four decades to surrender to the IMF was seen as a humiliation and a defeat for the Icelandic postcolonial project (see Bergmann 2014b).

In the UK, worries over the poor state of the Icelandic banks had been growing for some time. Since May, unsuccessful negotiations had been under way to move the Icesave deposits to Landsbanki’s Heritable Bank and thus under the cover of the UK banking scheme. On Friday 3d October the FSA formally announced applying its legal measures against Landsbanki stipulated in the Financial Services and Markets Act 2000 (FSMA). The bank was already by Monday to install funds amounting 20 per cent of the Icesave deposits into the Bank of England, lower free access deposits to below 1 billion pounds by end of 2008 and cap total deposits at below 5 billion pounds (SIC 2010, Vol 6). The bank was also to bring its interest below best buy levels and halt all marketing of free access deposits. As Landsbanki did not at the time have funding available to comply this was in effect equal to killing of the bank.

In the evening Alistair Darling called his counterpart raising concerns that 600 million pounds were illegally being moved out of Kaupthing and back to Iceland. To this the Icelandic authorities had no answer. By close of market the same day The European Central Bank had placed a margin call of 400 million Euros on Landsbanki in Luxembourg, threatening to seize many of its assets. However, on Sunday evening the ESB revoked the call and by doing so releasing some of the tension (SIC 2010, Vol 6).

Thus, while Iceland was desperately trotting the globe shopping for money, the UK authorities and the ECB were not only refusing any funding but indeed pressing it for cash. The firm stand of the Bank of England, the ECB and the US Federal Reserve against Iceland also made the Scandinavian neighbours hesitant to help further (SIC 2010, Vol 6). To stem the bleeding of the Edge and Icesave accounts, both Kaupthing and Landsbanki were frantically selling off assets at rock bottom prices. With the rapidly increasing flow of negative reporting abroad, the run on Icesave in the UK grew stronger. On Saturday 4th October, depositors could no longer access their accounts online. On the website an explanatory note read that this was because of technical problems. Traffic had increased more than fivefold. Really, however, this was not least because the bank was already exhausted by the run; it could no longer honour the withdrawals. Out of the £4.7 billion the 300,000 or so depositors held, more than £300 million ran off the accounts on that day alone. Foreign reporters and government authorities responded by asking whether Iceland would provide the same protection to foreign depositors as it had already announced for domestic ones. Pressure rose when the government struggled to find a diplomatic answer (Jóhannesson, 2014).

Around dinnertime on Sunday 5th October British PM Gordon Brown called his Icelandic counterpart Geir Haarde, urging him to seek IMF assistance. They were old acquaintances, since both had served for years as finance ministers, meeting on several occasions. Brown also voiced concern that money amounting to more than one-and-a-half billion pounds was unlawfully being brought over to Reykjavik out of Kaupthing’s London subsidiary, Singer & Friedlander, which would not be tolerated. The amount had thus grown by billion pounds in only couple of days since the call from Darling (see SIC 2010, Vol 7).

This claim of illegal money transferring out of the UK, which was repeated by many UK officials over these dramatic days, later proved unfounded as was for example stated in report to the House of Commons Treasury committee (2009, April). The UK was in this regard already burned by Lehman Brothers, which prior to its default had sneaked back to the US eight billion dollars from the City of London, and would not allow the same thing to happen again. The call ended without a solution, with Brown all but begging Haarde to call in the IMF rescue team. The message from the UK side in frequent correspondence over the weekend was always the same: no bailout money would be available internationally for Iceland except through an IMF programme (SIC 2010, Vol. 6, Ch. 20: 100).

The UK authorities were threating to seize Icesave already by Monday. To halt the blow the FSA demanded 200 million pounds immediately to underpin Icesave and further 53 million to stabilize the Heritable Bank (SIC 2010, Vol. 7, Ch. 20: 145). All attempts to shift the Icesave accounts into British banking space had thus failed. Negotiations with the British FSA to allow Landsbanki to move the deposits to its London Heritable Bank and thus under the UK banking regime were stuck. The British were asking for more money alongside it than either Landsbanki or indeed the Icelandic state could possibly raise. The Icelandic Central Bank could only bailout one of the three big Icelandic banks. All of them seemed to need around 500 million Euros for only short-term rescue. When it came clear that Kaupthing would win the lottery of which to bail out, as it was deemed to have the best chance of surviving, the light was finally out on Landsbanki.

God Bless Iceland!

When the markets opened on Monday October 6th, the FME had stopped trading the banks’ stocks and the banks themselves froze all fund transactions. To counter the almost inevitable avalanche of withdrawals, the government issued a blanket protection for all deposits within the country. The UK and Netherlands were issuing top-up guarantees for deposits above the €20,887 stipulated in Directive 94/19/EC up to €40,000 in the Netherlands and, by Wednesday, up to £50,000 in the UK. Many European states were also issuing complete guarantees, including Ireland, Germany, Denmark and Austria. Iceland was, however, only guaranteeing domestic deposits but could not explicitly state what would happen in foreign branches, apart from a vague general pledge to the effect that the banks’ Depositors and Investors Guarantee Fund would be ‘supported’. That promise was always very ambiguous and, furthermore, it was always clear that it might anyway be difficult uphold, as deposits in foreign branches of Icelandic banks, most of which were on Icesave accounts, amounted to around £8.5 billion, about 80 per cent of the country’s GDP, whereas the fund held only about 1 per cent of that total amount, which, though, was comparable to other countries. The ambiguity of the statements coming out of Reykjavik was thus worrying neighbours, especially government officials in Whitehall (see Jóhannesson, 2014).

It was clear that Landsbanki would already be defaulting the following day. This was a stark reversal of the bank’s situation from just a few months before, when it seemed to be well funded with a comfortable €800 million liquidity and strong inflow of foreign deposits. Furthermore, redemption of loans was low until late 2009. And even though it was exhausted of foreign cash by the run in the UK, the bank still had enough money in Icelandic króna to survive this storm; the problem was that the króna was no longer tradable for foreign currency. This was thus a double crisis – a banking crisis and a currency crisis – starting already in March (see Bergmann, 2014).

