This essay originally appeared on TomDispatch
In December, reports surfaced that Treasury Secretary Henry Paulson pushed his Wall Street bailout package by suggesting that, without it, civil unrest in the United States might grow so dangerous that martial law would have to be declared. Dominique Strauss-Kahn, managing director of the International Monetary Fund (IMF), warned of the same risk of riots, wherever the global economy was hurting. What really worried them wasn’t, I suspect, the possibility of a lot of people thronging the streets with demands for social and political change but that some of those demands might actually be achieved. Take the example of Iceland, the first–but surely not the last–country to go bankrupt in the current global crash.
While the United States was inaugurating its first African-American president, Icelanders were besieging their parliament. The YouTube video of the scene–drummers pounding out a tribal beat, the flare and boom of tear gas canisters, scores of helmeted police behind transparent plastic shields, a bonfire in front of the stone building that resembles a country house more than a seat of government–was dramatic, particularly the figures silhouetted against a blaze whose hot light flickered on the gray walls during much of the eighteen-hour-long midwinter night. People beat pots and pans in what was dubbed the Saucepan Revolution. Five days later, the government, dominated by the neoliberal Independent Party, collapsed, as many Icelanders had hoped and demanded it would since the country’s economy suddenly melted down in October.
The interim government, built from a coalition of the Left-Green Party and the Social Democrats, is at least as different from the old one as the Obama administration is from the Bush administration. The latest prime minister, Johanna Sigurdardottir, broke new ground in the midst of the crisis: she is now the world’s first out lesbian head of state. In power only until elections on April 25, this caretaker government takes on the formidable task of stabilizing and steering a country that has the dubious honor of being the first to drop in the current global meltdown. Last week, Sigurdardottir said that the new government would try to change the constitution to “enshrine national ownership of the country’s natural resources” and to “open a new chapter in public participation in shaping the structure of government,” a 180-degree turn from the neoliberal policies of Iceland’s fallen masters.
Iceland is now a country whose currency, the krona, has collapsed, whose debt incurred by banks deregulated in the mid-1990s is ten times larger than the country’s gross domestic product and whose people have lost most of their savings and face debts and mortgages that can’t be paid off. Meanwhile, inflation and unemployment are skyrocketing, and potential solutions to the crisis only pose new problems.