Order of the Puffin - lundisorða

The Order of the Falcon (fálkaorða) is Iceland's highest honour. The Order of the Puffin (lundisorða) is this blog's highest honour. Both are quite difficult to get – especially the former, as U.S. Ambassador Carol Von Voorst found out this month.

Now in the world of world diplomacy, handing round a few gongs here and there is nothing particularly unusual. The British, always the experts in the finer distinctions of relative snobbery, have even created an entire order of knighthood, the Order of St Michael and St George, which is only given to diplomats. So it can't have been too much of a surprise to Ms Von Voorst when the President's office rang earlier this month to say that she would be awarded the Order of the Falcon on the occasion of her moving on from Reykjavík to a new posting: three previous U.S. ambassadors to Iceland had been similarly honoured.

The surprise came last Friday, as she was on her way to the Presidential residence at Bessastaðir to pick up her medal. It was all a terrible mistake, apparently, and she wouldn't be getting it after all! But she was welcome to come in anyway for a cup of tea and a chat with Ólafur Ragnar Grímsson if she wanted too. "Grímsson allegedly explained to her that only those who were deemed worthy were honored this way." according to Iceland Review. The Order of the Falcon, or tea and a chat with Óli and Dorrit?

Now Ólafur Ragnar is no stranger to controversy. Last November, he allegedly tried singlehandedly to sell the Keflavík naval air base (and international airport) to the Russians – the Russians politely declined the offer – before lashing out at virtually every other country with an embassy in Reykjavík, especially the British (no surprise there). It's really quite hard to take him seriously when there are so many accumulated speeches from before last October in which he claimed that Iceland's bankers were financial wizards rather than the deluded psychotics they turned out to be. But with this latest incident, he seems to have stooped to new lows of ridicule.

Ambassador Von Voorst might not be the best U.S. ambassador to Iceland in the short history of diplomatic relations between the two countries. She was only in the job for three years, and presided over the somewhat muddled announcement of the withdrawal of U.S. Navy aviators from Keflavík. The commentators at the Iceland Weather Report don't seem to think much of her. But that's no reason to snub the woman, it's only a medal after all all: if she'd been told she was going to get it, she should have got it, and tough if a few people felt she wasn't "worthy" enough. After all, there are plenty of people who think that Ólafur Ragnar is hardly worthy of being President of the Republic and hence ex officio Grand Master of the Order of the Falcon! So, in a belated attempt to set things right, I've whipped off an email to the U.S. Embassy in Reykjavík bestowing the Order of the Puffin on Ambassador Von Voorst for her services to the Icelandic people in proving that their Presidency really couldn't organise a piss-up in a brewery.

If you have any other suggestions for worthy – or unworthy, I don't care – recipients of the Order of the Puffin, the comments box is below!

Get this man a job!

Thanks once again to Anya the eyes for finding exactly the sort of absurd news stories which appeal to the Ministry of Puffins. Apparently a certain Halldór J. Kristjánsson is thinking of leaving Iceland to try to find gainful employment abroad. Sadly, there's nothing unusual about that these days, with unemployment up 650% in the last twelve months. Halldór says he wants to work in the financial sector, so I guess it makes sense to look for work in a country which actually has a financial sector – somewhere like Albania, for example, which this week managed to apply for EU membership, a feat which seems beyond Iceland's political class.

Does Halldór have any experience in this type of work? Well, that depends what you count as "experience". Until 8 October 2008, Halldór was chief executive of Landsbanki: he lost his job when the Icelandic government had to take over the bank. His disastrous scheme of taking deposits in Britain and Holland and lending them to Icelanders without the means to repay them has cost the country thousands of billions of krónur. Unsurprisingly, he has been unable to find steady employment in Iceland since he bankrupted the country (with a little help from his friends), hence his search abroad.

Still, it pains me to think of Halldór sitting doing nothing in Reykjavík, using social security benefits which could go to more deserving causes, so the Ministry of Puffins is making this appeal: if you know of a job, preferably a long way from Iceland, that Halldór could do, please let us know, and I'll do my best to pass on the information.

I'll start the ball rolling with a job offer I found from a company at 41/42 London Wall, in the heart of the City of London (postcode EC2M 5TB, telephone +44 20 7638 7787): Halldór can even apply online here… i'm lovin' it®

Today is Monday

Back to work it is. And Saturday's election results send a clear sign to Iceland's government as to what the People want that work to be.

