Sunday, 11 January 2009

Single Market - A Recent Case Study #2

So what of Iceland since that has become something of a totem of those parties arguing that the "union" equals a "single market"?

As an independent state it has been able to access IMF funding of $2.1 billion. However that funding is dwarfed by the funding it has received from fellow Nordic Council countries. In November 2008 Denmark, Finland, Norway and Sweden "worked closely together and jointly decided to supplement the IMF financing...with additional loans of $2.5 billion".

And in December 2006 Nordic Council ministers also voiced more support for Iceland with particular reference to Icelandic researchers and youngsters being able to continue playing their part in Nordic exchange programmes:

"...we recognise that more has to be done and that tangible actions are needed to support Iceland in the difficult situation that has arisen"
They tasked the Secretary General of the Nordic Council of Ministers, Halldór Ásgrímsson, to present proposals for tangible measures to their next meeting in March.

Therefore this undermines the Commission parties' claims that you need a "union" to require such help. Organisations like the Nordic Council show that a union of unity works just as well.

If you were to apply the test of the previous post about Dexia and Fortis you would have to go back to the Kalmar Union of 1520 for Iceland to be "saved" under the Calman parties.

But it is not only Iceland's Scandinavian and Nordic neighbours who have stepped in to support the country. As this article shows Belgium and Luxembourg stepped in to help Iceland's Kaupthing.

Considering how Calman has virtually boasted about the virtues of their "union" for Scotland one would think that it would act in a similar friendly, international manner.

After all on 17 November 2008 Gordon Brown did have this to say about international co-operation:

The Prime Minister: In Washington, we agreed first of all fundamental reform of the way the financial system is supervised around the principles that Britain has been promoting. They are greater transparency, responsibility, integrity—to avoid conflicts of interest—better banking practice and international co-operation.
However that was not this case as this article in the Wall Street Journal from November 2008 shows: "Brown's actions helped to worsen the island's financial crisis"

As this report shows it was the UK Treasury which unilaterally placed Kaupthing Singer and Friedlander in administration on October 8. This meant the Iceland had to take control of Kaupthing because the UK's actions helped bring about Kaupthing's failure prematurely. The UK's use of anti-terrorist legislation against Iceland caused a run on its banks.

That doesn't say much for the superior "international co-operation" that is meant to benefit Scotland within the "union" compared to the other models above. Particularly since Kaupthing is to take the "union" government to court for actions that contributed to Kaupthing's collapse. Likewise the Icelandic Government is considering a similar action to the European Court.

Considering these heavy handed (to say the least) and unco-operative moves by the government of the "union" how can it be argued it is a benefit which Calman can just blithely ignore? Particularly since this action has put in question UK council investments and savers who thought all of Iceland's banks were going under?

This lack of international co-operation is further underscored by the fact that whilst Denmark, Finland, Norway and Sweden were coming forward with financial assistance "the UK government has put pressure on the IMF to delay the loan".

And to underscore the dysfunctional and contradictory nature of the "union's" supposed "international co-operation" it has been further revealed that the Bank of England and UK Government were aware of serious problems in Iceland as long ago as March 2008 but failed to work with the Icelanders.

However it's not just on Iceland we see a lack of international co-operation from the Government of the "union" in terms of the present financial crisis. There are numerous other examples of its high minded approach causing similar friction.

At an international summit in November US officials said "that Britain was making unreasonable demands over the reform of global institutions". This was already pointed out by the Telegraph's Robert Winnett who wrote that the "US rejects Gordon Brown's Bretton Woods plan".

Gordon Brown has also annoyed the French by claiming the bank bailout was his idea:

M. Sarkozy is said to be "furious" that the media has portrayed the EU proposals as a British blueprint. He is even reported to have told several people: "The British plan is something that we worked out for them."

One French official said yesterday: "We find it pretty astounding that Brown is now basking in all the glory. The truth is that it was in the pipeline all the time."
Then there are the Germans, the IMF and OPEC

All in all the example of Iceland shows how the unions of unity - the Nordic Council and the Benelux - are far more beneficial than the "union" which fails to co-operate maturely and honestly on the international stage. That the Calman Commission has blithely decided to ignore these aspects only exposes it to the charge that it is simply about retaining power at Westminster for the parties involved.

And this is even before we consider that serious economists are talking about London being ‘Reykjavik on Thames (such as Willem Buiter, Patrick Hosking and Will Hutton); or how the leaking of confidential information to the BBC's Robert Peston caused shares in RBS to fall by a "staggering" 39%, thus wiping £10bn off its value.

How those aspects of the "union" and its relation to Scotland are not being is one that only the Calman Commission can answer.

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