Iceland & Greece in the Global Crisis

Iceland & Greece in the Global Crisis
Alex Vavoulis
Alex Vavoulis
Alex Vavoulis

By Alex Vavoulis

Iceland, an independent country, is in the North Atlantic between North America and Europe, and Greece is a country in southern Europe. Both have suffered because of the global recession and both are dealing with the economic crisis in different ways.

On the Internet, Samuel Greenberg wondered out loud about the Iceland crisis not receiving media attention but other countries, like Greece, getting a lot of written press and electronic attention. Is it because a few of the main banks in Iceland were nationalized? Also, he suggests that the country did not want to pay its debt to Great Britain and the Netherlands because the debt was due to bad financial politics and because an assembly has been formed to rewrite Iceland’s constitution.

Greek politicians have taken a completely different approach to their debt and their economic crisis. Because Greece is part of the European Union, it has become dependent on loans from the EU, which brings with them harsh austerity requirements. This has led to large unemployment: 27% for the general population and 50% for younger people. In addition, the debt that was accrued over the years was hidden with the help of Goldman Sachs for which Greece paid Sachs $350 million. In a real sense, it is a bad debt and a number of columnists have commented on this fact.

In the same Internet article, Greenberg summarizes what happened in Iceland: 1) resignation of the whole government, 2) nationalization of the main bank, 3) a referendum so that the people can decide on the economic decisions, 4) incarcerating the responsible parties and 5) rewriting of the constitution by the people. And all of this, Greenberg says, was done in a peaceful way; a whole revolution has occurred against the central power structure that created the current global crisis.

Yannis Varoufakis is professor of economic theory and director of political economy in the Faculty of Economic Sciences at the University of Athens. He is an expert on the global crisis and has presented alternative views especially on the Greek situation. He has written books and articles on the subject and has lectured and given interviews in many countries. He has rarely been invited on Greek television to present his views. He takes the position that Greece is different from Iceland because it is in a massive depression, it is in the Eurozone and it has kept the euro as its currency. Its fate now is determined at the EU level. He is fearful that the crisis is more than a banking crisis; it is also a European democracy crisis.

The Financial Times reports on the Internet that in Iceland, the head of its biggest lenders has become the first lending bank chief executive to be convicted of a crime related to the financial crisis. Bertold Brecht, a playwright who escaped from Nazi Germany and became famous in American theater productions, was a keen observer when he said in the early 1930s, “worse than a bank robber is a banker” or “behind every fortune there is a crime.”

Time will tell whether Greece can move on its way to recovery as well as Iceland has. In the Jan. 10 issue of the Fresno Bee, Nobel Laureate and columnist for the New York Times, Paul Krugman, discussed the economic crisis in Greece and closed his column with the following: “The truth is that we’ve just experienced a colossal failure of economic policy—and far too many of those responsible for that failure both retain power and refuse to learn from experience.”


Alex Vavoulis is professor emeritus at Fresno State. For 20 years, he served as president of the Fresno Free College Foundation and is an honorary Advisory Board member for the Sword of Zeus Project. Contact him at


  • Community Alliance

    The Community Alliance is a monthly newspaper that has been published in Fresno, California, since 1996. The purpose of the newspaper is to help build a progressive movement for social and economic justice.

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