“Oh take me in your arms. Rescue me...”
It seems like everyone who is anyone wants to get themselves rescued these days, although a little life experience should warn us that not everyone ends up as happy as they expected, once they find out who exactly it is they have been encouraging to come and rescue them; after the mask comes off, that is.
Take the Icelanders, the early recipients of an IMF-style rescue. Only later were they to find out how strict their new partner really was and just what they were getting themselves into. But while it is easy to start relationships, it is often harder to break them up. So even though the Icelanders are now voting to try to break some of the bonds that bind them, with recent referenda on whether to repay €3 billion to the UK and the Netherlands owed as a result of Iceland’s bank system crashing, they are also about to find that divorce proceedings are costly. Indeed the UK and Dutch governments are threatening to take them to court for around €4 billion, and if they don’t pay, the country could easily find itself denied international credit lines.
Iceland is a small country and most of us have considerable sympathy with the situation its inhabitants find themselves in. Being asked to pay for the stupidity of others is never an agreeable experience.
But the Icelanders have become the unfortunate victims of historic circumstances, because in the background to their plight lies the European debt crisis and the situation of two other countries who have also found themselves burdened down with debt, Ireland and Greece.
They, too, look like they will not be able to pay for all the debt their citizens have been landed with and talk of future restructuring (a polite expression for not paying part of the debt) is widespread. So all that sympathy for Iceland’s predicament is likely to evaporate in the face of worries about setting precedents.
Now Portugal is about to find itself in the same jam, while hushed voices everywhere are whispering “will Spain be next?” Certainly the Spanish financial system badly needs restructuring, but any such process is likely to be expensive, more costly than the sum the Spanish government (which is preoccupied by the need to stay within agreed deficit limits) would really like to spend. So having a helping hand from someone really might be useful. Yet then come all the doubts.