Around noon Monday 6 the UK embassy in Reykjavik reported to London on events over the weekend. Interestingly the ambassador mentioned the Icelandic governments guaranty of domestic deposits but then indicates that the government had sent similar statement to London because of Kaupthing and Landsbankis operations in the UK (Jóhannesson, 2014). This was a misunderstanding but it seems clear that the UK government believed that such a promise had been given, that the Icelandic government would at least protect the minimum of EUR 20.887 (ibid). This proved to be a wrong interpretation of what Icelandic officials meant when stating that the Icelandic Depositors Guaranty Fund would be ‘supported’ (ibid), but given the fact that Iceland officials at the time were avoiding contact with the British and only providing them with as vague responses as possible (ibid) one can understand that there was wide room for such misunderstandings.

In the afternoon on Monday 6 October the Icesave bank was being closed in the UK by formal issue of the FSA. Around the same time PM Geir Haarde was announcing that the Icelandic state would not have the means to bail out the banks. By trying so it ran a risk of being sucked with them into an economic abyss. (Haarde, 2008). An emergency legislation was rushed through parliament, allowing the government to split the banks into a domestic only good bank surviving and bad bank taken into receivership. This method was according to advice of a financial specialist, Marc Dobler, sent from the Bank of England to Reykjavik (SIC 2010, Vol. 7, Ch. 20: 120). The legislation also altered the order of payments of claims out of the fallen banks by moving depositor’s claims to the front. This was a force majeure situation. The government simultaneously wanted to protect domestic depositors in Iceland and the state from claims from abroad. The action was part of the defensive wall being raised around ordinary households. Foreign creditors would simply have to accept losing most of what they had loaned to the Icelandic banks.

This was a time of chaos. UK authorities were desperately trying to get information out of Iceland. It didn’t help when Alistair Darling could get through to neither the Icelandic PM nor the Finance Minister, who he was asked to contact again the following morning. The UK government’s frustration was reported in correspondence throughout the evening by the UK ambassador with Sturla Sigurjónsson of the Icelandic Prime Ministry. He reported a message from London: if convincing explanations would not come out of Reykjavik, that would be negatively interpreted in London and might have serious effect on the bilateral relationship between the two countries. (SIC 2010, Vol. 7, Ch. 20: 147).

Before opening of business on Tuesday morning, a board for a new Landsbanki had been appointed. Meanwhile, in the UK, the FSA issued a moratorium on Landsbanki’s London based Heritable Bank.

With all funding opportunities closed, the situation was growing bleaker by the hour. As planned Alistair Darling called on Tuesday morning to discuss these and other grave matters with Finance Minister Árni Mathiesen. When he could not get a clear state guarantee out of his Icelandic counterpart, an assurance that UK depositors would be protected, at least up to €20,887 according to Directive 94/19/EC, he stated that this would be ‘extremely damaging to Iceland in the future’ and then ended the call saying, ‘the reputation of your country is going to be terrible’ (“Samtal Árna og Darlings,” 2008). Mathiesen could not but agree, but he understood from their conversation that he would still have some time to work things out.[1]

Invoking Anti-Terrorist Act

Seen from the UK and the Netherlands, the situation was simply that Icesave depositors were left without access to their accounts. The website was inaccessible and no trace of the bank was left in the UK or the Netherlands. No one answered the phone and there was not even an address to go to. Depositors were in an intolerable position – the bank had disappeared without a trace from the face of the earth. This caused a seriously strained relationship Reykjavik had with London and The Hague. The British and the Dutch governments decided to compensate their depositors, even beyond the €20,887 mark guaranteed by Directive 94/19/EC. For this they demanded payback with interest from the Icelandic government.

In Whitehall, preparations had been under way for dealing with the Icelandic crisis. Icelanders would not get away with simply cutting off their foreign debt, shutting the doors and leaving British citizens out in the cold. It did not help that UK officials had learned of the message from governor of Iceland’s Central Bank on TV few days earlier, in which he stated that foreigners could only expect between 5 to 15 per cent of their claims. The plan was to be kicked into action. The British claimed that giving preference to depositors in domestic banks over those in foreign branches was a breach of European regulations, which Iceland subscribed to through the EEA.

In the early morning of Wednesday 8th October 2008 Alistair Darling appeared on BBC Radio 4 claiming that the Icelandic government was reneging on its responsibility to UK depositors, and that this would not be tolerated. Referring to his conversation with Iceland’s finance minister Mathiesen the day before he said: ‘The Icelandic government, believe it or not, told me yesterday they have no intention of honouring their obligations here’ (Darling, 2008). In a joint press conference at 9:15 Darling and Gordon Brown announced a massive bailout of UK-based banks, to the tune of £500 billion. As a result of pumping the money into the banks, the British state acquired a majority stake in the Royal Bank of Scotland and steered the merger of HBOS and Lloyds TSB, in which the state had acquired third of the shares. There was, however, not a penny for Icelandic-owned banks in the UK. On the contrary, Brown claimed that Iceland’s authorities must assume responsibility for the failed banks and announced that the UK government had taken ‘legal action against the Icelandic authorities to recover the money lost to people who deposited in UK branches of its banks’ (quoted in Balakrishnan, 2008). Director of the British FSA, Hector Sants, is reported to have told the management of Kaupthing Singer and Friedlander in the UK: ‘Those funds are not for you’ (SIC 2010, Vol. 7, Ch. 20: 171).

Earlier in the morning, the UK FSA had called Kaupthing demanding £300 million instantly be moved from Reykjavik to Singer & Friedlander to meet the run on Edge accounts, which with the Icesave website down also was blazing, and then a further £2 billion over ten days. This was an impossible demand for Kaupthing to meet, and it instead called the Deutsche Bank, asking it to sell off Kaupthing’s operations in the UK. Deutsche’s brokers thought that could be done within 24 hours (Jónsson, 2009).