Samfylkingin (the Social Democratic Alliance) was the most voted party (29.8%, 20 seats). Together with Vinstrihreyfingin – grænt framboð (Left-Green Movement, 21.7%, 14 seats) they now have a majority in the 63-seat Althing. Borgarahreyfingin (the Citizens' Movement, or Civic Movement depending on how you translate it) came from literally nothing – it was only "formed" nine weeks ago, and had a campaign budget of about a million krónur – to gain 7.2% of the vote and four seats. And perhaps the great surprise of the night was the showing of Framsóknarflokkurinn (the Progressive Party), which won 14.8% and nine seats (more on that later).

Sjálfstæðisflokkurinn (the "Independence" Party) was clearly punished for being the architect of the economic bubble that burst with such dire consequences, although it still polled 23.7% and won 16 seats. Many bloggers have been surprised at how many voters could still bring themselves to vote for this heap of crap: 23.7% represents 44,369 votes, less than the 50,000 members that Sjálfstæðisflokkurinn boasts about on its website. It really is that much of an institution in Iceland: hopefully in a couple of years' time, we will be able to write that sentence in the past tense.

Other losers were Frjálslyndi flokkurinn (the Liberal Party), which was wiped off the political map; the newish Lýðræðishreyfingin (Democracy Movement), which gained the votes of its candidates and some of their close family members; and L-listinn, which was doing so badly that it didn't even bother to stand in the elections.

Ironically, the Left-Greens are also on many lists of election losers. Education minister Katrín Jakobsdóttir – the Left-Green's one woman charm offensive – looked incredibly glum on Saturday night for someone whose party was scoring a historic victory, with more than 50% more votes that at the last election. While the results were the best in the Left-Green's ten-year history, opinion polls just a week before the election were predicting them 26–28% of the vote, instead of 21.7% which they ended up with. Left-Green environment minister Kolbrún Halldórsdóttir lost her seat in the Althing: that's right, Iceland's first green environment minister lasted twelve weeks…

So what divides the winners from the losers in Saturday's election? The Social Democrats, the Progressives and the Citizens' Movement all support negotiations to join the European Union: they were the winners on Saturday. The "Independence" Party, the Liberals and the Left-Greens all oppose membership negotiations with varying degrees of vehemence: they were the losers on Saturday, even if the "loss" of the Left-Greens is only relative.

Let's be clear that the idea of a referendum to approve the start of negotiations is just a manoeuvre to prevent negotiations starting at all. What is there for people to vote about? It is frighteningly obvious that most of Iceland's politicians don't understand what EU membership negotiations entail, let alone the rest of the population. That includes Iceland's foreign minister, which is truly worrying, but more on that another time. A referendum before negotiations start would be a vote on peoples fears and prejudices, and we all know which way that one would fall.

All the same, Icelanders have voted in representatives who are favorable to starting negotiations on behalf of the nation. The government should do so without delay. Like today. OK, maybe wait until the first Cabinet meeting, but that meeting should not just discuss negotiations, it should agree how to move forward. Too much time has been wasted already.

And the (early) results from the Icelandic jury…

22:23 UTC
Projections from state broadcaster RÚV, based on about 40% of votes counted:

• Progressive Party: 9 seats (+2)
  
• Independence Party: 15 seats (–10)
• Liberal Party: 0 seats (–4)
  
• Civic Movement: 4 seats (+4)
• Democracy Movement: 0 seats (–)
  
• Social Democratic Alliance: 22 seats (+4)
  
• Left-Green Movement: 13 seats (+4)
  

The international observers from the OSCE have declared the elections to be "of the highest standard": they certainly seem to be giving a reasonable result so far.

22:36 UTC
Those predictions seem to be based on rather less than 40% of the vote counted: thanks to the team at The Reykjavík Grapevine, whose Icelandic is far better than mine is, for the correction!

23:44 UTC
No real movement in the projected figures, except maybe the Civic Movement will gain an extra seat at the expense of the Social Democratic Alliance.
Apparently "thousands" of ballot papers have candidate's names struck out, perfectly legitimate in Iceland's "open list" system. The speculation is that the candidates concerned are those that were named as having received campaign donations from corporations during the 2007 elections. The striking out of candidates does not affect the number of seats for each party, although it might affect the individuals who are elected from certain lists and will slow down the count.

