Why are there differences between how Greek and Irish people have reacted to austerity?

While Irish Independent advertisements suggest that the difference between Greek and Irish responses to austerity is a matter of individual choices, new research from NUIM Dept of Sociology indicates that matters are a little more complex than that. Understanding European movements: new social movements, global justice struggles, anti-austerity protest, published today by Routledge and edited by Cristina Flesher Fominaya and Laurence Cox, is the first systematic attempt to situate Europe’s anti-austerity movements in their historical and cultural context.  Cristina Flesher Fominaya (Aberdeen) starts a two-year Marie Curie fellowship at the Dept. of Sociology in September, working with Prof. Sean O Riain on a comparison between anti-austerity movements in Ireland and Spain, while Laurence Cox co-directs the MA in Community Education, Equality and Social Activism, jointly based in Sociology and Adult and Community Education.

Understanding European movements is the first publication from the Council for European Studies’ research network on social movements, which is chaired by the two editors and brings together 178 scholars from 23 countries and 18 disciplines working in the field. The book’s
15 chapters include authors based in 11 countries whose analyses are all grounded in ethnographic and historical research on these movements – in Denmark, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Romania, Spain and the UK as well as transnational relationships. The book offers a comprehensive, interdisciplinary perspective on the key European social movements in the past forty years and sets present-day struggles in their longer-term national, historical and political contexts. Its four sections discuss the European tradition of social movement theory, the relationship between European movements from 1968-99 and contemporary anti-capitalist movements, the construction of the “movement of movements” within the European setting from the late 1990s onwards and the new anti-austerity protests in Iceland, Greece, Spain and elsewhere.

The book will be launched by leading social movements scholar James Jasper (CUNY) at the CES conference in Amsterdam next month. Other network events at the conference include two mini-symposia, five panels, a workshop and a roundtable on understanding contemporary waves of protest. Together with the ECPR’s and ESA’s standing committees on social movements, the CES network is also organising a symposium on social movements and the European crisis at the Transnational Institute, Amsterdam.

Cristina Flesher Fominaya and Laurence Cox, eds. (2013) Understanding European Movements: New Social Movements, Global Justice Struggles, Anti-Austerity Protest. London: Routledge (Advances in Sociology series).

304 pp. hardback, ISBN 978-0-415-63879-1

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Iceland and Ireland are not only separated by one letter

Another guest post from Iceland, this time from Huginn Freyr Þorsteinsson.

In the early days of the present financial crisis Iceland became one of the poster children for the crash that seemed inevitable. Some commentators thought Iceland’s problems were an indicator for what would soon be the fate of other countries that had prospered in the days of the economic boom. The question was posed in early January 2009: “What’s the difference between Ireland and Iceland? – One letter and about 6-months!”

The question was valid. Although Ireland did not expand its banking system nearly as much as Iceland did the situation in Ireland was serious enough. Both countries had followed neo-liberal policies in trying to lure investors to the country with deregulation, lowering of taxes and privatization. For this the two respected countries got lauded by neo-liberal economists who stated that the proof was in the pudding – economic growth was staggering in both cases. But what is the situation now one year has gone by since the above question was posed?

I think it is fair to say that the doomsday scenarios put forward in October 2008 for Iceland have not materialized. Also that predictions for other countries such as the Baltic States, Ukraine, Ireland, Spain, Italy and Greece turned out to be wrong because they were too optimistic. The status of these countries is now catching the international media headlines whilst Iceland has somewhat gone out of the spotlight and news that Iceland’s economic contraction was smaller then envisaged, unemployment figures lower, less capital needed to put into the resurrected banks and a huge turnover from a massive trade deficit to trade surplus has not surfaced.

Three major differences separate Ireland and Iceland. One is that we do not have the Euro which is extremely helpful when we need to rely on exports and a trade surplus. The Icelandic krona gives way whilst the crisis in Ireland has little or no impact on the Euro. Once an expensive place of travel, Iceland is now actually a relatively cheap destination, helping the tourist industry staying strong despite diminishing tourism around the world. The same goes for the export industry which benefits greatly from a weakened krona as it gets more kronas for the products exported.

The second difference is that Ireland went for an all-out bank bailout whilst Iceland took deposits and matching important assets (loans to individuals and Icelandic companies etc.) and put it into new banks whilst letting the old banks go into administration. This manoeuvre was implemented through emergency legislation in October 2008 in order to protect the Icelandic economy from collapsing along with its gigantic banks (their size was 8-10 times Iceland’s GDP at the time of collapse). This means that the sovereign did not try to stand behind the big banks but used the opportunity to heavily trim them down which in turn has made Iceland’s external debt many times lower than it was in the months before the crash.

The third difference is the future unforeseen impact of pensions on the tax payers’ money. One thing we do know is that the future number of pensioners in Europe will be considerably higher than today and more money is needed to fund pension schemes. When it comes to calculating the government debt or obligations of the state such numbers are left out but it is quite evident that many states will struggle with meeting pension obligations. Iceland has a well funded pension system and as seen on the picture below will be well off in meeting these demands and will probably not have to rely on tax payer money.

Pension fund assets growing in relation to the size of the economy (OECD Pensions and Markets 2008)

The ratio of OECD pension fund assets to OECD GDP increased from 70.7% in 2005 to 72.5% of GDP in 2006. The largest asset-to-GDP ratio was Iceland’s, at 132.7%.