The legal actions Brown had mentioned in his press brief, however, went much further. At 10:10 in the morning, deposits in Landsbanki’s Heritable Bank were moved to the Dutch internet bank ING Direct for free when the ‘Landsbanki Freezing Order 2008’ took effect (The Landsbanki Freezing Order 2008, 2008). The action was based on the Anti-Terrorism, Crime and Security Act, which had been put in place after the terrorist attacks in the US on 11 September 2001. Not minding that around a hundred thousand people worked for Icelandic-held companies in Britain, the UK government invoked the Anti-Terrorism Act to freeze the assets of Landsbanki in the UK and for a while also all assets of the Icelandic state including the Icelandic government, the Icelandic Financial Surveillance Authority and the Icelandic Central Bank (SIC 2010, Vol. 6, Ch. 18: 40).

Later that day the FSA took control of the Heritable Bank and Landsbanki’s subsidiary in London. The Landsbanki Freezing Order was issued with an explanation reading:

The Icelandic authorities have announced that Landsbanki has been placed into receivership but has not given any indication as to how overseas creditors will be dealt with. The Icelandic Government has also announced a guarantee of all depositors in Icelandic branches. However, overseas depositors have not been covered by the guarantee. This exclusion on grounds of nationality is discriminatory and unlawful under the rules governing the European Economic Area. The UK government is taking action to ensure that Landsbanki assets are not transferred from the UK until the position of UK creditors becomes clearer. The UK authorities are seeking to work constructively with the Icelandic authorities to ensure speedy resolution.

Subsequently, Landsbanki and for a while also Iceland’s Central Bank and Ministry of Finance was listed on the Treasuries home page alongside other sanctioned terrorist regimes, including Al-Qaeda, the Taliban, Burma, Zimbabwe and North Korea.

While Kaupthing’s CEO, Sigurður Einarsson, was in his London office in the late morning discussing with Deutsche Bank over the phone the fastest way to liquidate its assets, he read a banner running on the TV screen saying that the FSA had already moved Kaupthing’s Edge accounts to ING Direct in the Netherlands. Their phone conversation quickly ended, as there was no longer anything to talk about. In the afternoon, the UK authorities issued a moratorium on Singer & Friedlander, showed its Icelandic CEO, Ármann Thorvaldsson, the door and sealed the offices (Thorvaldsson, 2009). This instantly prompted a flow of margin calls and a further run on the mother company. When the dark set in, Kaupthing Bank was itself taken into administration in Reykjavik. Thirty thousand shareholders lost all their investment. Interestingly, both the previously mentioned report to the House of Commons Treasury committee (2009, April) and also the British FSA later found out that no money had illegally been moved from Singer & Friedlander to Iceland (Júlíusson, 2009), which, however, had been one of the main justifications for the UK’s attack on Iceland.

On this same day, Thursday 9th October, Brown told BBC that the actions of the Icelandic government were effectively illegal and completely unacceptable. ‘They have failed not only the people of Iceland; they have failed people in Britain’ he said. Then he said his government was ‘freezing the assets of Icelandic companies in the United Kingdom where we can. We will take further action against the Icelandic authorities wherever that is necessary to recover money’ (quoted in “Brown condems,” 2008). Later that day, Brown told Sky News that Iceland, as a state, was bankrupt and that the ‘responsibility lies fairly and squarely with the Icelandic authorities, and they have a duty in my view to meet the obligations that they owe to citizens who have invested from Britain in Icelandic banks’ (“Brown Blasts Iceland Over Banks,” 2008). Iceland was being completely rebuffed. In fact, in the coming days Brown’s rhetoric against Iceland was only to harden.

With UK depositors holding a stake of £700 million in Icesave, including many charities’ funding, Brown stated that the Icelandic authorities were now responsible for the deposits. Even in the UK, many were stunned by Brown’s harsh response to the Icelandic crisis. Many claimed that by attacking Iceland, a foreign actor, Brown was attempting to divert attention from difficulties at home, perhaps much as Margaret Thatcher had done during the Falklands crisis (Murphy, 2008). Initially it did indeed work. On its front page the Daily Mail declared ‘Cold War’ (2008) on Iceland and the Daily Telegraph screamed across its front page: ‘Give us our money back’ (2008). And these were papers that did not even support Brown or his Labour Party.

With access to the estimated 7 billion pounds the Icelandic government and banks held in assets in the UK no longer being available, the wall finally came tumbling down. Invoking Anti-Terrorist legislation against a neighbouring state and fellow NATO and EEA member was virtually an act of war, as is indicated in the interviews conducted for this paper. This was an unprecedented move against a friendly state, which cost Iceland dearly, in both economic and political terms. Moody’s instantly downgraded Iceland by three full points, to A1. Money transactions to Iceland were stopped not only in the UK but as a result also widely in Europe, where many banks refused to trade with Iceland after it had been listed in the UK with terrorist actors. The payment and clearing system for foreign goods collapsed. In only two days, all trading in króna had ceased outside Iceland’s borders (SIC 2010, Vol. 7).

By Thursday 9 October 2008, almost the entire Icelandic financial system had collapsed in a dramatic chain of events, which later became known simply as The Crash. Ironically, this was a full week before Glitnir’s 15 October deadline – which had started the whole thing.

Explaining the UK Attack

In hindsight it seems clear that the UK authorities went in their actions much further than needed in protecting British interests. Invoking the Anti Terrorist Act was for example in stark contrast to responses elsewhere. Authorities in the Netherlands, for example, saw no reason to freeze assets and in Stockholm the Swedish Central Bank was still trading with Kaupthing’s Swedish branch. In this segment I attempt explaining some of the reasons behind the harsh response of the UK government against Iceland.

First thing to note is that this was a time of utter chaos, frustration and widespread political as well as economical upheaval. Perhaps part of the reason can be found in the fact that Iceland’s economic fragility turned the mirror on the UK and its own volatile financial situation. Economist Willem Buiter (2008) who had studied the state of the economy in both countries, saw the similarity and wrote that it was no great exaggeration to also describe the UK as a huge hedge fund.

From private off-the-record interviews I conducted for this paper in late 2013 and early 2014 with several leading UK officials, within for example the UK Treasury, Foreign Office and the Labour Party, who were at the heart of these events at the time, it seems clear that the UK government finally lost faith in not only the Icelandic banks but also the Icelandic government over the weekend from Friday 3d to Sunday 5th October, 2008. This conclusion is for example also supported in unpublished report Icelandic stakeholders commissioned a leading business investigation firm in London to conduct into the issue.[2] The report states that the UK government believed until October 3d 2008 that a ‘high level political deal’ was in place of fast-tracking Icesave deposits to British banking space. The alleged deal included stipulation of insurance premium to be paid by the Icelandic government, that the ‘Icelandic government [was] to transfer 200 million pounds to the UK’.

