Greece vs. Iceland: This Simple Comparison Proves Austerity Is Morally And Literally Bankrupt

Image Credit: New Internationalist

Image Credit: New Internationalist

UK Prime Minster David Cameron, and his fellow pro-austerity politicians across Europe have issued stern warnings about the election of an anti-austerity government in Greece this week. But the rise of anti-austerity movements presents a far greater threat to them, than us.

In 2007/8, two European nations stood on the brink of insolvency – Greece, and Iceland. The proposed remedy for both was a bank bail-out, a central bank loan and austerity. While Greece’s political elite embraced austerity, Iceland rejected it. A glance at the outcomes explains the election of an anti-austerity, socialist government in Greece this week.

First, a look at Greece. The Greek government accepted an £88bn loan from the IMF and the European Central Bank (and the Austerity measures attached) in order to bail out its banks and stay in the Euro.

  • The economy of Greece has shrunk every year since.
  • The Austerity Programme has turned a financial crisis into a humanitarian crisis.
  • By 2013, 11% of the population were living in ‘Extreme Material Deprivation’ without heating, electricity, or enough to eat.
  • Unemployment is now over 27% and continues to rise each month, while youth unemployment is now over 59%.
  • Unsurprisingly, crime has soared – with burglaries rising by 125% in 2011.

Such impoverished conditions, coupled with the political scapegoating of immigrants and the poor, laid the ground for a resurgent fascism.

In 2013, Greek police launched Operation Xenios Zeus last year as part of a crackdown on immigration.  This operation, named after the Greek God of Hospitality delivers anything but that to anyone on Greece’s streets who ‘doesn’t look Greek’.  In the first 7 months of the Operation, Greek police arrested more than 85,000 foreigners – yet only 6% were arrested for unlawful entry.  While 94% of those arrested were lawful residents of Greece, in many cases they suffered violent assault by the police in the process.  The operation became nothing more than a means to vilify and bully foreign looking people.

Tourists to Greece have also been caught up in these arbitrary arrests.  In January 2014, a Korean backpacker was seized by Greek police as an illegal immigrant, despite showing them his passport and itinerary.  When he asked for proof of identity of the police officer arresting him, he was punched in the face.

In the same month, Christian Ukwuorji, an African American travelling on a US passport was walking through Athens on his holiday when he was seized by police.  When he showed police his US passport, they confiscated it and beat him so severely he was hospitalized.

Greece has previously enjoyed a low prevalence of HIV, but since the economic crisis new infections have sky rocketed; in 2010, the new infection rates shot up by 57%. These rises were entirely attributable to the austerity crisis.  In 2010, heroin use grew by 20%.  In areas where the state funded needle swap programmes were closed, HIV infections among drug users shot up 1,450%.  As the social security and healthcare systems failed after 40% budget cuts, some desperate Greek addicts were deliberately infecting themselves with HIV in order to access just $890 of financial support each month and admittance to a drug rehabilitation centre.

But instead of addressing austerity, authorities blamed sex workers for the rise.

Greek police began raiding brothels and forcing sex workers to undergo HIV tests.  In February 2013, the police published the names and photographs of 17 sex workers arrested and testing positive for HIV, branding them a danger to public health.  One of the sex workers committed suicide as a result, unable to face her family.

Later came legislation making it legal for police to arrest and detain all suspected illegal sex workers and test them for HIV without their consent.

Austerity has been a disaster for Greece. But how did Iceland fare?

Iceland refused to use tax payer cash to honour debts run up by the private sector, jailed the bankers responsible, kicked out the Prime Minister and put him on trial for his part in the crisis, and invited its citizens to write a new constitution.

There is an alternative to Austerity, and it has proven far more successful.  In fact, there is no case in history where Austerity caused growth in a time of economic crisis. Greek voters are joining Iceland and much of Scandinavia in opting out of neoliberalism, in favour of social democracy – and if they are equally successful in the implementation of such policies, it will be yet another nail in the coffin of this morally and literally bankrupt ideology. It is time for the UK electorate to follow suit.

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22 thoughts on “Greece vs. Iceland: This Simple Comparison Proves Austerity Is Morally And Literally Bankrupt

  1. You say Iceland did NOT go the ‘austerity’ route and yet you describe their austere reforms. What do you call Iceland’s method of recovery, if not austerity?

  2. I get really annoyed when I hear about the Greek debts on mainstream news – because they never mention how most of the money went to bail out the banks!

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  6. i’m penniless (and homeless) also….and struggle to read much these days…..but I always read your work. Well said and thank you!

  7. I believe poverty is going to become the biggest issue in the UK this year, given that all the main parties have agreed that austerity measures will continue after the election. However none have or are willing to deal with the bankers who caused the crash, according to Mark Carney (Governor of the Bank of England) or the debt, except to add to it.

    So far only 30% of cuts which are apparently required to balance the budget deficit (according to George Osborne) have been introduced. The rest will be after the election. These cuts will have a catastrophic effect on the living standards of the 60% of people in the UK who work and claim benefits.

    The lucky ones will have a choice of whether they eat or heat their homes, but the vast majority will potentially be hungry and homeless.

    This will continue for as long as the people allow it and eventually the UK will have no choice but to follow Iceland’s lead and reclaim sovereignty.

