Iceland’s government on point of collapse as angry protesters stake out the parliament in Reykjavik
BY Eirikur Bergmann / 21 January 2009
While Barack Obama was being sworn in to office on Capitol Hill yesterday, the people of Iceland were starting the first revolution in the history of the republic. The word “revolution” might sound a bit of an overstatement, but given the calm temperament that usually prevails in Icelandic politics, the unfolding events represent, at the very least, a revolution in political activism.
Four months after the collapse of Iceland’s entire financial system, no one has accepted any responsibility. Our currency has lost more than half its value, rampant inflation has already eaten up most people’s savings, property values have dropped by more than a third and unemployment is reaching levels never seen before in the life of our young republic. The fault is clearly shared between the business elite and the government, which failed to regulate the newly privatised financial sector, allowing a few incompetent and egotistical business tycoons to gamble with the nation’s fortune. And yet neither the government nor the bankers – who, by the way, seem to have disappeared into the cold thin air – see anything wrong with their own behaviour.
The governor of the central bank blames the risk-seeking bankers, the bankers blame the government and the prime minister attributes the whole crisis to the international credit crunch. This lack of any sense of responsibility has angered the Icelandic public to the extent that they have turned to the streets in greater numbers than ever before.
It started in October with peaceful demonstrations. Then the frustration grew, first with the lack of any sense of responsibility, then with the lack of any effective action to ease the economic pain most people feel – and finally with the sense that all the political elite were incompetent.
Initially the government tried to dismiss the protesters as frustrated wannabe politicians and disillusioned youngsters who did not understand the complexity of the situation. But when our grandmothers put down their knitting gear, strapped their boots on and took to the streets shouting for new elections we all saw that the disgust was almost universal.
Yesterday parliament resumed for the first time after Christmas. Without much organisation or central planning the public surrounded the parliament building and put forward a clear demand for early election. Ignoring them, the ministers and parliamentarians tried to sit out the protest, hiding inside the old building in downtown Reykjavik. This time it didn’t work. The protests grew and ordinary people kept warm by burning torches in front of the building. They were going nowhere. Well into this dark night in Iceland’s history, parliament remained under siege, and the vigil resumed this morning.
It is the first time in Icelandic history that a young anarchist can well expect to meet his grandmother in the crowd demonstrating against the government and drumming with her kitchen knife on pots and pans. The government is surely hanging by a thin thread and might fall at any moment.
The Icelandic public fear that their country has virtually been stolen by the globetrotting business elite that spent more time rubbing shoulders with international high society than giving back to the society that enabled them to enjoy this privileged lifestyle. Now ordinary Icelanders are determined to take their country back.
WORLD’S FIRST LEADER TO STEP DOWN OVER ECONOMIC CRISIS
BY Valur Gunnarsson / 27 January 2009
The global economic crisis claimed its first leader yesteday, as Iceland’s prime minister announced the immediate resignation of his government following the collapse of the country’s currency and banking system. Geir Haarde said as recently as Friday that his coalition would remain in office until early elections, called for 9 May, after violent protests at its handling of Iceland’s tottering economy.
Yesterday he threw in the towel, saying that his Independence party and its Social Democratic Alliance partners were quitting immediately as he could not accept a demand by the Alliance to take over the premiership. “What I have feared the most has come to pass, we now have a governmental crisis on top of the economic one,” Haarde said.
The prime minister’s previous national popularity was obliterated in October when the global credit crisis ravaged Iceland’s hugely indebted economy, leading to a collapse in the country’s currency, the crown, and forcing the government to take control of its three major banks. The population of 320,000 – who had enjoyed years of rising incomes and high growth rates, thanks in no small part to an economy burdened with a foreign debt that peaked at 10 times the annual national GDP – now face a potential economic contraction of up to 10% this year, with unemployment rising rapidly.
After months of rallies outside the parliament building, last week protesters pelted Haarde’s car with eggs while riot police used teargas for the first time since 1949. The protests continued at the weekend despite Haarde’s announcement of the early election. Yesterday the country’s commerce minister, Bjorgvin Gudni Sigurdsson, resigned, apologising for the collapse. “I accept my part of responsibility in the collapse of the banking sector even if numerous other people have their share of responsibility,” Sigurdsson, a Social Democrat, told a press conference.