01:00 UTC
These projections are from Morgunblaðið, based on 53.6% of votes counted:

• Progressive Party: 13.2% (+1.5%), 9 seats (+2)
  
• Independence Party: 23.4% (–13.2%), 15 seats (–10)
  
• Liberal Party: 1.9% (–5.4%), 0 seats (–4)
  
• Civic Movement: 8.0% (+8.0%), 5 seats (+5)
  
• Democracy Movement: 0.5% (+0.5%), 0 seats (–)
  
• Social Democratic Alliance: 32.2% (+5.4%), 21 seats (+3)
  
• Left-Green Movement: 20.9% (+6.6%), 13 seats (+4)
  

01:50 UTC
Anya at NewsFrettir passes on a warning from the National Electoral Commission that the large number of strike-out ballots may mean that the current figures are "giving off the wrong image" of the final result. The reason is that struck out ballots are counted last, and there are clear differences between the parties as to the proportion of ballots having names struck out.

Election special

A small country goes to the polls this weekend to elect a new parliament after a very hectic six months. A country with a thousand-year history and an innate sense of independence, but which has nevertheless been repeatedly bullied into submission and poverty by its more powerful neighbours. A country which thought it had found riches, only to have the recent global crisis brutally expose the weakness of its economic model: a model which, at times, seemed to be based entirely on banking and shopping.

The last opinion polls predict a historic victory for the social democrats, after decades of hegemony by a centre-right party far too cosy with the nation's bankers. In recent years, it has seemed that the banks were supporting the state, not the other way round.

Everyone agrees that some sort of change is needed. The social democrats support EU membership, while the centre-right wants simply to revise the current agreements. Nobody seems to have a clear idea of what sort of deal they would be able to get from Brussels or (at least as importantly) from Frankfurt and the City of London.

The population are understandably worried. What will be the cost of unraveling the excesses of recent years? How can the prosperity of the nation's children be assured? Or will it all just end up with yet more of the stunning wilderness concreted over by foreign "investors" who couldn't even find the country on a map? Those foreign "investors" are already trying to impose their own terms, with varying degrees of tact and diplomacy, yet surely their "solutions" are just more of the same, exactly what got the nation into its current problems…

The polls are open from 09:00 to 19:00 Central European Summer Time on Sunday 26 April. The country is Andorra, not Iceland. Plus ça change, plus c'est la même chose, but I'll let you know the results when I get them ;)

On glacier bonds and Frankfurters

On the eve of today's elections the newspaper Morgunblaðið (linked to Sjálfstæðisflokkurinn, the "Independence" Party, as are many of the Icelandic media) published a report, translated at NewsFrettir, on the glacier bond problem. See "More euro madness" and "How much is a króna worth?" for the Ministry of Puffins' take on the issue.

Morgunblaðið claims (quite plausibly in my opinion) that the European Central Bank has been left holding 100 billion krónur in these once-cool financial instruments, money which is now trapped behind behind Iceland's currency controls. That's about one-fifth of the total outstanding value of the glacier bonds, according to several estimates seen by the MoP. The ECB accepted the bonds – 57 billion krónur in Íbúðalánasjóður (Housing Finance Fund) bonds, 28 billion krónur in Iceland treasury bills and 15 billion in króna-denominated bonds issed by Dutch bank RaboBank – as collateral for a euro loan to Landsbanki Luxembourg S.A., a subsidiary of Landsbanki h.f. which is now in suspension of payments.

Less plausibly, Morgunblaðið also claims that the interest payments on glacier bonds are driving down the króna exchange rate. Foreign investors are allowed to convert króna interest payments into hard currency under the currency controls; only the principal (capital) is locked into Iceland. But with some 500 billion krónur in glacier bonds, even the interest payments are a significant drain on Iceland's foreign currency. Significant, yes, but nothing compared to Icelandic domestic debt – 4827 billion krónur according to the latest available figures, of which a whopping 60% is denominated in foreign currencies according to the IMF. Although the foreign-currency loans to households (with no foreign-currency income) represent the pinnacle of stupidity, these are only a small proportion of the total: most of these loans are to Icelandic businesses. The hard currency which goes on paying off these loans can't be used for other things, like paying for imports, so the businesses have to buy more hard currency for squidgy-soft krónur, which pushes the value of the króna down.

Don't expect to hear any of this from Sjálfstæðisflokkurinn in the foreseeable future: it's simply more than they could humanly bear, to admit that sold the independence that they pretend to cherish so dearly, all for a fist full of euros (no less!).

