RNH Academic Director, Professor Hannes H. Gissurarson, gave a talk at a Reykjavik luncheon meeting of the Chicago Council on Global Affairs 16 June 2016. It formed a part of the joint project of RNH and AECR, Alliance of European Conservatives and Reformists, on “Europe, Iceland and the Future of Capitalism”. Here are the main points of the talk:

Determinants of Iceland’s Foreign Policy: 1) tiny nation which cannot defend herself; 2) far from being self-sufficient, need for markets; 3) location in mid-North Atlantic Ocean, immediate neighbours Norway, Great Britain, Canada, the US, 4) culturally part of the West and the North

874 First settler from Western Norway, most settlers from Norway

930 Foundation of Commonwealth, the rule of law without government

1000 Discovery of America, oral tradition confirmed by archeological findings

1022 First treaty with Norwegian king, mutual rights

1262 Covenant reluctantly made with Norwegian king: dependency or tributary state

1355–1374 Ruled by the King of Sweden, not Norway (shows tenuous links with Norway)

1380 Ruled by the King of Denmark, as Norway and Denmark enter a personal union

1412 First recorded English fishing vessel; becomes an important part of English fisheries

Henry VIII refused three offers to buy Iceland

1518 Danish king offered Iceland to Henry VIII as collateral for 50,000 gold florins loan (=$6.5 million). Two more offers, in 1524 and 1535

1490–1602 Consolidation of royal prerogatives in Iceland; foreigners excluded, monopoly trade

1627 Uselessness of Danish “shelter” exposed: Muslim raids without any defence

1645 Danish king offered Iceland to Hamburg merchants for 500,000 thalers (=$6.4 million).

1785 Danish officials seriously discuss evacuating the Icelanders to other parts of the realm, as a result of volcanic eruptions, earthquakes and the “Mist Famine”

1785–1813 Several suggestions by British individuals that the UK seize Iceland; little interest

1814 Iceland not included when Sweden gets Norway as compensation for Finland. Why? Probably decision by the UK: Wanted Iceland controlled by a weak power, but had no interest in ruling her directly, tacit protection in the following century by British Navy

Jon Sigurdsson, leader of Iceland’s independence struggle

1848 Jon Sigurdsson calls for self-rule and sovereignty, using three arguments: 1) Iceland always sovereign; 2) Distinct culture and language; 3) Local knowledge

1855 Freedom of trade

1868 US government plans to purchase Iceland from Denmark, like Louisiana from France and Alaska from Russia; proponents William H. Seward and Robert J. Walker; laughed out of Congress

1876 last year when export of agricultural products exceeds that of marine products in value

1914–1918 UK government practically takes over Iceland, British consul controls foreign trade; direct trade negotiations between the UK and Iceland (still a Danish dependency); uselessness of Danish “shelter” demonstrated yet again

1918 Denmark grants Iceland sovereignty, independent kingdoms in personal union

1940 UK occupies Iceland

Iceland 1967: US Ambassador Karl Rolvaag, Icelandic Prime Minister Bjarni Benediktsson (who signed the North Atlantic treaty in 1949 and the Defence Treaty with the US in 1951) and astronaut Neil Armstrong, training for his journey.

1941 US and Iceland conclude a defence agreement, Monroe line drawn east of Iceland, Churchill visits

1949 Iceland joins NATO, strategically important in Cold War

1951 Defence Treaty with US, still in force

1952–76, four extensions of fisheries limits, Cod Wars with the UK, tacit support by the US

2006 US unilaterally abandons military base in Iceland

2008 Iceland left out in the cold, no help from US which however helps Switzerland and Sweden (never allies); severe blow from UK government, closing British banks owned by Icelanders while assisting all other British banks; putting an Icelandic bank and, briefly, also Central Bank and Finance Ministry on list of terrorist organisations; contributes to total collapse

2009 Disillusioned with old friends and allies, majority of Parliament decides to apply for EU membership; but “negotiations” stall: Iceland’s fisheries well-run, CFP disaster

2006–16 Iceland alone, expendable, unwanted, unprotected (except by US and NATO declarations), as in 1518–1868

Two future options, North Atlantic or European; not mutually exclusive. Terms:

1) continued access to European market, but also trade with US, Canada, China, Russia, etc.

