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Blog > Russia bails out Iceland. Media reacts in horror.

Russia bails out Iceland. Media reacts in horror.

When I heard the news earlier today that Russia is about to loan Iceland $5.4 billion (the equivalent of 1/3 of Iceland’s GDP) to bail out the financially crippled country’s ailing banks, I thought to myself:

“Hmm, when I get home tonight I think I’ll write a tongue in cheek post wondering how long it will be before the media condemns the deal, and raises the spectre of evil Russia taking over the tiny, defenceless Iceland.”

I genuinely thought it was going to be a slightly daft post that no-one would take seriously.

Then I read this editorial, published an hour or so ago in British newspaper the Daily Telegraph:

“[The loan would] create strategic ructions. Iceland is a NATO member, but Russia would want something in return for a loan equal to almost a third of the tiny state’s GDP. The US would fret this could eventually mean a Russian military presence in the North Atlantic.”


Update: The Icelandic Weather Report sums up Iceland’s decision to make friends with Russian pretty succinctly:

a] The US pissed off Icelandic authorities two years ago, when they unilaterally pulled their military out of Iceland, with the accompanying job losses and whatnot.* b] The US pissed off Iceland a few weeks ago when they purposely left them out of a currency swap agreement. c] Iceland has gone looking for new friends. d] Russia is Iceland’s new best friend.

A closer relationship between Russia and Iceland certainly looks on the cards, although I still think the chances of a Russian military base in Iceland are pretty slim!


  • It’s always a bummer when reality beats you to the punch on satire.

    That said, I think a loan that constitutes about 1/3 of a country’s GDP usually means that you get something for it – probably not a military base but at least some help on an Arctic territorial claim. I’m pretty much agnostic about it.

    As my friend says, the economy of Iceland is in pretty bad shape after everyone realized that Bjork has no talent and stopped buying her records…

    James´s last blog post..Iceland Gets Left Out in the Cold

  • Yeah, I hate reality!

    To an extent, I have some sympathy with the critics of this deal. The interest payable on this deal was never going to be calculated entirely in dollar terms and Iceland has put itself in a politically difficult position.

    I think you’re right – Iceland will now come under pressure to support Russian territorial claims in the arctic, and I’d imagine that Iceland will become significantly more ‘Russia friendly’ in major international forums such as the UN.

    But it’s hard to criticise Iceland too much. Desperate times call for desperate measures. If you’re about to go bankrupt and your supposed friends (in this case the US and Europe) won’t lend you money, who do you turn to?

  • Yes, I agree, Iceland can’t be criticized for the crime of trying to survive economically. I also see that Sweden has thrown them a bone. The United States is wholly unable to help anybody out right now, but I am surprised to see that more arctic bordering states aren’t putting up some additional help. Hello, Canada?

    Then again, did you know that the entire population of Iceland is smaller than the metro area of Minneapolis?

  • Of course, Russia is big scary and could there be any other motive for this move yet for them to wish to create a ‘base’ in the Atlantic Ocean? Duh!

    Josefina´s last blog post..Brittsommar

  • You know, I’ve been rethinking.

    I don’t think it’s a coincidence that this deal was announced on the very same day that Putin released his new Judo video…

  • They just had Edward Pukeass on the World Service interviewed about this. He totally ignored what the Icelandic PM said, i.e. ‘we asked our allies and were ignored’. Pukeass made the usual comments ending on ‘why didn’t Iceland get help from its allies’. It goes to show that nothing, not even reality, will get in the way of Pukeass’ opinions.

    Let’s look at the obvious.

    1: Iceland is a member of NATO. NATO is not a financial institution and therefore does not air-drop billions of dollars out of the back of Hercules transport aircraft to its allies. Only the US flies huge bundles of case about in military transport planes (Iraq).

    2: The US withdrew its military forces from Iceland 2 years ago – no more F-15s on QRA to intercept those pesky nuclear armed Bears coming through the GIUK gap to attack the UK and the US east coast (there’s a great strategy game called ‘Harpoon’ where you can do this). The US cut costs and basically told Iceland ‘go get some other sugar daddy’. Iceland lost both political and economic benefits. I would hazard a guess that this was not a welcome politic amongst the Icelanders.