How the UK authorities came to believe this deal was in place is not clear as no such understanding is sheared amongst Icelandic officials at the forefront of these events at the time, who also were interviewed off the record for this paper in late 2013 and early 2014. Neither are there any public documents available to support such alleged ‘deal’ at ‘high political level’ as the report claims.

UK officials interviewed for this paper point out that this was a time of great uncertainty and misinformation. Long lasting still ongoing tension at the time between the British Foreign Office (FCO) and the Treasury had weakened British institutions. Under Gordon Browns premiership it is reported that the Treasury was leading all actions against Iceland and that the FCO was hardly involved. Still, the little information that was available on Icelandic politics within the UK government was kept at the FCO. It is furthermore reported in the interviews I conducted that there was a serious communication malfunction between the Treasury, the FSA and the Bank of England. This was unfortunate as reliable intelligence on the Icelandic banks was rather within FSA and the Bank of England than in the Treasury.

In addition to not understanding Iceland, the Treasury was overworked by challenges of the international financial crisis blazing at the time. It is furthermore reported that as relatively young and small ministry in the UK the Treasury was suffering from high staff turnover and thus lack of institutional memory. All of this combined meant that when dealing with little Iceland the Treasury neither had the means nor knowledge to properly contemplate the highly complex situation.

My interviewees concur in saying that when trouble arose Iceland was thus not in focus in the Treasury, in fact it was rather viewed as troubling black hole preventing the UK from dealing with the big picture. Unlike the Foreign Service the Treasury had no room to contemplate political implications cross borders, in dealing with Iceland this was just a financial issue like all others. ‘This was just nuts and bolts finance’ said one of this papers interviewees. While desk officers were of course analysing Icelandic banks like all others, higher-level officials were ignorant about the country.

One interviewee for this paper, senior official in the British Foreign Service said that this was in effect a failure of diplomacy. He said that on both sides there existed surprising lack of understanding between the two governments, that the Icelanders did not know British governance and the UK side was almost utterly ignorant about Iceland. He pointed out that even though Gordon Brown and Geir Haarde were on good terms and for example met at Number 10 after Brown took office, that friendship did not amount to much at time of crisis. ‘To think so was foolish’, he said.

Plan A and Plan B

British officials interviewed for this paper pointed out that repeated references in FSA letters to Landsbanki to its legal authority to interfere with the banks operation in the UK, discussed earlier in this paper, was nothing short of blatant threat of seizing the bank. This warning seems, however, not to have been taken equally seriously in Iceland. According to British officials interviewed for this paper a low level and at first rather vague plan to deal with Iceland was slowly starting to emerge since May 2008, developing in gradual steps until the very end when the UK government finally struck on October 8th 2008 with implementing of the Anti Terrorist Act. The plan consisted of two options. Plan A revolved around getting Icelandic authorities on board with moving Icesave to the UK, which was to include proper insurance premium funds coming with it. If however, that would not work out, plan B was quite simply unilaterally seizing the bank.

As mentioned before, until Friday October 3d, Treasury officials believed a deal was in place with Icelandic authorities. Over the weekend however the UK side lost faith in the Icelanders, resulting in Plan B being kicked into action. The above mentioned investigative report prepared for Icelandic stakeholders also indicates that the UK side feared that the government of Iceland was losing control over to Central Bank governor Davíð Oddson, the country’s previous long standing PM and that he was planning to ‘veto the scheme’ – that is, the alleged deal on moving Icesave against 200 million pound insurance premium. The report also noted an expectation existing in the UK that the nationalized Icelandic banks would be ordered to reclaim their funds from abroad following such an Oddson veto. Furthermore, hints of Russian rescue money flowing to Iceland caused further concerns of Iceland going rogue.

When coming to the conclusion of applying plan B, UK officials interviewed for this paper claim that when dealing with Iceland, Brown and Darling wanted to been seen as being tough on rouge bankers. They pointed out that Iceland was viewed to be small enough to be made an example off; that it might serve as stark warning to others. Thus, when the big bank bailout was announced on Wednesday October 8th 2008, being tough on Iceland set the right political tone domestically, i.e. being tough on bad bankers while also preventing the banking system from collapse. Thus, this was also a balancing act. Applying the Anti-terrorism Act against Iceland was thus purposely used by the UK government to send a strong message and in doing so preventing others from straying off from the right path.

UK officials interviewed for this paper agree that the UK government had no idea what implication their action would have on the Icelandic banking system, that they were not thinking about Iceland as such in their actions, that this was quite simply only about British politics in time of crisis and that they did for example not contemplate Kaupthing collapsing as a result.

This view of events is somewhat supported when examining conversation between Icelandic Finance Minister Mathisen and Lord Paul Myners, the British Financial Services Secretary, on 8th October 2008. Myners said that it had worried UK authorities not being able to get reliable information out of Iceland on whether British depositors would be compensated or not. Lord Myners said that the UK government had thus decided to take action in protecting British financial interests against Iceland (SIC 2010, Vol. 7, Ch. 20: 151). When discussing the issue in the House of Lords on 28th October 2008 Myners cited the same reasons for applying the Anti-terrorism, Crime and Security Act, that is; lack of sufficient commitment from Iceland regarding deposits in the UK but also adding that the actions had been necessary because of volatility on the UK financial market. He said it had been necessary to act vigorously when Iceland seemed to be taking actions hurting British interests (SIC 2010, Vol. 7, Ch. 20: 154).

Quite clearly, we can conclude that these actions were a co-ordinated attack that had been in the making for days, if not weeks. Indeed, it was a bomb, which was to blow up the defensive wall that the Icelandic government was trying to build around domestic households.

