IPLI Foundation

Menu

Close Albums

Back to Albums

Geir Haarde 06/11/2012 Former Prime Minister of Iceland

Geir Haarde, who was the head of state from 2006 to 2009, discussed the Euro Crisis and the potential policy ramifications for Iceland's EU accession negotiations.

The discussion began with Mr. Haarde commenting on the opportune timing of the lecture on the eve of the US presidential elections and how topical austerity and stimulus were in policy discourse. He then outlined the banking crisis Iceland faced in 2007 when the three major Icelandic banks crashed after taking on unsustainable debts despite falling within the recommended European banking standards. He also drew some comparisons to the fiscal difficulties currently faced by Greece and Spain with their insoluble sovereign and banking debt and concomitant high unemployment. Mr. Haarde gave an unprecedented first hand point of view of the difficult decisions he faced as head of state not to guarantee the deposits of the Icelandic banks. His aim he said was to avoid "socializing the debts of private institutions" and avert a run on the banks. EU integration and the adoption of the Euro was seen as a path towards currency stabilization and the IMF played an important role in helping Iceland navigate the crisis.

Following the worsening of the Euro crisis Mr. Haarde suggested that Iceland will not become part of the European Union in the near future. In fact, there are debates to withdraw the application for integration. He felt important questions still need to be answered on how to protect important Icelandic interests such as renewable geothermal energy and fishing resources. He underlined the point that states within the EU have to balance sovereignty and national concerns while avoiding handing over complete power to Brussels.

After his brief lecture Mr. Haarde took questions from students that ranged from the concept of European social solidarity to future of European Union. He answers were frank, thoughtful and pragmatic. Mr. Haarde was limited in his optimism of the European Union's ability to ascend its current troubles and become a union more like that of the United States of America, which was similar in population size to the EU. He felt the advantages America held in a shared history, language and culture predisposed it to a successful union. He suggested that the European Union is only sustainable if it limits its scope to manageable projects such as economics and trade. Dissolving the union was not an option he suggested as scaling back the powers of the European Central Bank for example would be an almost impossible task.

Geir Haarde, who was the head of state from 2006 to 2009, discussed the Euro Crisis and the potential policy ramifications for Iceland's EU accession negotiations.

Back