2) continued independent currency, but deal with the UK or US on convertibility and lender-of-last-resort facilities (permanent currency swap deals)

3) rejuvenated military cooperation with US, adding UK and Norway to the equation

Prof. Gissurarson gives his talk in Rio de Janeiro.

In April 2016, RNH Academic Director, Professor Hannes H. Gissurarson, gave three papers at regional conferences of the Brazilian Students for Liberty, Estudantes pela liberdade: 16 April in Rio de Janeiro, 23 April in Belo Horizonte and 30 April in the university city of Santa Maria in the state of Rio Grande do Sul. In all three papers he discussed the controversial ideas of French economist Thomas Piketty who suggests expropriatory taxes on high-income groups and people of property in order to make income distribution more equal. Gissurarson pointed out the strange fact that Piketty worried about people becoming rich, whereas philosophers such as John Rawls had worried about people remaining poor: Unlike affluence, poverty was a real problem. Globalisation, or the extension of international trade, had had two consequences: a group in possession of special, non-reproducible abilities (Piketty’s famous 1%) could now sell these abilities in a much larger market; and hundreds of millions of people in China and India had migrated out of poverty. Therefore, somewhat paradoxically, income distribution in the West had perhaps become somewhat less equal in the past decades, whereas in the world as a whole it had become more equal. Gissurarson also asked what was indeed wrong with unequal income distribution, if it was the result of free choice. If Milton Friedman visited Iceland and charged each person attending his lecture there $100, and if 500 people showed up, then income distribution would become less equal: Friedman would be $50,000 richer and 500 persons would each be $100 poorer. Everybody would however be more satisfied. Where was the injustice to be found?

Estudantes pela liberdade has become a very influential association in Brazilian universities and is in the forefront of the campaign against the endemic corruption in the country. Gissurarson’s lectures formed a part of the joint project of RNH and AECR, the Alliance of European Conservatives and Reformists, on “Europe, Iceland, and the Future of Capitalism”.

Gissurarson Slides in Rio de Janeiro 16 April 2016

Prof. Gissurarson at Manhattanville College.

RNH Academic Director, Professor Hannes H. Gissurarson, gave a lecture at a conference on economic freedom in Manhattanville College, Purchase, New York, 8–9 April 2016, on economic freedom in Iceland 930–2016. He discussed the institutions of the Icelandic Commonwealth, including the choice between chieftains (or protection agencies), and grazing rights in the mountain pastures which solved to some extent the common pool problem. He also tried to explain why the Icelanders suffered hunger and famines for centuries even if there was plenty of fish in the Icelandic waters. Furthermore, he analysed the Icelandic system of individual transferable quotas in the fisheries which has made them both sustainable and profitable, unlike fisheries in most other countries. Last year, the University of Iceland Press published Professor Gissurarson’s The Icelandic Fisheries: Sustainable and Profitable. Finally, Professor Gissurarson briefly compared the market capitalism developed in Iceland in 1991–2004 and the crony capitalism replacing it, contributing to the complete collapse of the banking sector in 2008.

At the conference, Professor Gissurarson participated in a panel on money and central banks with Dr. Warren Coats, former head of the SDR (Special Drawing Rights) section of the IMF, Dr. Arthur Gandolfi, former Citibank Vice President, and Professor James Lothian of Fordham University, who served for two and a half decades as Editor of the Journal of International Money and Finance. Professor Gissurarson gave an account of his experience as a member of the Overseeing Board of the Central Bank of Iceland in 2001–9 and shared his conclusions about the proper monetary order for a small and open economy like Iceland. Gissurarson’s participation in the conference formed a part of the joint project of RNH and AECR, the Alliance of European Conservatives and Reformists, on “Europe, Iceland, and the Future of Capitalism”.

Prof. Lothian of Fordham, Dr. Gandolfi of Citibank, Dr. Coats of the IMF og Prof. Gissurarson. Lothian and Coats both received their Ph.Ds in monetary economics under Milton Friedman.