When PM Haarde called in the morning on Thursday 9th October to complain about this brutal treatment, Brown did not even answer. Haarde was instead referred to Darling, who in their phone conversation justified the actions of the British authorities by referring to his talk with Icelandic Finance Minister Mathiesen two days earlier. Darling said that Mathisen had not been able to provide guaranty for the Icesave deposits and that he had indicated that obligations of the FME might not be honoured. Records of their 7th October conversation however do not support Darlings recollection from their talk (See SIC 2010, Vol. 7, Ch. 20: 152). Interestingly, when interviewed for this paper a senior UK Foreign Office official pointed out that Mathiesen had made a mistake when agreeing to talk on the phone with Darling that day, by doing so he had given Darling the excuse he needed to attack Iceland. The British official said that the phone call had made it easier for the UK to apply the legislation they had already for some time been preparing to use if the need presented itself.

From correspondence between the UK embassy in Iceland and the Treasury in the UK, now partly made available by the Freedom of Information Act 2000, the UK authorities seem to have felt quite confident of success in their dealings with Iceland. On late October 11th the UK ambassador reported to London that Treasury officials were travelling back from Iceland and that a deal on Icesave was within reach. UK officials discussed imminent ‘quick wins’ in the dispute against Iceland and contemplated ‘lifeline’ to be handed to Iceland after securing their victory (See in Jóhannesson, 2014).

The Icelandic government only made weak attempts to protesting against these actions taken by the UK. On 13th February 2009 the UK Treasury finally provided explanations in a letter signed by Clive Maxwell, claiming that the actions were not taken on grounds of terrorist operations. The letter quoted instead protocol in the law saying that the Treasury can act against those whose actions are construed as being to the detriment of the United Kingdom’s economy. The letter maintained that the British Treasury had believed it to be likely that the Icelandic government was discriminating in favour of Icelandic depositors and against UK and other foreign creditors. The letter quoted the 7th October phone call between finance ministers Mathiesen and Darling, claiming that the Icelandic authorities had failed to issue credible protection to foreign depositors. The letter also stated that the Icelandic government had provided contradictory information and said that the Icelandic actions were threating financial stability in the UK and that there was real risk of contamination (SIC 2010, Vol. 7, Ch. 20: 155). This is somewhat different to the explanation Finance Minister Darling told PM Haarde in their phone call on 9th October 2008.

Forced Agreement

Though ambiguity remained over many legal aspects of this highly complex situation, the UK and Dutch governments were pressuring Iceland to accept full responsibility for the Icesave accounts. While also pressuring Iceland to turn to the IMF, these governments were, with the help of the EU apparatus, lobbying neighbouring capitals to refuse it any loans except through an IMF programme (See in Independent Evaluation Office of the International Monetary Fund, 2014). Iceland’s government, however, was still afraid of the stigma of being the first Western state in four decades to surrender to the IMF (See for example, Mathiensen & Jósepsson, 2010)

Iceland gradually caved under the collective pressure and sought help from the fund. To Iceland’s surprise, the IMF board refused help unless, Iceland was made to understand, first clearing up the Icesave dispute with the British and the Dutch. Initially at the IMF yearly meeting in Washington already on October 11, Finance minister Mathiesen signed a Memorandum of Understanding with the Dutch where he agreed to an arbitrary court ruling on the issue. Only in its wake, on 22d October, was Landsbanki removed from the list of terrorist regimes on the UK Chancellor’s website. This agreement was however abandoned by the Icelandic government upon Mathiesen’s return in Reykjavik and in November it was replaced with a much more broadly based deal, what was called the Brussels Guidelines, which included EU involvement. The deal stipulated that Iceland would indeed accept responsibility, but that its European partners would help shouldering the cost. Holding out for not much more than a month, the government thus threw in the towel and under impossible pressure, accepted to guarantee deposits up to the minimum €20,887 stipulated by EU Directive 94/19/EC.

The EEA connection did not amount to much. IMF assistance was only made available after Iceland gave into the Dutch and the British. The government’s apparent weakness in responding to the UK attack added to the public’s frustration, especially when it had become clear that no money had illegally been moved out of the UK.

The initial forced Icesave agreements (The Memorandum of Understanding and the Brussels Guidelines) angered the public, which in wake of the Crash had taken to the streets in ever-greater numbers. After a series of protests, which later became known as the Pots and Pans Revolution (búsáhaldabyltinging), the grand coalition of the Independence Party (IP) and the Social Democratic Alliance (SDA) was ousted from power in late January 2009, paving the way for a new left-wing government – the first purely left-wing coalition in the history of the republic.

The severity of the currency crisis, which followed the banking collapse, can for example be seen in the fact that Iceland was the only country that had to revert to such extreme measures as implementing capital controls. The economy seemed paralysed. On Friday 10 October, the first of many popular protests started.

While the crisis was tightening its grip leading up to The Crash, Iceland’s neighbours had refused help unless it was through an IMF programme. After the collapse of the banks, the IMF gradually emerged as Iceland’s only viable option as it was still being isolated internationally. The British and Dutch governments had been successfully lobbying both the ECB and other European states not to aid Iceland independently, while at the same time pressuring Iceland to accept responsibility for the Icesave deposits. Iceland’s government, on the contrary, insisted that according to Directive 94/19/EC it was only obligated to ensure that a Depositors Guarantee Fund was in place and not explicitly responsible for foreign branch deposits (Blöndal & Stefánsson, 2008). Referring to a report written for the French Central Bank in 2000, Iceland argued that the Directive did not explicitly dictate that the state had to pick up the balance in the event of a systemic collapse (Banque de France, 2000).

This was, however, a difficult argument to get through in the crisis-ridden climate at the time. In order to prevent a further run on their own banks and to regain enough credibility to keep them afloat, the British, during these same days, led a coalition of G20 and EU states promoting collective international action emphasizing almost blanket depositors protection (see, for example, Pilkington, 2008). Allowing Iceland to leave depositors in foreign branches without such protection was seen as countering these efforts and indeed undermining the entire global financial system. In Whitehall, many feared that the Icelandic crisis was spreading to the UK, which also had approached the brink of widespread banking collapse. As a result, Iceland was being turned into an international villain. Iceland was trapped.