Who will take over from Haarde is unclear. Gisladottir, currently Iceland’s foreign minister, immediately ruled herself out. Gisladottir has only just returned to Reykjavik after undergoing treatment for a brain tumour in Sweden. Gisladottir has called for another senior member of her party, Johanna Sigurdardottir, the social affairs minister, to lead a new government. “A new government should be formed by the end of the week,” Baldur Thorhallsson, a political science professor from the University of Iceland, said. “It seems most likely that we will have a minority government of the Alliance party and the left-greens.”
Steingrimur Sigfusson, leader of the left-greens, offered a national government in October, when the collapse became apparent, which the government rejected. Sigfusson said that he is now considering all possibilities. Protesters celebrated the fall of the coalition government with a party outside the parliament building. “I am proud of the Icelandic people to have driven this off their hands. Now that the suspect is leaving the scene of the crime, the investigation can begin,” Illugi Jokulsson, a publisher, said. “The Independence Party should not run anything except the transportation ministry at most,” Erpur Eyvindarson, a rapper, said. Eyvindarson continued: “They ignored us in 1949, they ignored us when they went to war in Iraq and when they dammed the highlands. They will ignore us no more.”
PART-TIME RIOT POLICE
“The news agencies reported last week that Icelandic “riot police” fired pepper spray at furious demonstrators outside the parliament building in Reykjavik. They rather overcooked the story. In truth, the Icelandic riot squad is on a par with the Icelandic anti-terrorist branch, NCIS or SWAT team, which is to say it does not exist. Iceland had been a model Nordic social democracy without the need for a coercive apparatus. Crime was so low that in 2007, the prison population stood at 104. Many of the 700 police officers were part-timers. Until its demented financiers bankrupted the island, the idea that they would be dousing their neighbours with pepper spray was unthinkable.’
New age of rebellion and riot stalks Europe / January 22, 2009
Iceland has no army, no navy and no air force – but it does now have riot police.
On Tuesday night the black-uniformed troopers came out to quell the latest riots in Reykjavik, which erupted in front of parliament. The building was splattered with paint and yoghurt, the crowd yelled and banged pans, shot fireworks and flares at the windows and lit a fire in front of the main door. Yesterday the protesters gathered again, hurling eggs at the car of Geir Haarde, the Prime Minister, and banging cans on its roof.
The transformation of the placid island into a community of seething anger – there have been half a dozen riots in recent weeks – is more than a regional oddity. In Riga last week 10,000 protesters laid siege to the Latvian parliament; yesterday hundreds of Bulgarians rallied to demand that the Socialist-led Government should take action or step down, in a second week of demonstrations, and last month the police shooting of a 15-year-old Greek boy led to days of running battles in the streets of Athens and Salonika.
The protests went beyond the usual angry reflexes of societies braced for recession. The Greek riots heralded sympathetic actions across the world, from Moscow to Madrid, and in Berlin the Greek Consulate was briefly stormed. The Riga unrest spread rapidly to Lithuania. It is, some say, just the beginning: 2009 could become another 1968 – a new age of rebellion.
The LSE economist Robert Wade addressed about 1,000 Icelanders recently at a protest meeting in a Reykjavik cinema, warning that large-scale civil unrest was on the way. The tipping point, he said, would be this spring. “It will be caused by the rise of general awareness throughout Europe, America and Asia that hundreds and millions of people in rich and poor countries are experiencing rapidly falling consumption standards; that the crisis is getting worse, not better, and that it has escaped the control of public authorities, national and international,” he said.
The global liquidity emergency became a full-blown crash so quickly that there was no time to hold governments to account. Now leaders all over Europe have declared themselves to be the saviours of the economy and are nationalising assets, extending loans and guarantees to failing banks and manufacturers. But the price is high: unemployment is starting to soar and cuts in public spending are hurting hospitals, schools and universities. Personal bankruptcies are at record levels.
Every segment of society has been hit, but it is the young who feel the pain most – and just as in 1968, it is they who are leading the rebellion. The Greek disturbances, the worst since 1974, were triggered by the killing of the teenager, but the anger was stoked by a sense that the young were going to have to pick up the bill for the miscalculations of the political class. Unemployment among Greeks aged 15 to 24 has reached 21.2 per cent; for 25 to 34-year-olds it is 10.5 per cent. The good years have come to an end suddenly.
The boom in Iceland led to the few narrow streets of the capital becoming jammed with expensive 4x4s. Latvia had double-digit growth for years; now GDP is set to contract 5 per cent in the coming year and Latvian youths are beginning to rail against mismanagement and corruption. In the EU, migration was always a way out of a tight domestic labour market. No more: the sheer magnitude of the recession means there is no easy escape. There are reports of anti-immigrant trouble brewing in Spain. Usually at this time of year migrant workers, most of them from Morocco, pile into the country to pick strawberries. This year the Spaniards are making it clear that they are unhappy about migrants taking jobs.