    3: NATO is not NATO, i.e. not the one of the Cold War. It is an altogether completely different dinosaur. Iceland has lost its strategic importance to NATO (GIUK gap as mentioned above). There is not much love that Iceland can give in return to Russia, however one cares to squeal about it (Pukeass for example). Cold Sore, not Cold War.

    4: Iceland is not a member of the EU, therefore its saves are not covered by the 100,000 euro guarantee in the recent agreement, though it appears that British savers with money in Iceland will be.

    So, is it unreasonable that the Icelanders should not look out for themselves? They’ve been told to get lost by their allies and are too small to be cared about apart from when the world is facing a nuclear holocaust.

  • Further thoughts about what the Russians might want…

    Led Zepplin
    Deep Purple
    Thin Lizzy

    Heavy Metal!

    Iceland has been positioning itself as a major manufacturer of base metals and alloys and has been trying to attract a lot of foreign investment here. It already has a lot of heavy industry.

    Looks like prime Deripaska territory!

  • Ah. So those references to Medvedev’s love of music were actually just code referring to the Russian takeover of Iceland… it all makes sense now!

  • Well they do share some similar habits, i.e. beating themselves with birch branches in saunas and rolling about naked in the snow….

    I still don’t know what to make of the Robert Palmer & Alison Kraus combo. RP has categorically denied any LedZep reunion for at least the next two years…

    I just came across this in a british paper:

    “Iceland skilfully used its cold war importance to move away from fishing and farming – too far away, it now transpires – and if Europe and the US are now too preoccupied to help, it will look elsewhere. We can only be grateful it was Russia with its not-very-good navy stirring trouble, not China, that made the loan.

    Talk about having one’s head screwed on properly! Other interesting stuff in the article too, lest us not forget that the UK used anti-terrorism legislation to freeze 4b quid of icelandic assets

    P.S. Full disclosure: I hate watching ‘Lazy Town’ where Sporticus is the main character, but my nephew and niece have other ideas. It is mildly better than ‘Dora the Explorer’, but I do cheerfully respect the kiddies anarchism in ignoring whatever their parents tell them to do…

  • PLANT, Robert Plant. How on earth did I get him mixed up with Robert ‘Addicted to Love’ Palmer??? It really is Gin & Tonic time again…

  • Well they do share some similar habits, i.e. beating themselves with birch branches in saunas and rolling about naked in the snow….

    Aleks – sorry, you’re confusing Iceland with the Finns. Didn’t you know that Iceland has no trees?

    Alda´s last blog post..How about some googlies?

  • James, it’s impossible to loose such huge talent as Bjork’s. I have read Abramovich likes Bjork and was spotted at her concert Moscow. That’s why Russia helps Iceland, heh :)) Medvedev listens to good music too 🙂

  • Alda,

    “no trees”??? I am surprised! Are you sure? 😉

    Silver birch is distributed throughout almost all of Europe and in Asia Minor. Downy birch also occurs throughout much of Europe and in north Asia, and is one of the very few native trees in Iceland.

    Or, even better:
    …woods of Bæjarstaðir in Skaftafell National Park contain some of Iceland’s prettiest, highest growing birch…

    So is it just the foreigners who do this or is it just for lack of sufficient birch that the Icelanders don’t? It seems that Iceland is an increasingly popular destination for the Russians (as it also appears quite a few other countries are too in the last couple of years):

    A quarter of the increase in overnight stays came from Russian tourists, who also brought in 27% of Finland’s total tourism receipts in 2007. “Russian tourism in Finland has grown for a long time, but the growth has only been this strong for the last two years,” Marjut Tuominen, registrar at Statistics Finland, said.

    I did come across some extra info today that in fact though the US had ‘left’ Iceland, they temporarily deployed F-15s to intercept and escort the Tupelov bombers that were heading to Venezuela for exercises so it is apparent that ex(?) US facilities are kept warmed over…

  • Heeeeheeeeee you people are so ignorant that it makes me feel good inside knowing that the stupidity in the world is only getting larger, i feel sorry for people 90% of the world that are brought up in a media world and believe everything they see and hear from the people that control them. If you people would only come to Iceland and see what we have, and how we live, and read about our history you would have to eat all you words. To be friends with the US or Britain is a death wish for the future, to be friends with Russia is the Future, its not for me to tell you why, but for you to find out, you are so fucking stupid, but thats great for the future of our people.

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