Another aspect of Iceland's PM resignation

Another aspect of Iceland's PM resignation

Imran Khan often gives example of Iceland’s Prime Minister Sigmundur Davíð Gunnlaugsson’s resignation after the name of Mr Gunnlaugsson appeared in the Panama Paper Leaks. Imran Khan always positions himself on high moral ground, such a position demands vigorous fact checking. A true leader should tell the complete story or at least provide the full context of a situation to the public. Our people deserve truth so that they can make informed decisions about their country’s future. Many have deceived Pakistanis by false promises, half-truths and distorted facts.

In Iceland, technically, Mr Gunnlaugsson is on leave; however, the circumstances that led to his leave from his office are very intriguing. Before 2008, Iceland banks and their corporate sponsors in the US and Europe had created an artificial bubble in financial markets, particularly in the real state or property sector. Iceland’s private banks had taken 120 billion US Dollars from creditors and had used that money as loans to their customers for property purchases.

Thousands and thousands of Icelanders bought homes and properties at very high prices using bank loans. The property bubble busted in 2008 and with that artificially inflated property prices came down sharply. Meaning a house which someone had bought for millions of Króna (name of the Icelandic currency) in Iceland, its value fell down to half and even less but the owner still owed the actual amount plus interest to the bank, which gave him/her the credit. As a result, Icelanders were under heavy debts, their homes lost value and they were unable to pay bank instalments. They couldn’t sell their homes either.

This had also happened in the United States and in other countries due to bankers’ greed and lies. In the United States, the government found typical Capitalist solution. Instead of punishing bankers and financial managers, the US government helped bankers by pumping money into banks. In other words, the US government used taxpayers’ money and paid for bankers’ losses but it didn’t give much help to ordinary citizens.

While other Western nations bailed out their banks in 2008, in Iceland a peaceful revolution against corrupt bankers occurred. Consequently, the government nationalized the main bank of Iceland and forced many government officials to resign and a new government was formed. It was led by Prime Minister Sigmundur Davíð Gunnlaugsson who was challenging corrupt bankers. In 2015, the government jailed dozens of top bankers and financial executives for their involvement in manipulating financial markets after 2001 financial deregulation in Iceland.

The government also adopted a completely different policy. Instead of helping bankrupt financial institutions and corrupt bankers of his country, Prime Minister Gunnlaugsson decided to pay peoples’ loans. The government paid off homeowners’ debts and also punished the bankers. It was a unique and revolutionary strategy, which revived Iceland’s economy and brought happiness and prosperity at a time when the US and other Western countries were suffering from financial crisis. But in doing so, Mr Gunnlaugsson became the enemy number one of financial world’s crocodiles.

Prime Minister Gunnlaugsson and his wife owned shares in an off-shore company when they were living in the United Kingdom. He had sold his shares before becoming a member of the Parliament and later the Prime Minister of Iceland in 2009. He was accused of not disclosing his ownership of an off-shore company. Major financial institutions and Western media outlets campaigned against Mr Gunnlaugsson and presented him as a corrupt and dishonest man. He stepped down.

I’m in not in position to pass any judgment on Mr Gunnlaugsson’s integrity. It is possible that he was involved in financial wrongdoings but there is plenty of evidence that this young man had offended very powerful interest groups of the financial world right from the start of his political career. Surprisingly, so far, names of prominent US leaders or corporate heads are missing from Panama Leaks. The United States is the father of Enterprise Capitalism, which is the mother of corruption and white-collar crime.

The lesson is that leaders and opinion makers should try to provide full context and all known facts of anything they share with public. It is very important for building credibility.