Each flare-up touches on a separate aspect of the crisis. In Greece it was partly about the failure of the education system (as in 1968). In Vilnius it was over high taxes. In Iceland it is about massive debt. In Russia unrest in Yekaterinburg and Vladivostok was about dearer car import duties. But there are common threads. Across Europe, protesters demand a change of government. Politicians in wealthier countries can try to prop up banks and industries, but it does not work in heavily indebted nations with bloated and exposed financial sectors.
And there is a shared shock that the good times have gone. “The explosion conceals a compressed desperation,” the Greek psychology professor Fotini Tsalikoglou said of last month’s outburst in Athens. “Many young people live with the unbearable knowledge that there is no future.”
LABELED AS ‘TERRORISTS’ BY UK (TO SEIZE ASSETS)
Global financial crisis overwhelms tiny Iceland
BY Colin Woodard / January 21, 2009
In the depth of winter, the sun shines about four hours a day here. But thousands of Icelanders – more than 1 percent of the entire country – have sacrificed much of their precious few hours of daylight in recent weeks to protest the financial darkness that now shrouds their island. From dapper senior citizens to masked anarchists, an eclectic group gathers every Saturday to demand the resignation of their government. On Tuesday and Wednesday, they clashed with police in increasingly violent demonstrations that suspended Parliament.
They’re furious over Iceland’s recent plunge from the world’s fourth richest nation – and the best in the world to live in, according to the United Nations – to global financial crisis roadkill. Its banks are ruined, the currency devastated, and one of the country’s closest allies recently named it a terrorist state. “This has been very hard for the nation,” says protester Rosa Eyvindardottir, eight months pregnant and carrying a red socialist flag in her hand during a recent Saturday protest. “Maybe this is a lesson that we need to wake up and see what’s been right and wrong with our minds.”
Harbinger of trouble?
As the world holds its collective breath, worried that a global recession will become another Great Depression, Iceland is being seen as the canary in the coal mine, an early warning system that might indicate what other countries could face. With the dust beginning to settle from the banking system’s collapse, Icelanders are taking stock of the mistakes. “The banks were expanding too fast, they were taking excessive risks, and the government didn’t do what had to be done to keep them in check,” says Gunnar Haraldsson, director of the University of Iceland’s Institute of Economic Studies.
Iceland’s banks were relatively new players on the international stage. Indeed, they were based in a remote, sub-Arctic country that had spent much of its history in a state of grinding poverty. Constrained by a short growing season, battered by storms and volcanic eruptions, Icelanders were one of the poorest peoples in Europe when they achieved independence from Denmark in 1944. Their national dishes – singed puffin, putrefied shark carcass, charred lamb’s head – reflect past necessity to avoid starvation.
After World War II, Icelanders harnessed the fish in the frigid sea and the lava-heated steam beneath their feet, investing the proceeds in infrastructure, education, and healthcare. By 2000, it was a society nearly devoid of poverty, where almost everyone is fluent in a foreign language, where homes and even the capital’s streets are heated with geothermal heat. Health care and education are virtually cost-free.
Iceland went global
In recent years, Iceland embraced the world economy, integrating with (but not joining) the European Union, floating its tiny currency on the open market, and, in late 2002, deregulating its sleepy banks. The banks rapidly expanded overseas, buying English soccer clubs, offering high-interest Internet savings accounts to Dutch and British families, and foreign-currency mortgages to Icelanders. “The whole world was suddenly open to us and this new generation of young people had taken over the banks and they looked like they had the know-how to deal with this new reality,” says the Rev. Karl Sigurbjornsson, bishop of Iceland’s state-sponsored Lutheran church. “Ordinary people like myself couldn’t understand what was really happening and when we asked questions we were told that we were just ignorant of the great new world of the free market.”
Halla Tomasdottir, a former head of the national chamber of commerce and cofounder of Audur Capital, says the economy was defined by “extreme risk-taking, short-term orientation, paper profits, and a lack of regard for transparency and the human being…. We looked around and said: This is going to burst.” By 2006, many worried that the banks had become too big and globalized for an economy of 300,000 people to backstop. The balance sheets of the three big banks – Glitnir, Landsbanki, and Kaupthing – exceeded Iceland’s gross domestic product (GDP) by more than five times. A report from Copenhagen-based Danske Bank warned that the banks had outgrown the country.