Though Iceland was still stubbornly hesitating, a joint economic programme was informally being negotiated that would include $2.1 billion from the IMF and a further $3 billion from the Central Banks of Denmark, Finland, Norway and Sweden in addition to a separate loan from Poland. Iceland’s resilience was however diminishing by the day. The pressure to accept responsibility for the Icesave deposits grew. According to some reports, Iceland was even threatened with being expelled from the European Economic Area (EEA), its economic lifeline to the outside world (Hálfdanardóttir, 2008). With dwindling foreign reserves and at risk of a serious shortage of, for example, medicine, food and other necessities from abroad, Iceland finally threw in the towel and applied to enter the IMF emergency program on 25 October.

IMF Blockade

Based on informal query the government expected that the IMF board would accept Iceland’s application on 3 November (Sveinsson, 2013). In the meantime, however, the British and Dutch governments, which previously had been pressuring Iceland to go to the IMF, were now lobbying behind the scenes against Iceland being allowed into the program unless first accepting responsibility for the Icesave accounts (Duncan, 2008). The NRC Handelsblad in the Netherlands reported that the blockage was being orchestrated by Dutch Finance Minister Wouter Bos and his British colleague Alistair Darling (Banning & Gerritsen, 2008). Later, the chief IMF representative in Iceland admitted to a block of not only the British and Dutch governments but also the Nordic states (Rozwadowski, 2013).

When Iceland would not concede, the IMF board postponed its decision and made clear that the plea would be blocked until accepting of liability for Icesave. During this time, a senior advisor in the IMF’s external relations department publicly acknowledged that the delay was directly due to unresolved disputes with the Netherlands and the UK (Transcript of Press Briefing by David Hawley, 2008). As Iceland was not a member of the EU and thus not subject to the European Court of Justice, and as the EFTA Court had no jurisdiction in the UK and the Netherlands, there seemed at the time to be no available legal body to rule on the dispute – apart from the previously mentioned initial arbitrary court that Finance Minister Mathiesen had felt forced to agree to on October 11 but the Icelandic government later abandoned on the ground that it was skewed in favour of the UK and the Netherlands through the EU’s involvement.

Iceland was thus caught in a tight spot. It needed money to prevent further deterioration of the already devastated economy but that meant agreeing to liabilities it did not want to accept. According to the Brussels Guidelines brokered by the French EU Presidency the government of Iceland agreed to cover the deposits of depositors in the Icesave accounts in accordance with EEA law. Iceland was to repay the Icesave debt over ten years, starting three years after signing, with 6.7 per cent interest on the loan. The agreement also entailed that the EU would continue to participate in finding arrangements that would allow Iceland to restore its financial system and economy. This was a precondition Iceland set for paying out according to the agreement. A stabilization package of financial assistance from the IMF was an explicit part of the agreement, which was to be discussed at the IMF Executive Board meeting on Wednesday 19 November (Agreed Guidelines, 2008).

Though these early agreements on the Icesave deposits were meant to end the quarrel, the dispute was only just starting. Ambiguity still remained. To keep up the pressure, and even to increase it, the Dutch Foreign Minister, Maxime Werhagen, threatened to veto Iceland’s EU bid in July 2009 (The Hague Threatens Iceland, 2009). The Icelandic government justified the agreements by claiming that it had had no choice. Either it bit the bullet and accepted responsibility or the country would remain frozen out, thus without access to vital imports such as medicine and food. The Icelandic government explained that no one supported us; not even our Nordic neighbours were willing to listen to Iceland’s legal arguments. Without agreement, Iceland would no longer have been considered a modern state, internationally recognized as equal to others, but would rather have been relegated to being an isolated outpost surviving on local agriculture and fisheries alone. The signing was, however, a serious blow to the country’s political identity, as the postcolonial national identity insisted on not giving in to foreign pressure. It thus caused great strain domestically (Bergmann, 2014b).

After Iceland’s concession to the British and the Dutch over Icesave, the general public took to the streets in even greater numbers than before, now not only protesting against our government’s mismanagement of the economy but also against apparent foreign oppression. Frustration grew as businesses closed and more and more people were laid off while inflation rose to 20 per cent. The protest was now spreading around the country.

Icesave II and III

The new left-wing government parachuted in on the canopy of the Pots-and-Pans revolution contested some of the premises of the Brussels Guidelines, which they claimed was unlawfully imposed by foreign forces. Under the leadership of Finance Minister Sigfússon, chairman of the Left Green Movement, the new government abandoned the multinational approach and instead sent their representatives to London and The Hague to renegotiate terms. This result, which in effect was merely a loan agreement with the foreign ministers of the Netherlands and the UK, where Iceland accepted to cover up to €4.5 billion, instantly became one of the most unpopular agreements in the history of the country. Only after it’s signing however was the freezing order on Landsbanki and related Icelandic assets lifted.

Similar delaying tactics within the IMF on reviews, as when entering the program initially, was furthermore confirmed in a report by the Independent Evaluation Office of the IMF into its response to the financial crisis. The report spoke of ‘the active involvement of (at least some) Nordic countries served to delay the first review by several months because […] pressure […] by their European partners not to provide financing assurances in an attempt to influence the outcome of the ongoing discussion on the extent of deposit guarantees for Icesave.’ (Independent Evaluation Office of the International Monetary Fund, 2014)

Parliament reluctantly accepted the agreement, but only after adding to it new preconditions, referring to Iceland’s ability to pay. These the UK and the Dutch refused. A new negotiation committee was thus formed, which was able to lower the interest rate a little further. After a fierce debate, the amended agreement was accepted in Parliament on the last day of December 2009. The new government was now also accused of caving in to foreign pressure and surrendering Icelandic interests to external forces.

The saga took a dramatic turn on 5 January 2010, when the President of Iceland, Ólafur Ragnar Grímsson, denied signing the law necessary to ratify the new agreement after receiving a petition of 60,000 Icelanders asking him to reject the deal. (He had signed the revoked earlier one). This was an exceptional move.