Gissurarson Slides in Manhattanville 8 April 2016

RNH Academic Director, Professor Hannes H. Gissurarson, gave a lecture at the Icelandic-American Chamber of Commerce in New York 7 April 2016, on Iceland and the Anglo-Saxon Powers. Professor Gissurarson described the relationship between Iceland and Great Britain from 1412 when the first English fishing vessels appeared in Icelandic waters until 2008 when the British Labour government invoked an anti-terrorism law against Iceland and brought about, or at least contributed to, the Icelandic bank collapse. He discussed a few Britons who had an impact on Icelandic history, including Sir Joseph Banks, a great friend and benefactor of Iceland, Sir Eric Cable, British Consul during the First World War (who practically ruled the country), and two Labour leaders, Gordon Brown and Alistair Darling, and the actions that the two of them took against Iceland. Professor Gissurarson also analysed the relationship between Iceland and the United States, the 1941 Defence Agreement (whereby a US military force replaced the UK occupation force), the 1951 Defence Treaty (which established a US military base in Iceland), the 2006 departure of the US military force and the almost total lack of interest shown since then by US officials about the fate of Iceland. His conclusion was that nevertheless Iceland should seek closer cooperation with her neighbours in the North Atlantic, the US, Canada, Norway and the UK.

After the lecture, Professor Gissurarson attended a dinner with Einar Gunnarsson, Icelandic Ambassador to the UN, prominent banker Thor Thors (son of Thor Thors, longtime Icelandic Ambassador to the US) and others. Ambassador Gunnarsson was Permanent Secretary in the Icelandic Foreign Office during the bitter dispute between Iceland and the UK in 2009–10. The lecture formed a part of the joint project by RNH and AECR, the Alliance of European Conservatives and Reformists, on “Europe, Iceland, and the Future of Capitalism”.

St. Thomas Aquinas

RNH Academic Director, Professor Hannes H. Gissurarson, attended the annual meeting of APEE, Association of Private Enterprise Education, in Las Vegas 3–6 April 2016, where he chaired one session and gave a lecture in another, about business ethics. Professor Gissurarson discussed the position of St. Thomas Aquinas who taught that merchants did not have to inform their customers of their own evaluation of circumstances (in the famous tale of the merchant from Alexandria on the island of Rhodes), but that they should not, on the other hand, make use of desperate circumstances (such as a city under siege) in order to achieve unfair outcomes. In this connection, Gissurarson described how Norwegian, Finnish and Danish financiers had, after the Icelandic bank collapse, acting in collusion with their respective governments, acquired assets of the fallen Icelandic banks for a pittance, Glitnir Bank and Glitnir Securities in Norway, Glitnir Pankki in Finland and FIH Bank in Denmark. Gissurarson argued that the behaviour of these financiers would have been deemed immoral by St. Thomas.

Economist Gerald O’Driscoll, former Vice President of the Federal Reserve Bank of Dallas, was elected President of APEE. Board members include Professor Robert Lawson who had visited Iceland on the invitation of RNH and given a paper on the index of economic freedom. Gissurarson’s lecture in Las Vegas formed part of the joint project by RNH and AECR, the Alliance of European Conservatives and Reformists, on “Europe, Iceland, and the Future of Capitalism”.

Gissurarson Slides Las Vegas 5 April 2016

Prof. Gissurarson at Rockford University.

RNH Academic Director, Professor Hannes H. Gissurarson, gave three lectures in the United States in the spring of 2016, comparing the Nordic economies in Sweden, Denmark, Finland and Iceland on the one hand and the Nordic economies in Minnesota, Manitoba and South Dakota on the other hand (leaving out the oil-rich states of Norway and North Dakota). Living standards turned out to be significantly better in the Nordic economies of North America. Professor Gissurarson argued that this was because in North America more opportunities were available to produce oneself out of poverty. It was true, he submitted, that the Nordic nations in Europe had managed to develop an attractive system of affluence and security, but that this had happened despite, but not because of, high taxes and efforts at redistributing income. It should be emphasised that the Nordic economies were open and relatively free, protected by the rule of law.

The lectures were held at the University of Indiana in Bloomington 30 March, at the Heartland Institute in Chicago 31 March and at Rockford University 1 April. They formed a part of a “Free Market Road Show” organised by Dr. Barbara Kolm of the Austrian Economics Centre in Vienna. The lectures also formed part of the joint project by RNH and AECR, the Alliance of European Conservatives and Reformists, on “Europe, Iceland, and the Future of Capitalism”. The seminar at the Heartland Institute was taped:

Gissurarson Slides Bloomington 29 March 2016