“The Icelandic banks, media, and officialdom saw the report as part of a conspiracy by representatives of the old colonial power,” recalls the report’s coauthor, Lars Christensen, who says the crisis could have been headed off if the banks had been reined in at that point. “We were worried, but it’s difficult when you are in a competitive environment to take responsibility for macroeconomic solutions,” says Landsbanki chief economist Yngvi Orn Kristinsson. “Somebody else has to do that: the Central Bank.”
Bank controls were weak
But, the Central Bank and government regulators didn’t rein in the banks. By October, their liabilities had reached twelve times Iceland’s GDP. The banks had borrowed heavily to make these investments and were dependent on short-term loans to continue operations. When Lehman Brothers collapsed and global credit markets froze in September, the banks had nowhere to turn for help. At the end of September, Glitnir executives turned to the Central Bank for a bridge loan. Instead, Central Bank chief David Oddsson – a former prime minister with no banking background – announced he would nationalize the bank.
Mr. Kristinsson, of Landsbanki, recalls: “We knew immediately that we wouldn’t have more than one or two weeks. It was a dangerous miscalculation, because analysts and credit institutions abroad believed that it was too much for the government to take on.” Ratings agencies downgraded the value of Icelandic bonds, dragging down the currency, and cutting Landsbanki’s credit lines, triggering its failure. Mr. Oddsson then suggested that Icelandic banks might not pay British depositors, prompting British Prime Minister Gordon Brown to evoke antiterrorism laws to seize their British assets – a move that took down Kaupthing.
Icelanders were shocked to see Landsbanki listed alongside Al Qaeda and North Korea on Britain’s list of sanctioned ‘regimes’. “We conceived of ourselves as a very peaceful, peace-loving people,” Bishop Sigurbjornsson says. “Being labeled as terrorists was something we could never have imagined.” Most British and Dutch deposits will be guaranteed, largely by Iceland’s citizens using money borrowed from abroad. Many here are upset that they are left paying an enormous tab run up by wealthy bankers. Some economists compare the debt burden to the crushing one imposed on Germany after World War I.
Protesters want new leaders
The protesters’ main demand is for Oddsson and his longtime political ally, Prime Minister Geir Haarde to resign, which organizers say is the first step toward rebuilding public and investor confidence. Both have resisted. “They want to be able to lead the nation out of the mess,” Mr. Haarde’s spokesman, Kristjan Kristjansson explains. “Walking away from the problem now would be to surrender to it.”
CANARY CLEARLY DEAD
Is Iceland the Canary in the U.S. Coal Mine?
BY Ed Zimmer / January 29, 2009
The collapse in late January 2009 of the Icelandic Government is being blamed directly on the collapse in 2008 of the country’s banks after they were overleveraged to such an extent that the world-wide financial crisis caused investment values to implode. During a period of rapid growth, the banks amassed huge debts in financial implements that turned out to be based on little more than promises that the good times would last forever.
Turns out forever had an expiration date. As a result of the banks’ implosion, the currency has plummeted, unemployment is rising and inflation is growing as the value of the currency falls.
Iceland was unable to prevent the banks’ collapse – it was simply too much, too quick. Elsewhere in the world, governments have been creating money hand over fist and pumping that money into banks by any means possible to avoid what happened in Iceland. Results are hard to quantify so far because the extent of losses seems to grow with each passing month.
In the UK, the government there is talking of nationalizing banks, yet no one is talking about how much is still at risk in these banks. The general feeling is that if the true extent of the losses were made public, the pound would literally ‘take a pounding’ in the currency exchange markets.
Here in the US, the same problem is showing up. Predictions less than six months ago that the total losses of bad investments would be around a trillion dollars have now been surpassed, with new estimates putting the total losses over 2.2 trillion dollars. 350 billion dollars of government bailout has not righted the economic ship and proposals now include spending the rest of the 700 billion dollar stimulus, plus another 850 billion dollars in new spending and buying up the “bad” assets by the US government.
However, just as in Iceland, no one is willing to admit just how much “bad” assets will need to be purchased or guaranteed by the government to stem the crisis. No one is even willing to admit to just how much needs to be written off, although research by NYU economist Nouriel Roubini is now placing US banking losses at some 3.6 trillion dollars. If that is accurate, it is 16% more than the entire US budget for this fiscal year.
The US continues to literally throw money at a problem that we are clueless about. The banks refuse to divulge any information that would make them look bad or create a “crisis in confidence” among their depositors, but it’s okay to take government funds, paid as taxes by those same depositors.
