Iceland’s friends by Quentin Bates

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Iceland’s Parliament, which goes under the archaic name of the Althing, has rapidly debated and ratified a brand-new free trade agreement with China, the first European nation to do so. It sailed through the Althing with only the dissenting voice of the Pirate Party pointing out that the People’s Republic might not be the most salubrious bedfellow.

The whole debate around who Iceland’s friends should be has been very odd and unsettling. The US used to be Iceland’s friend, until the Cold War came to an end and the military air base at Keflavík was no longer needed to fly reconnaissance flights far out over the North Atlantic. When the financial crash happened in 2008, it seemed that Iceland’s stock of friends was limited and the erstwhile friends in Washington weren’t interested, as well as having problems of their own to worry about.

For a while it seemed that Russia might be Iceland’s new friend, until it turned out that the anticipated roubles were wishful thinking on the part of a few politicians who had spoken too soon.

As for the immediate neighbours, there has long been an awkward kinship with Norway and there’s all the old colonial baggage with Denmark. The other Nordic nations wished newly skint Iceland well, but not to the extent of dipping deep into their pockets – with the exception of the Faroe Islands. The Faroese had been through their own financial crisis in the nineties and were bailed out by Denmark, and it’s an uncomfortable episode that’s still fresh in people’s memories there. So the Faroe Islanders were the only ones who were prepared to come up with aid with no strings attached.

The bloc that is Iceland’s most obvious friend, the European Union, certainly isn’t and Iceland has had a deeply troubled relationship with Brussels, even though the bulk of Iceland’s trade is with Europe and many of the rules and regulations that govern everything from car number plates to additives in dog food are lifted wholesale from EU regulations. That isn’t to say that the Icelandic bureaucrats aren’t also dab hands at concocting contradictory and confusing legislation if the mood is on them…

Britain and Holland, where the notorious IceSave scams (sorry, accounts) were run became almost demonised as the big, bad bullies who wanted their money back from the impoverished Icelanders. The people of Iceland were understandably less than pleased that the antics of a fairly small number of financial whizzkids had resulted in the entire country being branded as economic hooligans, not least when legislation designed to combat terrorism was used briefly on an Icelandic bank. Yet somehow the popular fury that anyone would imagine would be levelled at the bankers has instead been subtly deflected against those wicked foreigners; a real PR coup, if you like.

The debacle with Britain and Holland served to deepen the suspicion of the European Union. The last government set in motion a largely unpopular process towards accession to the EU, since brought to a halt by the present government, but not abandoned. It’s there to be kick-started in needed, and a recent poll suggests that Icelanders are once again warming to Europe while a majority would prefer to see the negotiations with the EU completed, if only to find out precisely what is on the table; not that the government wants to allow that to happen if it possibly can.

So China is Iceland’s new BFF, for the moment. The difference between the portrayal of the deal with China and the tortuous saga of possible EU accession could hardly be more striking. Politicians have taken pains to stand up and say how important it is for Iceland to be able to influence the Chinese, as if one of the world’s smallest nations is really going to persuade the Beijing to release all its dissidents and start being nice to everyone. There has been minimal public or Parliamentary debate.

On the other hand, Iceland has seen an energetic anti-EU campaign that has been going on for some years in government and in every media, with newspaper advertising and EU- Nei Takk posters around Reykjavík. Iceland’s pro/against Europe debate has been a saga of bitter recrimination, misinformation and propaganda, all organised and bankrolled by organisations with their own agendas and reasons for keeping clear of Europe and the changes that membership might bring.

It isn’t mentioned anywhere that while the EU is a lumbering, clumsy, overblown and inefficient bureaucracy, it is a union of democratic states – while China doesn’t have a shining record on dissent and human rights, and there are plenty of examples of less than happy stories of its involvement in developing countries. China is growing hand over fist with an insatiable demand for power and raw materials, as well as a need to expand – and probably sees Iceland as a handy platform for access to the Arctic basin as the polar ice recedes.

It makes you wonder how this has come about. Iceland’s various governments have been confused, to say the least. The previous government welcomed both Chinese approaches and the EU accession process, but now Iceland is locked into its free trade deal with an economic giant on the other side of the world and at loggerheads with its neighbours on a variety of issues.

Iceland’s agreement with China, a state the size of a medium-sized town in a deal with what will probably soon be the world’s largest economy is always going to be a pretty one-sided affair and it’s clear which one has the negotiating muscle. So maybe Europe could be Iceland’s ticket out of a bad deal? There’s a theory that this is all a well-laid plot; was Iceland shepherded into a deal with China as part of a deep strategy to push it into Europe’s embrace? We shall see.

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