06.28.2016 0

Seeds of Brexit, Euro chaos planted in Iceland


By Natalia Castro and Robert Romano

The European Union (EU) thrives on the economic and cultural legitimacy its members reinforce, but since 2008 the seeds of rebellion have been sown and the “Brexit” was just the tipping point.

Following the economic turmoil of 2008 Iceland was the first country to make an extremely unpopular decision in allowing the largest banks in the country to fail. Rather than allowing banks to be considered “too big to fail”, Iceland considered their banks “too big to save”. Iceland told the banks to pound sand, saved itself from continued economic devastation and delivered democratic accountability to their people. Later in 2013, Iceland withdrew its application to be a member of the European Union.

Just over the weekend, Iceland elected a new president  who ran on a Euroskeptic, anti-corruption campaign. Guðni Th. Jóhannesson, a historian, had never held elected office before. He won following the resignation of Iceland Prime Minister Sigmundur David Gunnlaugsson, after his reference in the Panama Papers brought the entire government down.

But it was the fateful decision to allow the banks to fail that spurred a movement across mainland Europe for democratic legitimacy when economic legitimacy was lost — particularly when citizens of European Union member states saw the harsh economic restriction of the organization and also the failures of the euro currency as unnecessary.

In 2011, Mish’s Global Economic Trend Analysis explained “Spain’s Icelandic Revolution”, in which young Spaniards took to the streets with the organization Democracia Real Ya (Real Democracy Now) and chanting “when we grow up, we want to be Icelanders!” It was a message that would resonate elsewhere, in Italy, in Greece, in France, reigniting the question of what was true sovereignty in modern Europe.

Did Iceland light the fuse for the dissolution of Europe as a political and economic entity?

The United Kingdom’s decision to leave the EU was not the first under consideration either, tales of a Grexit, or Greek exit from the Eurozone were prominent as the sovereign debt crisis reached its pinnacle. Given the inability to let creditors fail — leaving no relief for a pile of sovereign debt that could not be repaid — suddenly the common currency that once banded the EU, began to threaten its dismantling.

However, it required much more than just economic uncertainly to cause UK citizens to move toward separating themselves from the EU, it was also an overwhelming sense of political intrusion which paralyzed the government and disconnected the people. The UK never adopted the euro.

New York Times writer Amanda Taub writes in her June article, “it is clear from polling data and interviews with voter’s that those who voted for ‘Brexit’ had been well warned about the economic risks. They just cared more about something else: immigration.”

British citizens felt too much immigration was bad for the economy and social make up; the cause of their immigration woes were constraints placed on the nation by the EU. An unelected, undemocratic board imposing regulations on the country’s immigration policy.

In Brexit the existential question became: Were the people of the UK European, or were they British? The answer delivered by more than 17 million Britons was decidedly in the latter.

The UK is not alone in divisions arising on the immigration and economic globalization question. Factions within the EU over immigration policy have been developing rapidly amid growing concerns of the mass migration of refugees from the wars in Syria and Iraq. Back in February the EU Observer described meetings led by Austria among Western Balkan States ahead of the EU interior ministers meeting in Brussels. The states met to plan their own strategies to deal with immigration, directly challenging the control of the EU. These Balkan States have consistently expressed the isolation they have experienced from any involvement in EU immigration policy, while Germany monopolized discussion.

Expressing frustration with EU control over immigration, before his resignation Austrian Chancellor Werner Faymann even noted “Austria is not the waiting room for Germany” to the EU council president Donald Tusk, expressing his deep discontent with the minimization of his country’s needs. Faymann was issuing stronger border controls.

But it was not enough to stamp momentum on the immigration issue as the migrant crisis worsens. The Freedom Party’s Norbert Hofer, running on a platform against open borders, just narrowly lost a bid to be Austria’s new president against that country’s Social Democratic Party. Undeterred, the Freedom Party is now calling for an Austrian exit from the EU.

Now, as reported by the Local Austrian, a prominent domestic news source, Hofer is calling for an EU referendum that must take place within a year if no significant reforms are made. “If the union develops incorrectly, then that is the moment for me where one needs to say: Now we have to ask the Austrians as well,” he said in an interview.

Brexit could just be the beginning.

It is no surprise the UK has been at the tip of the spear on this new liberation movement. As noted by the Wall Street Journal’s Greg Ip, the UK’s history has never been one for political union with Europe, but rather strong democracy and sovereignty. The EU does not represent democracy, but a restriction from self-government; immigration policy has been the latest example of the EU’s unforgiving control.

But look further back to Iceland’s actions 8 years ago to declare independence from international banks — and the real movement, under the radar, it sparked. Once one country sets the example of autonomy, it’s hard to others to ignore the freedom. It is that Icelandic sentiment that has permeated political parties on the right and left in the Europe. UKIP in the UK, Syriza in Greece, Five Star in Italy, National Front in France. Maybe we are all Icelanders now.

Natalia Castro is a contributing editor at Americans for Limited Government. Robert Romano is the senior editor of Americans for Limited Government.

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