Still, the problem for the government remains how to save the banks, which could be completely insolvent due to bad assets on their books, without further shooting the economy which is in a recession. Both appear to be drowning, and with Iceland as the most recent model of what follows a banking collapse, the US government may not be willing to lose banks that could trigger a political coup. For the average person in the US, the question may be one of getting the bad medicine over quickly, or a lingering illness that produces a long term Japanese Pseudo Recovery.
For US politicians, it must appear as a no-win situation, and not a single politician wants to be accused of doing nothing while the crisis grows. But ignoring the consequences of their actions as an excuse for throwing money at a problem is not the answer. 350 billion dollars already spent would have given every man, woman and child in the US about $1000 each. That would have allowed some people to postpone the repossession of their homes, allowed others to pay bills or buy Christmas presents or even save for a rainy day. Instead the money went into a banking black hole and for all visible purposes, vanished from sight. Banks won’t even say how they have used the funds.
We may not be able to resuscitate this canary. The question may be, is there a better solution available or is it going to die anyway?
The Next Iceland? Three countries on verge of economic and political meltdown
BY David Kenner / January 2009
Economic damage: The financial crisis has gotten so severe in Britain that it has earned London a new nickname in the international media: Reykjavik-on-Thames. The question in Britain is no longer when the economy will enter a recession, but when it will enter a depression, with many bracing for a slump that could rival the 1930s in severity. GDP fell 1.5 percent in the fourth quarter of 2008, and the European Union estimates it will contract another 2.8 percent in 2009. Unemployment is projected to balloon to more than 8 percent by year’s end, and an estimated 23 percent of adult Britons currently consider their debt level “unmanageable.”
The British downturn is especially severe because the U.K. is more dependent on its financial sector than most developed economies. All told, British banks currently hold about $4.4 trillion in foreign debt (which, until recently, included a large amount of Iceland’s debt). For a $2.1 trillion economy, that’s a heavy load to bear.
Political fallout: Prime Minister Gordon Brown initially earned voters’ confidence by seizing a leading international role in the response to the crisis but, as the recession deepened, British sentiment has turned against the government. A recent poll showed that almost 6 in 10 Britons think the latest economic recovery measures will fail and gave the opposition Tories a 15-point edge over Brown’s Labour Party.
The government has already nationalized much of its financial sector, and investors fear that another round of nationalization might be around the corner. Government intervention has become so pervasive that nearly half of the economy will consist of state spending in the coming year. This, in turn, has earned Britain another nickname: Soviet Britain.
Economic damage: Latvia is arguably the one country that most resembles Iceland, and not just because of the cold climate. The small, developing country’s lofty growth rates in recent years were fueled by heavy investment from elsewhere in Europe, massive foreign debt, booming consumption, and minimal savings. After growing at an extraordinary 12.2 percent rate in 2006, Latvia’s economy is now the weakest of the 27 EU member states. A European Commission report forecast that Latvia’s GDP is set to contract 6.9 percent in 2009 and a further 2.4 percent in 2010, with unemployment climbing into the double digits by next year. The International Monetary Fund has approved a $7.3 billion bailout package for Latvia, but a long road to recovery remains.
With financial markets tightening and housing markets crashing down to earth, Latvian businesses have ground to a halt and the government has been forced to cut services to the bone. A new program will involve a 25 percent cut in the state budget, 15 percent wage reductions, and widespread layoffs.
Political fallout: The financial crisis threatens not only Latvians’ livelihoods, but it also poses a danger to their nascent democratic system. The government’s popularity currently sits at about 10 percent. In the largest protests since the rallies against Soviet rule in the 1980s, more than 10,000 Latvians gathered earlier this month in the capital of Riga to protest the government’s mismanagement of the economy. Some demonstrations turned violent, as angry youths threw rocks and eggs at police and lobbed cobblestones at the Parliament building.
The government has initiated a crackdown of its own, unleashing its security forces against those guilty of economic pessimism. When a university lecturer speculated that the crisis might cause a devaluation in Latvia’s currency, he was arrested and held in jail for two days.
Economic damage: The Greek economy, burdened by a debt-to-GDP ratio of more than 90 percent, is one of the shakiest in the European Union. The adoption of the euro had previously fueled Greece’s economic boom, but it is now one of the primary obstacles to getting the country out from underneath its massive debt. The typical method countries use to alleviate their debt is to depreciate their currency, lessening the real value of their liabilities. But with a single currency in use across the euro zone, Greece no longer controls its own monetary policy. Faced with the strain of falling tax revenues and the need to fund a bailout program, Greece could be forced to withdraw from the euro zone or default on its debt.