Jekyll and Hyde

There were a couple of bits of good news from Kreppaland this week. Firstly, the assets of Kaupþing banki h.f. are reckoned to be enough to pay off German depositors in Kaupthing Edge. The Kaupthing Edge accounts in Germany were operated under the disastrous "branch" model chosen by Landsbanki for its Icesave accounts, rather than the more conservative "subsidiary" model that Kaupþing chose for most of its overseas retail markets. The news from Kaupþing's Icelandic administrators is equivalent to €1.2 billion that the Icelandic state will not now have to take on in short term loans: Prime Minister Jóhanna Sigurðardóttir was justifiably pleased at last week's annual meeting of the Central Bank.

A second piece of good news came from the United Kingdom. The administrators of Landsbanki's Scottish subsidiary Heritable Bank plc reckon that uninsured depositors (mostly UK local councils) will get 70–80% of their money back. As a spokesman for Kent County Council put it, they'd have lost more money had they invested their reserves on the London Stock Exchange.

The news about Heritable Bank didn't cause many ripples in Reykjavík, for reasons I'll come to in a moment. However Iceland's finance minister and tireless promoter of relations with Norway, Steingrímur J. Sigfússon, was ready with a comment: "It is very positive that there are valuables at hand but it does matter how they are disbursed of the interest of the nation."

The problem for Steingrímur Jóhann is that these "valuables" are not available to be disbursed "of the interest of the nation". Heritable Bank was a subsidiary of Landsbanki h.f., or to put it another way, Landsbanki was Heritable's shareholder. Shareholders are always the last to get paid in a liquidation and, if depositors are only getting 70–80%, it seems very unlikely there will be anything left afterwards. As a Scottish company, Heritable Bank was a full member of the UK Financial Services Compensation Scheme, which picked up the £500 million deposit insurance bill but which will also be reimbursed at "70–80%". The only benefit to Iceland is a bit of good press, and a reminder that the banks had (and have) assets as well as debts, but even that is welcome these days with all sorts of ludicrous claims being exchanged in multiple fora.

Now Steingrímur Jóhann is a geologist, not a lawyer, but one would hope that he understands the principle of limited liability corporations, especially given his current job. Icelandic Wikipedia doesn't have an article on them, but I found this one in Nynorsk if it helps him at all… After all, it's hardly the first time he's put his foot in it in less than three months as finance minister, a job that one would think is pretty important (not to say hellishly difficult) in today's Iceland.

On the other hand, like the character from the Robert Louis Stevenson novella, Steingrímur Jóhann has another side to his (political) personality. As well as being finance minister, he is also minister of fisheries and agriculture, a subject dear to puffins!

Steingrímur Jóhann's party, the Vinstrihreyfingin–grænt framboð (Left–Green Movement) were long ridiculed by "those who decide[d]" for Iceland: until, that is, the kreppa came and people started to realise that the old decisions were not as sensible as had been claimed. Steingrímur Jóhann was born on a sheep farm in Northeast Iceland, and already had experience as agriculture minister (1988–91), but was still taking on one of the more conservative sectors of any society from the position of leader of the "loony left". And, despite all the anxiety which surrounded his appointment, he has done remarkably well at the helm.

His predecessor in the fisheries ministry left a poisoned chalice in the form of a controversial set of fishing quotas, especially for the section devoted to commercial whaling. Steingrímur Jóhann sensibly decided not to take on the powerful fishing lobbies in a head-to-head, saying that there were probably more important things for the nation to be arguing about, but neither did he simply dodge the argument. In one of his last acts before tomorrow's election, he has commissioned a study of the contribution of whaling to the Icelandic economy, which many believe to be zero if not negative. He has calmly cooperated with the European Commission in their review of the EU Common Fisheries Policy – possibly a far more effective way to insure the future of 8% of the Icelandic workforce than any hypothetical hardball negotiation.

The last opinion polls suggest a clear victory for the parties of the current coalition government, and hence a clear break with the hegemony of Sjálfstæðisflokkurinn (Independence Party). But as Heilög Jóhanna prepares her new government, she will still have to take account of grubby little demands like "another job for one of ours!" or "the best job for me!" I can only hope that she manages to place as many ministers as possible with portfolios that they will do well. That means removing finance from Steingrímur Jóhann, but keeping him as fisheries and agriculture minister. The next few days will really show the commitment of Iceland's political class to move ahead together for the good of the country – or not as the case may be.