The End of Iceland's Innocence: The Image of Iceland in the Foreign Media during the Financial Crisis

The Conflict with the United Kingdom—One of Us, Not One of Them

– 152 – THE CONFLICT WITH THE UNITED KINGDOM ONE OF US, NOT ONE OF THEM ‘The crisis sparked a furious war of words between London and Reykjavik.’ Herald (Glasgow), October 10, 20081 Relations between Iceland and the United Kingdom have sometimes been strained. Both insular and claiming to be very different from other countries, they have long had a love-hate relationship which has fluctuated back and both through history. Icelanders seem cyclically compelled to confront the British, to the point where it is almost as though the British had colonised their country instead of the Danish. There is a very distant Viking link between the two islands, but the rivalry has arisen more in modern times. In a text for the Financial Times, Brian Groom wondered what had caused the tension between the two countries: ‘We always seem to be at odds with this independent-minded nation. Britain violated Iceland’s neutrality by occupying it in 1940 and tussled with it over fishing rights in the 1950s and 1970s cod wars.’2 The ‘cod wars’—or more specifically, diplomatic conflicts in which the United Kingdom tried to intimidate Iceland by deploying military vessels—are indicative of their difficult relations. In these wars, the United Kingdom contested Iceland’s maritime limits and, by extension, its sovereignty, over the issue of fishing rights. The small island’s victory over the large has come to look like post-colonial revenge in Icelandic history. 1 Herald (Glasgow), ‘Treasury officials hold emergency talks on Iceland’, October 10, 2008. 2 Brian Groom, ‘Back to the future. A leader for today’, Financial Times, October 13, 2008. – 153 – During the crisis in the fall of 2008, the ‘war’ between the two nations was waged on two fronts: on the one hand, the United Kingdom invoked anti-terrorism legislation to freeze Icelandic assets in its territory ; on the other hand, London and Reykjavík entered into a legal battle, threatening each other with legal action. On both fronts, the battle took place through the media, fuelling disagreement over the interpretation of statements made by each party, which David Ibison called ‘a war of words’.3 The rapid verbal escalation between the two capitals was all the more surprising given the composure characteristic of both the British and the Icelanders. Journalists, themselves, used heated vocabulary to report on the conflict, making statements like ‘the UK authorities exasperated with responses from Iceland seem to have overreacted’.4 The conflict seemed to have been caused by a series of misunderstandings . According to a Guardian report on October 8, 2008, ‘the chancellor, Alistair Darling, told the BBC that ... “The Icelandic government , believe it or not, ... told me yesterday they have no intention of honouring their obligations here”’.5 A few hours later, Prime Minister Gordon Brown came on strong and condemned the freezing of British bank accounts in Icelandic banks, supposedly ordered by Reykjavík; ‘What happened in Iceland is completely unacceptable,’ Brown told BBC television. ‘I’ve been in touch with the Icelandic prime minister (Geir Haarde), I’ve said that this is effectively illegal action that they’ve taken’.6 It was on the basis of these statements that the British government announced tough measures against Iceland. However, the subsequent transcript of the conversation between 3 David Ibison, ‘UK dispute with Iceland escalates’, Financial Times, October 24, 2008. 4 Jon Danielsson, ‘Why raising interest rates won’t work’, BBC News, October 28, 2008 (italics added). 5 Alistair Darling, quoted in Guardian, ‘Darling vows to help Icesave savers’, October 8, 2008. 6 Gordon Brown, quoted in Agence France-Presse, ‘Iceland acting illegally in freezing accounts—UK PM’, Australian, October 10, 2008. – 154 – Darling and his Icelandic counterpart would indicate that it was a misunderstanding: ‘a transcript ... appears to question the British government’s claim’,7 wrote David Ibison. A few days later, another transcript, this one of an interview with the Governor of the Central Bank of Iceland, Davið Oddsson, on Icelandic television, indicated that the British were right. The same day as the telephone conversation between Darling and his Icelandic counterpart, ‘[Oddsson] made unfortunate comments aimed at local audiences that “we will not pay for irresponsible debtors and ... not for banks who have behaved irresponsibly”.’8 On October 7, London announced an immediate freeze on all Landsbanki assets in Britain: ‘in a statement, the Treasury said it was taking the action “to protect the retail depositors [and] ensure the...