Standard & Poor’s cut the country’s sovereign debt rating earlier this month due to concerns over its rising deficit. Now, Greece must pay 5.6 percent to finance its 10-year debt, 2.5 percentage points more than Germany. As the financial crisis continues, expect the rift between the haves and the have-nots in the EU to widen further.
Political fallout: Outrage over a police shooting spilled over into widespread rioting throughout Greece in December. More than 150 banks were targeted by youths during the first days of the riots. Greece’s bleak economic situation is widely considered to be the underlying cause of the unrest. Greek banks had invested heavily in development in the Balkans and, with the onset of the financial crisis, found themselves dangerously overextended. The center-right government was forced to bail them out, but at the cost of drawing funds from social welfare programs. The image of the Greek government handing bags full of money to wealthy financiers while services were cut for the general populace has decimated the government’s credibility.
RĪGA – Shattered glass. Blue paint on the building. Broken plastic bottles. Cobblestones. Ninety-eight detained. These are the preliminary results of the aftermath of the penguin revolution (when Godmanis told the people in his New Year’s Eve address how penguins deal with severe winter – they huddle together to stay warm – the same way as Latvians ought to do when going through the economic turmoil).
But it started all so peaceful. Around 5 p.m. several hundred people had already flooded the Dom Square in the heart of the capital of Latvia. People of different ages, ethnicity, backgrounds appeared united in their disdain for the ruling coalition, and – more importantly – the culture of political cynicism. Following the 90-minute event mostly young people moved toward the Saeima building. They tried to get in. Prevented from doing so by the riot police, they began throwing anything that they could lay their hands on – from snowballs to street cobblestones. The first floor windows were shattered.
Commentators undoubtedly will analyze what had taken place – whether the riot was a fruit of public discontent and anger at the ruling clique, or a product of alcohol and intoxication, or, perhaps, a combination of both. One thing for sure, regardless of the protest, the political cynicism lives on. The Interior Minister Mareks Segliņš, who was nowhere to be seen near the riots, sent an SMS to Aigars Štokenbergs, a party leader, who organized the protest, saying “Now you can be proud.”
February 20, 2009 – Latvia’s center-right coalition government resigned Friday after weeks of instability brought on by the country’s economic collapse. President Valdis Zatlers said he accepted the resignation of Prime Minister Ivars Godmanis and his administration, which had been in power since December 2007. Zatlers said he would begin talks with party leaders Monday to find a new candidate for prime minister. Earlier Friday, the two largest parties in the ruling coalition parties had urged Godmanis to step down. Godmanis blamed those parties _ the People’s Party, and the Greens and Farmers Union _ for the government’s collapse, particularly at a time when Latvia must carry out tough economic reforms to get a rescue package from international creditors. “I am ready to continue working, but I think that responsibility for the consequences created by this government’s resignation must be taken by those parties that overturned the government,” Godmanis told reporters.
International lenders, including the EU, the International Monetary Fund and Nordic countries, have pledged euro7.5 billion (US$9.5 billion) to help the Baltic country recover from its economic predicament. President Zatlers has pressured the government to cut back on the number of ministries and bring in new faces in an effort to win back the public’s trust, which has plummeted. However, despite repeated attempts, the four ruling parties have been unable to reach a consensus on which ministries to abolish. The country’s economic decline is accelerating. Output plummeted more than 10 percent in the fourth quarter year-on-year, meeting a common yardstick for a depression. On Wednesday the Finance Ministry predicted that gross domestic product would fall 12 percent fall this year. Public anger spilled into the streets on Jan. 13, when scores of protesters clashed with police as they tried to storm Parliament. More than 40 people were injured in Latvia’s worst riots since the country split from the Soviet Union in 1991.
“On the night of Saturday, December 6th, two Special Guards of the Greek police clashed with a small group of young men. The exact details of what took place are still unclear, but it is known that one of the Guards fired three shots, and one of those bullets caused the death of 15-year-old Alexander Grigoropoulos – whether the injury was made by an accidental ricochet or deliberate shot remains to be determined. The two Guards are now in jail awaiting trial, the shooter charged with homicide. This incident sparked an immediate and widespread response in the form of angry demonstrations and riots in many Greek cities that have continued at varying levels to this day – though dimming in intensity recently. Alexander’s death appears to have been a catalyst, unleashing widespread Greek anger towards many issues – police mistreatment of protesters, unwelcome education reforms, economic stagnation, government corruption and more.”
