Iceland: The hope of a crisis recovery made in a different way

Iceland crisis lived a big crush as other European countries. However, the way they are dealing with the crisis and the consequences that those measures are having are totally different. Even the controversy created around the different ways in which Iceland was going through with the crisis, the unemployment level has improved and now only 6.1 per cent of Icelanders are unemployed. Nevertheless, not all are good news, the economic level is not still as good as was before the crisis, and the unemployment rate is thought that is not going to decrease more for the next year. Even Iceland has a lot to do to solve their financial crisis; they are beginning to recover themselves, and what it is more important, they are beginning to recover themselves without harming the less powerful ones.

In 2008, the three major commercial banks in Iceland collapsed due to they couldn’t refinance their short-term debt. After that, the Iceland currency, the krona, had a significant devaluation, which supposed that any good dependent from foreign countries were extremely expensive for the average Island people. Food, fuel and consumer goods started to be particularly expensive while at the same time unemployment rates and wages were getting worse.

At the beginning of 2009 Iceland people started to take the control of the crisis situation. After many protests, the government left the power being replaced by the Left-Green Movement and the Social Democratic Alliance. Unlike all European countries, Icelandic people decided in referendums, several times, that they were not going to pay the bank´s debt. This measure was severely criticized by most liberal policies, however now with their recovery it is beginning to be seen as an option.

Iceland, with the approval of the IMF, was intelligent enough to develop a more social method (as social as the circumstances allow) trying to solve the crisis problem. One important measure took by the Iceland Government was the decision of not refunding, with public sector money, to the private banks if they were in bad situations. This point already differed from the rest of countries in crisis Europe which assumed paying to the private banks when they were close to the bankruptcy. But not only that, even they decided to increase the citizen taxes and to decrease the public costs, the decrease in the expenditure on Education, Health and Pensions were not as big as in other countries affected by the crisis.

As Paul M. Thomsen, the sub-director of the IMF, explained: “Iceland is growing and creating employments again, Iceland people are demonstrating their resistance and force as a join unity”