In early 2010, Icelanders once again found themselves in unknown waters. A quarter of the electorate had signed a petition to be put to the President asking him to decline signing the bill, which was thus as a result of the non-signing subsequently put referendum were 90 per cent of voters refused ratifying it. The country was in a mood of defiance. Many felt betrayed by the UK government when it had invoked the Anti-terrorist Act – an action that ultimately drove our last bank into the ground. Icelanders therefore found the idea that they should foot the whole bill alone difficult to swallow. There was also a legal twist. Directive 94/19/EC upon which the British and Dutch had based their claim was rather unclear. It stipulated only that states are obliged to set up special deposit guarantee schemes. It did not speak of a state guarantee. Many Icelanders were thus frustrated by the fact that the British and the Dutch had refused the request for an impartial court to rule on the issue.

The general perception in Iceland was thus that the government had again been bullied by an overwhelming foreign power into signing an unjust agreement. It is generally accepted that the government and Parliament only accepted the initial deals to achieve other ends, rather than because they felt under obligation to pay. It was simply a necessary evil to gain access to the IMF. And then there was the cost. €4.5 billon might have seemed a small figure by UK standards but this was almost half Iceland’s GDP. Divided by Iceland’s small population, the bill amounted to more than €12,000 per head, or just under €50,000 per household. If Landsbanki’s assets deteriorated any further, this would place a devastating burden on an already debt-ridden population.

In addition to the wide-ranging general feeling of frustration, the appearance of leniency towards the British and Dutch spurred a new wave of protest in mid-2010, which heightened when Parliament resumed in the early autumn, to find thousands of protesters surrounding the building, once again.

After twice going back on signed agreements (in addition to abandoning the two initial deals), the government found it difficult to go knocking on doors in London and The Hague asking to renegotiate the deal once again. Headed by a hired American negotiator, the new team was nevertheless in the end able to bring the interest rate down to 3 per cent. This time, a large majority emerged in Parliament when the IP joined ranks with the government in backing the new deal. The Progressive Party (PP) though still opposed any agreement. Yet, to the surprise of most, President Grímsson also refused the third agreement. In a second referendum, on 9 April 2011, the new agreement was refused by a two-thirds majority, illustrating a clear division between Parliament and the public. Now, there was no longer anything to negotiate. The case was sent to the EFTA Court, where the EU was backing the claim of the UK and the Netherlands and the EFTA Surveillance Authority against Iceland. Finally, on 28 January 2013, the court ruled in favour of Iceland, which was vindicated of wrongdoing in its handling of the Icesave deposits (Judgment of the Court, 2013). The court refused the EU’s and the UK and the Dutch governments’ claims of a state guarantee, such as Iceland had been forced to accept in the earlier Icesave agreements. Later UK and the Netherlands filed a much more limited claim before court in Reykjavik, still pending judgment at time of writing.

Conclusion

Internationally the Icesave dispute reveals interesting contestation and political production (and re-production) of constitution of international legality. Development of international legality, as understood by Rajcovic et al (2016), has in this paper been traced throughout the course of this particular crisis. Domestically the issue was dictating politics in the post-crisis period in Iceland. To the surprise of many Icelanders, after the Crash had left Iceland in financial ruin, the Dutch and the British still enjoyed the full backing in the Icesave debacle of our neighbours in the European community. The UK and Dutch authorities were able to use both the EU and the IMF to pressure Iceland into accepting responsibilities that Iceland’s authorities never believed were theirs to shoulder.

 From interviews with UK officials conducted for this paper is seems clear that the UK side believed that a high level political deal was in place with the Icelandic government of fast tracking Icesave into the UK banking space and that the deal included insurance premium injection from Iceland of 200 million pounds. Interestingly, though, Icelandic officials claim not to have any knowledge of such a deal. It is furthermore evident that the UK government lost faith in Icelandic authorities during the weekend of 3d to 5th October 2008, finally kicking into action plan B of attacking Iceland by use of the Anti-terrorist Act, which had for a while been in the making in Westminster. When doing so it served the UK government well to take a tough stand on Iceland, while simultaneously bailing out banks domestically – being tough on Iceland became a balancing act, serving the purpose of sending tough message to others when announcing the massive bank bailout.

The Icesave case illustrates that in time of crisis international muscle power still prevails. In time of need small states have difficulties when defending off larger states sharp attacks. In a European context, being formally a non-EU member made it easier for the UK and the Netherlands to deploy the EU apparatus to pressure Iceland than they would against a fellow member state. The illusion of a shelter amongst the family of Nordic states was furthermore also shattered during Iceland’s Crash, which was therefore not only economic but also political and indeed psychological. Iceland had been frozen out in terms of diplomatic relations. Suffering the deepest crisis in its post-war history, the country was already drained of foreign currency when the IMF finally opened its doors in November 2008, after Iceland had, under coercion, finally agreed to guarantee the Icesave deposits. By use of delaying tactics of reviews within the IMF the UK was, with the help of some of the Nordics, able to maintain the pressure on Iceland. However, after the immediate crisis was over, it was through the EFTA Court, a European institution, that Iceland, as a small state, was finally able to escape the pressure applied by the British and Dutch governments.

 

 

 

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* Acknowledgements: This research was conducted by examining generally available data and through semi-structured off-the-record background interviews with several officials in the UK and Iceland. The interviews are referenced where appropriate in the text but due to anonymity they are not individually listed in the bibliography. The research was financially suported by the Social Science Instute of the University of Iceland, through a project analysing foreing impact on the Icelandic banking collapse. Parts of the paper are furthermore based on my book Iceland and the International Fiancial Crisis: Boom, Bust and Recovery (2014). Basingstoke and New York: Palgrave Macmillan.

Endnotes

[1] Authors interview with Mathiesen in Desember 2013.

[2] I was allowed only reading the unpublished report in Reykjavik on October 21st 2014

Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)

 

Historical memory is unwelcome by people who have too much at stake in the short term to realise that they may have much more to lose in the medium and/or long term. Historical memory is also unwelcome by people who wish that economic history could fit neatly within the theoretical constructs that they favour because of ideological, political, moral or pecuniary commitments of theirs (cf. Francesco Boldizzoni, The Poverty of Clio: Resurrecting Economic History, Princeton: Princeton University Press, 2011).