Greek police battle with rioters / 24 January 2009
Hundreds of anarchist protesters in Greece have fought running battles with police through the centre of the capital, Athens. The demonstrators were demanding the release of people arrested during rioting last month after a policeman shot dead a youth aged 15. Rioters smashed shop windows and threw stones and petrol bombs, police say. Officers responded with baton charges, tear gas and pepper spray and eventually dispersed the crowd. Compared to the riots that swept Greece last month, Saturday’s violence was on a relatively small scale but it showed that anger against the state and the police are still simmering, the BBC’s Malcolm Brabant reports from Athens. The street fighters and anarchists are trying hard to keep alive what they regard as December’s insurrection and demonstrations covering a wide range of grievances are taking place on a daily basis, our correspondent says. But the nature of the clashes may soon change, he adds. The futility of firing tear gas at rioters who wear gas masks has dawned on the authorities and it is reported that Greece is taking delivery of water cannon, which should be ready for action within a fortnight, our correspondent reports.
FARMERS BLOCK BORDERS, AIR TRAFFIC CONTROLLERS STRIKE
“STOP WATCHING, GET OUT INTO THE STREETS”
Greek protesters storm television station
“Dozens of protesters in the Greek capital stormed the headquarters of state television station ERT on Tuesday, interrupting broadcasting and unfurling a black banner that read, “Do not watch television. Everyone out on the streets.” Witnesses, including ERT chairman Christos Panagopoulos, said 40 protesters snuck into the building outside the capital city of Athens, entering in small groups and acting as guests so they would not raise suspicions. Some of the demonstrators went to the office of the president to complain about the network’s coverage of the protests, while others wrested control of a broadcast from technicians in the master control room. Another group of protesters entered the studio where an anchor was in the midst of an afternoon broadcast and unfurled the banner. The station had stepped up security in anticipation of such a move, Panagopoulos said. A posting on ERT’s Web site said Panagopoulos “denounced” the actions of the protesters, saying they had not identified themselves. “Mr. Panagopoulos stressed that they were not students but unknown people, who do not respect freedom and democracy,” the posting said. The peaceful stunt appeared to have been carried out by artists and other professionals, not just students, who have been conducting most of the demonstrations, a witness said.”
GREECE RAN OUT OF TEAR GAS
How police shooting of a teenage boy rallied the ‘€700 generation’
BY Maria Margaronis / 13 December 2008
Thousands of protesters hurled stones and Molotov cocktails at police yesterday, as Greek police reportedly began to run out of teargas after a week of riots that have seen the streets of major cities turned into virtual war zones. Police sources say they have used more than 4,600 teargas capsules in the past week and have contacted Israel and Germany for fresh stocks. The prime minister, Costas Karamanlis, yesterday vowed to keep citizens safe, but students angry at the fatal shooting of 15-year-old Alexandros Grigoropoulos by the police again attacked officers outside parliament.
“Alexi, these nights are yours,” says the graffiti on the subway wall, addressed to the Athens schoolboy killed last Saturday, allegedly by a police bullet. The week of rioting and protest that has left the city in shards belongs, above all, to the young. It is a revolt of schoolchildren and students, most on the streets for the first time. There are reports of children as young as 12 battling riot police, shouting “Cops! Pigs! Murderers!”
The teenagers and twenty-somethings who have come close to toppling the Greek government are not the marginalised: this is no replay of the riots that convulsed Paris in 2005. Many are sons and daughters of the middle classes, shocked at the killing of one of their own, disgusted with the government’s incompetence and corruption, enraged by the broken promises of the education system, scared at the prospect of having to work still harder than their exhausted parents.
Some call themselves the “€700 generation” in recognition of the wage they expect their degrees to get them. The intensity of their fury has startled the whole country – including, perhaps, themselves. Anarchist groups dreaming of revolution played a key part in the first waves of destruction, but this week’s protests were not orchestrated by the usual suspects, who relish a good bust-up and a whiff of teargas. There’s been no siege of the American embassy, no blaming Bush, very few party slogans.
Though the spectacular violence has dominated the news, thousands have also set out to join in peaceful demonstrations, among them parents worried for their children’s future. Linked by the internet, by twitter and text messages, many are trying to distance themselves from the destruction, which they attribute to “extremists, idiots and provocateurs”.
The demands of the young are hard to formulate. They want an end to police violence; they want to change things; they want jobs, and hope; they want a better system. If the wish list is slightly vague, the problem itself is amorphous and difficult to name: a crisis of values and institutions, society and economy, vision and leadership.
