One of the casualties of the financial crisis which has gotten little notice in the US is Icleand, and it went down in a particularly ugly fashion. Gordon Brown, the UK’s fantastically unpopular Prime Minister, said that Icelandic banks had threatened to not honor obligations to British account holders, so he declared Iceland a terrorist country and seized the banks assets. This caused the banks to go under and the Icelandic economy to implode to the extent that if Russia hadn’t sent them billions of dollars, they would have literally starved, since they need to import food.
Yes, they asked the US and their friends in the EU for money first, but apparently only Vladimir Putin cared enough about Iceland’s impending famine to do anything about it. It’s times like these when you find out who your friends are. I imagine the Icelanders are feeling a lot warmer towards Russia these days. Perhaps Putin would like a nice naval base there?
Leaving aside, for just a moment, the absurdity of labeling Iceland a terrorist country, the problem is this: Icelanders are saying "prove it" with respect to the allegation that they threatened to not honor account withdrawals, and so far Gordon Brown hasn’t come up with proof.
The thing about Icelandic banks is that they were offshore banks. As a friend of mine in the industry said "this is where the City sent stuff that was too dubious even for them". Iceland made money by doing the deals that were, not dirt exactly, but highly highly speculative and leveraged and in some cases shady. (People go to offshore havens to dodge taxes and keep money private, after all.) Which is to say, the Brits knew these banks were shaky, because they were an extension of the city. So odds are, they just decided to preemptively seize the assets and shut them down, without even giving them a chance (or help.) This is also why Icelanders paid almost no tax, and lived well for years, because huge amounts of money were going into the country. Laissez faire stupidity works when you’re an island with a small population and huge amounts of money churn from foreigners.
Back to the "terrorism" charge. The side effect of the terrorism charge for a country is that a lot of people don’t want to, or can’t do business with you. They know it’s a BS charge, but, legally, you are on the damn list. So not only is Iceland’s economy in free fall, but they’re now partially cut off from cutting deals and doing business.
The British terrorism law is, in this respect, no worse than the US one or those of many other countries. You get on these lists by administrative or executive fiat, there is no way off the lists except political intervention, the criteria is completely arbitrary and opaque. Sort of like the no-fly list in the US, for ordinary people.
These laws were never meant to be used this way, of course. Gordon Brown did something with the law that its writers would have never intended. But that’s the problem—when you give someone a power, they will use it as they see fit, to the widest extent they can. Such laws are extremely dangerous and both the UK and US have a large number of them: laws that allow the executive to hold anyone without charge, to go to war without a declaration of war, to spy on whoever they want without a court reviewing the decision, and so on.
These laws have been repeatedly used and abused, and they will continue to be so. They need to be repealed. No free peoples worthy of the name give such unrestricted power to anyone.
In the meantime, if you want to help the Icelanders, there is a petition you can sign asking Gordon Brown to rescind the declaration of terrorist status. Given that even the stupidest person on the planet knows they aren’t terrorists, it’s sort of the least he can do. Then he should step down as PM, he’s clearly been in government far, far too long.