Amid Greek debt crisis, Iceland still recovering from its own collapse

While Greece battles its debt crisis, Iceland – where major banks collapsed in the wake of the global financial meltdown – is gearing up for a referendum on whether its taxpayers will shoulder the burden of paying back billions of dollars of debt.

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Observers detect the influence of a new editor, David Oddson, who just happens to have been Iceland’s prime minister from 1991-2004, before becoming chairman of the Central Bank between 2005 and 2009.

Paying the Brits, and spending cuts too

It’s not hard to find those with sympathy for Sigfússon, who was a voice of warning in the days of Iceland’s unlikely role as a global financial power but who now finds himself burdened with selling both the hugely unpopular Icesave deal and forthcoming deep cuts in spending on public services.

At the very least, he can expect others to come under fire at the end of February when the truth commission set up by parliament releases its "Black Report" into the causes of the collapse.

Its contents remain secret for now – but its chairman has warned Icelanders to brace themselves for “some of the worst news anyone could have to convey to their country."

Whether the report will firmly blame any particular individuals – politicians or bankers – is also unknown, although it’s clear that the general public expect heads to roll at some point.

Most have more faith in a separate criminal investigation into Iceland’s discredited financial oligarchs, which is being assisted by Eva Jolly, a Norwegian-French politician and magistrate with a track record as a sleaze-buster.

Those expecting this investigation to deliver at least some scalps are unlikely to be disappointed if Mr. Sigfússon’s comments are anything to go by.

“Given the enormity of this situation and what happened and what is already visible about the behavior of some, one would guess that is a very likely outcome that some people will be severely penalized or put [in] prison,” he says.

If not, could there be a repeat of last year’s "saucepan revolution?"

“The whole political system is very unstable and discredited in the eyes of the Icelandic people,” according Mr. Helgason. “We don’t have a tradition of populist parties coming to the fore but there might be an opening if there was a new election.”

He also points to another ominous sign: “Basically, all the big companies are bankrupt and they are in the hands of the banks, so the wealth of Iceland is being redistributed, including fishing quotas, [which is] the most valuable thing.”

“Already though there are signs of corruption. That’s the big question: whether you can restructure society to be a healthy one, or whether there will be a new phase of corruption.”