Politically, Greece is a democracy that never grew up; economically, it remains a poor relation trying to pass in the salons of Europe. Its 20th-century history is a patchwork of coups and conflicts. The civil war that followed Greece’s occupation by the Axis powers in the second world war put politics on ice for 30 years. Greece is the only European country where collaborators were rewarded and those who resisted were punished. After the left’s defeat by Britain and the US, tens of thousands of resistance sympathisers spent years in prison camps or blacklisted from work.
The military dictatorship of 1967-1974 – brought down by the Turkish invasion of Cyprus after a Greek coup – was the last gasp of that repressive era. Under the conservative statesman Constantine Karamanlis (uncle of the present prime minister) democracy was restored, but institutions remained weak; under the socialist prime minister Andreas Papandreou (father of the present leader of the opposition), liberties were extended but corruption also flourished, hand in a hand with a corrosive leftwing populism.
At the same time, the country has been in the throes of a rapid and painful modernisation. In 40 years Greece has gone from peasant agriculture supported by a large diaspora to a mixed economy drawing foreign investment; from the periphery of the developed world to the middle ranks of Europe and the hub of the new Balkans; from a homogeneous nation where the lucky had jobs for life to a multicultural country where a fifth of the workforce are new immigrants.
Many of its most talented sons and daughters have chosen to work abroad rather than deal with Greece’s disorganisation and bureaucracy. The social fabric has worn paper-thin. Few politicians have risen to these challenges; most have relied on the old system of trading votes for favours, or on periodic appeals to nationalism and xenophobia.
Costas Karamanlis’ New Democracy government – which enjoys a parliamentary majority of one – has surpassed its predecessors in graft and corruption while imposing punitive economic austerity measures. Greece entered the eurozone in 2001 with a large budget deficit; prices have risen consistently since then. In 2004 the country spent an estimated €10bn on the Olympic games, an unknown portion of it pocketed by contractors and politicians.
The two trade union federations that staged a general strike this week want increased social spending in light of the global recession. But the government has called for bigger pension contributions and removed a tax exemption for some of the poorest self-employed. It has also partially privatised ports and plans to do the same with hospitals and schools – at a time when one in five live in poverty and youth unemployment stands near 25%, the highest in Europe.
Meanwhile, the centre of Athens is full of expensive boutiques; shopping malls sprout like mushrooms in the suburbs. Instead of education, values and understanding, the young are being sold an aspirational “lifestyle” they can’t afford, which many of them don’t want. They watch their parents struggling to make ends meet and are told to work hard at school only to find that without connections they can’t get a job – or a flat, or decent medical care. Despite the rhetoric of meritocracy Greece still runs on “means”, up to the highest levels.
In the weeks before the shooting of Alexis, the papers were full of the latest government scandal, a series of lucrative land swaps carried out for Mount Athos’s largest monastery, which involved at least three senior aides to the prime minister and are said to have cost the public more than €100m.
Graft, of course, goes hand in hand with incompetence. The government’s failure to contain devastating fires of 2007, in which at least 67 people died and 642,000 acres of farmland and forest were destroyed, was partly due to political tinkering with the fire brigades; the lack of progress in restoring burnt-out areas is due partly to pressure from developers eager to cash in.
Given that precedent, no one in Athens is surprised that the riots have got so wildly out of hand. It is the other shoe dropping – or, as one journalist put it, Nero fiddling for a second time while the city goes up in flames. Is this a country on the verge of a nervous breakdown? For some time, discontent in Greece has been aggressively policed. The area of Athens where the child was shot – a neighbourhood of ungentrified cafes where young people and anarchists, dope-heads and intellectuals all hang out together – has long been the target of a clean-up operation.
Police violence is not new, it is just that previous victims have been immigrants or Roma and so do not make the media. As usual when there is social dislocation, the far right has gained strength: the populist Orthodox Rally won 10 seats in parliament for the first time last year, and the neo-fascist Golden Dawn organisation is known to have supporters inside the police. Now that the lid has blown off the pressure cooker, repression may take more blatant and more violent forms.
More crucially, there is no obvious way out of the impasse. The problems facing Greece are profound and the recession will pull tensions tighter. Greece has a long tradition of protest and resistance – some of those occupying Athens University claim descent from the students who fell before the junta’s tanks in 1973 – but less experience of concerted action to find solutions. After the violence dies down there will, sooner or later, have to be an election. But the problems the young have exposed have been decades in the making. No one has begun to imagine a solution.