Moral Low Ground


Geir Haarde, Former Iceland PM, on Trial for Role in ’08 Financial Crisis

A former prime minister of Iceland is on trial for his role in the 2008 financial crisis, marking the first time that a world leader is being legally held to account in connection with the worldwide economic meltdown.

Geir Haarde (Photo: James M. Bowman)

The Associated Press reports that Geir Haarde, who presided over his country’s economic collapse that destroyed thousands of Icelanders’ financial lives even quicker than it enriched them during the boom years of the early-to-mid 2000s, is being charged with negligence over his government’s failure to prevent the failure of Iceland’s main bank. When the Icelandic economy began falling apart in 2008 after the collapse of the country’s leading commercial bank, inflation and unemployment soared and the króna, the currency, collapsed. The country, one of the richest in the world, was forced to borrow $10 billion from the International Monetary Fund and other foreign creditors, a great humiliation. Angry crowds took to the streets and Haarde was forced from power in 2009. Iceland hasn’t been the same since.

Haarde’s trial is the first of a world leader in connection with the 2008 crisis. But the former prime minister rejects the charges against him, claiming they are “preposterous” and “political persecution.” Haarde insists he will be vindicated when he appears before the Landsdómur, the special court set up to try him.

He may have a point. Legal experts say there is a good chance Haarde will beat the charges. He has a stellar legal team and growing public sympathy that he alone is being targeted for prosecution in connection with a global problem. The country’s parliament was torn over whether to prosecute Haarde; a 33-30 vote landed him in the dock.

But today David Oddsson, the former head of Iceland’s Central Bank, testified that he “warned the government, in the strongest possible terms, that the Icelandic banks were facing serious difficulties re-capitalizing themselves as the European banks no longer believed in their viability.” Oddson is himself blamed by many Icelanders for hastening the collapse by zealously embracing the ‘Washington Consensus,’ the neoliberal economic agenda that emphasizes a dangerous deregulation of the financial industry.

The special court trying Haarde consists of 15 members– five Supreme Court justices, a district court president, a constitutional law professor and eight people chosen by parliament.

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