Open Letter from the Prime Minister of Iceland
The Prime Minister of Iceland, Geir H. Haarde, has written an open letter to those nations which have officially offered financial support to implement plans by the Icelandic government and the International Monetary Fund (IMF) for economic recovery measures. This letter, which was published in daily newspapers in the countries concerned, expresses the Prime Minister’s thanks for this valuable support in trying times, and reaffirms its importance as a factor in the country’s economic reconstruction.
The text of the letter follows.
The world is currently suffering the most serious financial crisis it has experienced for decades, and before it has run its course we may have to look even further back to find similar events. The consequences in Iceland have already been more drastic than in most other countries, as the collapse of the three large private banks has meant enormous financial losses in the country. To respond to the daunting circumstances, the Icelandic state has been obliged to seek the assistance of international institutions and friendly nations. These actions are undertaken with determination to rebuild the country’s financial system, to safeguard its welfare system and other social infrastructure, and to fulfil our obligations towards other states, as we have always done.
When natural catastrophes have struck Iceland, for example, the volcanic eruption in the Westman Islands in 1973, numerous friendly nations responded with speed and generosity to offer us their support, just as we have done our best to reach out to others in their time of need. As we today experience man-made disasters, it is reassuring to see that the reaction is no less generous. The financial crisis is a global phenomenon. Icelanders are well aware that few countries are untouched by difficulties and that all governments are first and foremost responsible for the interests and security of their own nationals. As a result, the gratitude felt by Icelanders for the assistance provided to us by our friends and neighbours is all the more sincere, and gives cause for optimism that wide-reaching co-operative efforts will be undertaken to put an end to this global crisis.
No responsible national government seeks to borrow huge sums without good cause, in particular after finally achieving the long sought-after goal of practically eliminating treasury debt. There was simply no other alternative. Loans extended by international organisations and supportive nations enable us to begin work on reconstruction with hopes of achieving successful results in a much shorter time. In addition to the IMF, of which Iceland has been a member since 1946, the Faroe Islands, Poland, Norway, Denmark, Finland, Sweden and Russia intend to provide Iceland with loans. In addition, the European Union may conceivably participate in a joint effort with the above-mentioned countries. According to a two-year implementation plan drafted by Iceland and IMF, this money will not be channelled directly into the Icelandic economy, but rather be used as a reserve fund, enabling the Central Bank of Iceland to re-establish normal foreign currency trading, which is the pre-requisite for economic recovery. Furthermore, it is evident that while loans cannot prevent significant changes in Iceland, these funds can create the framework needed to facilitate necessary reforms to its institutions and financial system during the coming months and years.
The suddenness and magnitude of the Icelandic banks’ collapse, and the very visible consequences for Iceland, has spread deep and understandable concern among Icelanders for what lies in store for them and for their country in an international context. While the situation is definitely very grave, with effective action by the government, a strong sense of solidarity among the nation and moral, political and financial support from international organisations and helpful nations, it will be only temporary. The tiny and poor Icelandic nation established an independent republic and worked its way out of poverty, surmounting major difficulties to build a successful modern state; its descendants are more than capable of overcoming the current challenges. There is no cause for despondency. Iceland has both the human and natural resources to ensure further positive development of its welfare state and to make a responsible contribution to the international community. Among the key objectives of this government will be to encourage the creative and sustainable utilisation of marine products and renewable energy supplies, to support innovation and diversity in Icelandic business and industry. By so doing, Icelanders can put their education and expertise to work in building a future for the coming generations in our country.
Historical consciousness has always been a strong Icelandic trait. While dwelling too much on the past can cloud our vision of the future, it can help to place the present in an historical context. This nation has a long memory and will not soon forget a kind deed done in time of sore need.
Reykjavík, 1 December 2008