The word “terrorism” is a politically charged term, to put it mildly. Declaring a “War on Terrorism” means, of course, deciding who is a “terrorist.” And, according to the British government, the latest terrorist in its sights is Iceland.
Yes, Iceland.
Just what has this intrepid nation of 320,000 done to upset the Brits? In better times, Iceland built up a formidable financial sector. Its banks set up shop in other countries—notably, Great Britain.
For a while, times were good. Until a few weeks ago, Iceland’s residents enjoyed the fifth highest per capita income in the world. But beginning in late September, Iceland’s economy imploded. The Icelandic kroner lost 80% of its value in a matter of days. Iceland’s banks, heavily exposed to collapsing stock market and real estate prices, teetered on the brink of bankruptcy.
Iceland’s parliament responded to the crisis by nationalizing its three largest banks. This allowed the banks to reopen for domestic operations, but Iceland did not extend the bailout to the banks' foreign debts or assets. And this is the “terrorist act” against which Great Britain has responded.
Approximately 300,000 British residents have savings in British branches of Iceland’s banks. When Iceland announced that it would not compensate these depositors for their losses, the British government invoked the Anti-Terrorism Crime and Security Act of 2001 to freeze an estimated $6.5 billion of British assets belonging to the Icelandic banks.
I don’t want to minimize the seriousness of the situation these 300,000 depositors face.However, Britain’s use of an anti-terrorism law to protect its depositors in Icelandic banks is an important object lesson. Anti-terrorism laws—and indeed any law that gives a government broad authority to freeze or confiscate property—can be put to whatever use is politically expedient.
Certainly, protecting the interest of British depositors is politically expedient in Great Britain. The only question is, what will be the next politically expedient use of anti-terrorism laws in that country? Or for that matter, in the United States, which has the world’s most comprehensive anti-terror laws?
Copyright © 2008 by Mark Nestmann
(An earlier version of this post was published by The Sovereign Society.)