  Continue reading Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)

Dogancan Özsel (ed.), Reflections on Conservatism (Newcastle: Cambridge Scholars Publishing, 2011)

Against that revolution Edmund Burke wrote his Reflections that are taken by several of the authors in this collection to the origin of conservative thought. Burke emotionally abhorred the practices of the revolutionaries but, more theoretically, he abhorred the very idea of the attempt “to obliterate their former selves.” Underlying the Reflections are the convictions: that one ought not break with the past in the way that the revolutionaries of 1789 intended; and, perhaps less clearly, that one could not break with the past in that way. Tocqueville continues: “I have always felt that they were far less successful in this curious attempt than is generally supposed in other countries and than they themselves at first believed”. In other writings, e.g. on taxation in America, on the East India Company, on slavery… Burke clearly did not suggest that traditional practices and ideas were necessarily good and to be retained. He opposed neither liberty nor change. What he opposed was the revolutionary idea that it was imperative to break utterly with the past before the radically new and perfect invented future could be imposed from above. “The conservative emphasis on the importance of tradition and established order, which entails mutual obligations and duties for all [is] … opposed to that illegitimate order which is simply established by violence and comes with no obligations on the part of its rulers ..”.(Andreasson, 100) supposes not merely tradition but good tradition. It is as purblind to suppose the past to have been entirely bad as to expect a newly invented order to be entirely good. A tradition is the ambiguous fruit of greed and power and of many good ideas and practices that have stood the test of time. To winnow the wheat from the chaff, to distinguish the good from the bad, to discover what ought now to be done or not done are the unavoidable and enduring elements of argument.

Conservatism is not as clear as revolution. Hence Levante Nagy, in the first essay in Reflections, thinks of it as an “essentially contested concept”. Different people use the same term differently, such that if someone claims to be a conservative the listener does not yet know what precisely is claimed. That this is so is borne out in several valuable essays that examine the conservative tradition in different countries. Gergely Egedy writes of “The [Patrician] Conservatism of Jósef Antall” in Hungary, Kasper Støvring of “Cultural Conservative Traditions in Postwar Denmark”, Dogancan Özsel, Hilal Onur ?nce and Aysun Yarali of “New Trends in the Political Discourse of the Turkish Military: Marching towards Radical Conservatism?”, Agnès Alexandre-Collier of Sarkozy’s

UMP, Peter Dorey of “A Conservative ‘Third Way’ …” in the United Kingdom after Thatcher and William Miller of “Current Trends in Conservatism in the United States”.

In Turkey, the radical conservatism of the military that would preserve what Ataturk established in a fairly recent revolution (239 but passim) is far removed from the conservative traditions in Denmark, where some “conservative intellectuals are preoccupied with the necessity of a cultural community of common mores and customs, which are interpreted from a national perspective” (282). The Danish traditions are not wholly identical and are unlike the conservatism of Jósef Antall, the first Prime Minister of Hungary after the collapse of communism, who “In keeping with the Burkean traditions of organic change … made it clear that his government would try to implement the necessary and painful changes by ‘relying on our historical heritage’ instead of copying mechanically a foreign model.” (257) (It is worth noticing that to speak of social change as “organic” is to speak metaphorically; see, Rose on Hegel 111-115) In many of the post-communist central European states, initial euphoria at the removal of a crippling lack of freedom was soon tempered by the discovery that the new freedom brought with it new, not entirely welcome, responsibilities, uncertainties, and risks. In the older democracies, when the trauma of the second war had abated, and a welfare state established, the difference between “conservative” and “socialist” parties became far greater in rhetoric than in practice; and, in those democracies where violent (revolutionary) civil strife erupted what drove it was often based more on an image of traditional cultural identity than on a difference between conservatism and socialism although the (conservative) recovery of the past was often expressed in socialist rhetoric.

A great advantage of the collection is that beside studies of the particular countries and states stand theoretical studies and interpretations – Peter Dorey on “The Importance of Inequality in Conservative Thought” concentrating largely, but not exclusively, on contemporary writings in English and on the United Kingdom; David Rose on the influence of Hegel; Stefan Andreasson’s “On the Nature of Anglophone Conservatism and its Applicability to the Analysis of Postcolonial Politics” and John Varty on Adam Fergusson.

Giorgio Baruchello’s “What is to be Considered? An Appraisal of the Value of Conservatism in the light of the Life Ground.” discusses the contemporary Canadian environmentalist John McMurtry and Gerard Casey’s “Conservatism and Libertarianism: Friends or Foes?” Both are concerned with values, that is, with what is to be conserved or brought about. The values they discuss are neither the same nor necessarily wholly incompatible. “McMurtry’s life ground entails that a good economic system: (1) must secure the provision of vital goods for as many citizens – ideally all of them – for as long a time as possible – sustainability being no short-term goal; and (2) it must generate the conditions for a fuller enjoyment of life along the same spatio-temporal coordinates.” (Baruchello, 309) Someone who thinks of himself as a conservative might very well agree with that ideal – or might not – but to think of it as a specifically conservative ideal is to give yet one further twist to the meaning of that essentially contested concept. A particular libertarian might well accept the ideal, but qua libertarian will ask how it is to be achieved, for the libertarian qua libertarian concentrates on the value of freedom over against coercion, particulary state coercion.

The freedom valued by the libertarian is not unfettered; it is freedom from coercion, particularly state coercion, to do or not do what does not damage another. The libertarian rule: “do not agress against another” is, in fact, the second of Ulpian’s precepts of justice: “hurt no-one” (Justinian Institutes I.I.3 Digest 1.1.10.1). It does not follow from the injunction to love of one’s neighbour – which is to an extent the positive expression of “hurt no-one” – that people ought to be coerced into doing so. The basic libertarian value is the repudiation of coercion when the intended action does not harm another. The repudiation of coercion is the fundamental libertarian value but libertarians must have others also and two libertarians may well have different values: “One more or less certain way for to prevent its [libertarianism’s] collapse into libertinism is for it to adopt the cultural core values of conservatism [once one has determined what those values are and found them to be good] and this libertarians are free to do. Conservatism, on the other hand, is always at the mercy of the questions – whose tradition? Which customs? What habits?” (Casey p.53) Every human is born and educated into a tradition, which it is wise to examine and to keep what one finds good, unwise unthinkingly to try wholly to abandon, and unwise blindly to accept in all it details. That having been said, the basic moral question remains: what am I to do in the world in which I find myself?