  8. Another great article Kerry. I’m afraid I have to take issue with the last sentence though: “It is time for the UK electorate to follow suit” How? It’s simply not possible in the current paradigm. We really need to collectively stop feeding the mythology that it is possible in the UK to vote our way out of the mess we’re in. It really isn’t.

    The green party are the closest thing to Syriza that we have in the UK. But even with a massive surge of support for them and a loss of votes from the main three to smaller parties, the government will absolutely be either Labour or Conservative after this year’s election. The FPTP voting system in conjunction with the entirely predictable voting habits of the vast majority of over 65’s (who, remember, have known nothing but a two horse race and the need to choose between one or the other for decades) absolutely ensures this.

    So before we start talking about voting for alternative parties, we need to start talking about reforming the electoral system. PR would of course be a step towards a fairer system in which alternatives could flourish. But why would either establishment party do anything other than pay lip service to such a reform, given it would undermine their hegemony significantly? No matter how loud the calls for it after the election, they will resist.

    Changes to the voting system and the like are desirable reforms only – they are not essential pillars of democracy that could no longer be denied us if we were all calling for them. Add to this the fact that corporate lobbying and the party whip system renders junior partners in any coalition virtually obsolete, and it becomes difficult to find a reason to vote at all in the current paradigm. We WILL get more of the same, no matter what happens at the polls. That’s a given. Belief otherwise is pure delusion.

    So what, actually, can be done?

    The only electoral reform that is genuinely achievable and could make a real difference is inclusion of a formal None of the Above (NOTA) option on UK ballot papers. Why? Because NOTA is the only way to formally withhold consent at an election (consent being a central pillar of democracy, only truly measurable if it is possible to withhold it). It is therefore a democratic pre-requisite that could not be denied us any longer if enough people were calling for it. Abstaining is not the same as it can be dismissed as voter apathy with no further analysis, while ballots spoiled in protest are lumped in with those spoiled in error rendering the figure for them meaningless. An official NOTA option (with formalised consequences for the result if it were ever to ‘win’ – essential, otherwise it’s meaningless), could change everything. Once in place, further reform of the voting system etc. would be that much more achievable.

    Without NOTA in place first, there will be no further electoral reform and there will be no way of getting alternative parties into power. NOTA is the ground zero of electoral reform as it would be achievable with enough support, for the reasons stated.

    You are a well respected and widely read blogger, Kerry. Any chance you could write an article on NOTA? Then we might be getting somewhere. More info on our campaign can be found here:

    • Thank you. Actually, to clarify, I didn’t make any point about the Green Party or or whom to vote. The final line was about creating the political alternatives to the status quo, not simply voting out the current incumbents. We need a proliferation of anti-austerity and pro-democracy movements, parties, media outlets and so on. NOTA is one, excellent to see, and there are others which exist and need to be created. We should be supporting and developing all of them.

    • Proportional representation? how many people died in Iraq to have that forced upon them, supposedly making them more democratic than we supposedly are? Didn’t actually work now did it, still a puppet regime….

  9. I’m grateful that Occupy often share your blog articles and always enjoy reading them. I have nothing like the overarching knowledge of the economic situation across Europe that you do so wouldn’t disagree – but I’m wondering if there’s a risk of idealising the situation in Iceland…? I spent a few days in Reykjavik in January and our Icelandic tour guides spoke of how the cost of living has doubled since 2008 and wages have nothing like kept pace. They said so many people are leaving Iceland because it’s so expensive to live there now, and those who want to stay in their home country have to work two jobs or a lot of overtime to try and make enough money just to stay at home. It does sound tough. That said, Iceland did seem a very peaceful place, and you certainly don’t hear about social trauma in the way we do from Greece. Do you think Iceland’s problems pale in comparison to the trouble we’ve seen in Greece?

    • Hi Catherine, thanks for your response. Yes, to be clear, it is not that Iceland is a paradise with no problems. There will always be issues and things we need to develop and improve in our societies, that’s a given. However, states which have eshewed austerity have far fewer and less life-limiting problems to resolve. Inflation of prices in Greece dwarfs Iceland, and they also have to deal with wage deflation, soaring unemployment, mass cuts to public services and public sector jobs, and so on. Incidentally, Icelandic inflation also on a downward trend

  10. Excellent blog and summary –
    one needs further to note that the interest on euro-greek austerity is akin to the worst excesses of BWI structural reform and imposed behind border WTO ‘free-trade’ that causes selective growth for selective elites yet ‘stable’ and dis-proportionate poverty that remain at approx. early 1990 population percentages.
    The troika insists on loan shark interest and firesale crony privatisation for the average citizen, whilst at the same time creating free-money QE to buy off unelected transnational market demands – and consequently via bond gamesmanship – increasing asset values of those same interchangeable elites – as ex- Goldman Sachs , the ‘facilitator’ of the former Greek military state financial looting and now IMF/ECB Lagarde, Papademos and Monti personify.
    Syriza’s spokesman was spot-on today in rejecting the underlying structural corruption of unelected ‘technocratic’ institutional corruption that the owned media seeks to justify and defend at every other european citizens real and ongoing expense and health. In organic ‘self’ community terms – if money is the blood – then the troika’s neo-liberal and short-termism is the bodies ‘cancer’.

    Many thanks for your excellent work!

    • it has to be as you say I was a councillor for 6 years and found no local democracy on planning issues where consultation is a sick joke

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