However, Iceland has become very indebted because of the need to take loans to support its currency, restore the banks, resurrect the Central Bank (which went bankrupt), reimburse depositors in the UK and the Netherlands for the Icesave accounts and tackle a massive government deficit. At the moment the Icelandic government is working with the IMF and the Nordic countries in order to get the economy back on track and hasten the recovery. The IMF is working in close collaboration with a left-wing majority government whose finance minister, Mr. Steingrímur J. Sigfússon, comes from the Left-green Movement. The situation for the IMF is probably quite unique as they are dealing with a crisis that is a result of radical neo-liberal policies as opposed to lack thereof. Traditionally the IMF has thought such policies were medicine for failed economies but now the case is the opposite.

The uniqueness of the Icelandic case might be seen in how multi-dimensional it is. It is a bank crisis, a debt crisis (households and companies), a currency crisis and a tainted reputation. But as events unfold in the world economy Iceland’s difficulties seem to be less and less unique. Other countries seem to be catching up quickly and even possibly have already left us behind.

Huginn Freyr Þorsteinsson is adjunct professor at the University of Akureyri.

 

The view from Iceland

This is the first in a series of guest blogs from geographers around Europe. Edward Huijbens is a geographer based at the University of Akureyri in Iceland.
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On the Friday before the big weekend in October 2008, when the whole finance sector in Iceland came tumbling down, there was tension in the air. During lunch time news a revered economist at the University of Iceland had stated that the banks were bankrupt with unforeseeable consequences for the nation at large. The was obvious panic in his voice and I rushed back to the office, where we gathered round the computer and listened to a replay on the internet of the news. We had not much to say – we were just numb and awestruck. On the Monday after the weekend big news were afoot and the PM was to address the nation on TV at 4pm. The nation came to a stand-still and we watched as the PM announced that the finance sector had capsized and might suck the whole nation in. He ended with the famous Bushian “God bless Iceland”.

Immediately it was clear that this collapse manifested regional disparities within the country. Around the small villages and towns around the cost people shrugged and said; we have had recession here for 30 years, this will not change much. Whilst in the capital region Reykjavík and bigger towns namely Akureyri and Reykjanesbær, the effect was felt more, but also the need to invest all the bubble capital accumulating was mainly manifest there, in highrises, roadworks, big building projects and new boroughs. Now these are all half-done and on hold.

Mostly people were at first numb, did not know what had happened and how. In August 2008 the nation was on the top of the world, with a booming economy and just having won a silver medal in the Olympics in handball. When the handball team returned home tens of thousands filled the streets in Reykjavík as they received a royal welcome – national pride was rampant and all of a sudden it was all gone. Overnight we became equated with Zimbabwe and the likes in international media.

Then it began to dawn on some that the system we had built was fundamentally corrupt, through nepotism, and the ideological dogma of neo-liberalism was flawed. This was of course obvious to many beforehand, but the debate could never be sustained in the face of the amazing wealth that seemed to be pouring into the country. The only political party (the left green) that raised concern was absolutely ridiculed. As one left green parliamentarian suggested that the banks should just leave the country and set up HQ in London, the media uproar was immense.

As it dawned on the general public, various groups started to emerge and talk on various issues: general mis-trust at the political establishment was rampant so new ones formed. The most prominent one started the first Saturday after the collapse in October to rally people at 3 pm on the centre square in Reykjavík in front of the parliament house. There for 30 minutes 3-4 people would give short speeches on their take on the situation and the organiser, the well known civil liberties activist Hörður Torfason, would talk to people reminding them to come next Saturday. His aim was simple, to come every Saturday until three of his demands would be met: 1) That the director of the Central Bank would be ousted, 2) the government resigns and 3) that a general elections will be called.

The firm use of public space to voice simple clear demands became the platform for the change that would in the end occur. People held on to these meetings, and the media made more and more of them as people started coming in their thousands. What at first was a handful of people had by January 2009 become at least 10,000 people (bear in mind in Iceland the population is 320,000 in total). This mass of people simply could not be ignored and when the parliament reconvened after Christmas mid-January, Hörður urged all to come to the square and bring anything that could make noise – this time they will listen. People grabbed pots and pans mostly and filled the central square banging them along with percussionists and blaring horns. Inside the parliament people needed to shout to be heard, but still the parliament members and PM pretended as if nothing was going on. This so infuriated people that they came back the next day and the day thereafter and what unfolded was what later was called the “Kitchenware” Revolution and the government resigned. An interim government took over and general elections were called. There was change and a left government gained clear majority – but now, almost a year on, we are in the interesting situation that this new government seems to be doing all it can to resurrect the former system that collapsed in all its nepotistic and corrupt glory. We are a bit confused up here now and what next we do not know, except it seems clear that it is the tax-payer who will pay.

The lesson in this for me is that clear demands have to be set, with a clear structure and platform for the voicing of these demands: where come hell or high water, the demands will be voiced, and if not heard accompanied by pots and pans. For me the pivotal role that public space plays in the strategic locations, such as ours in Reykjavík, cannot be underestimated.

A hammer and a thick steel frying pan  can sever eardrums!

Eddie from Iceland