The Icelandic Banking Crisis and its Political Aftermath: a Brief Appraisal
This article outlines the main features of the crisis and stresses the role and the geopolitical implications of Russia’s unconventional decision (perhaps opportunity) to fund a NATO country

da | 2 Mar 2009 | Banca e bancari, Diritto pubblico privato ed internazionale | 0 commenti

International political scenario

Aside from the global financial crisis two major political events have characterized the last quarter of 2008: the election of Barack Obama as the new US president and the intervention of the red army in Georgia. Both will profoundly influence the state of international relations in the near future[1].A number of circumstances placed the Bush administration in a somewhat weak position. The running out of the presidential term, the increasingly low support of the US public opinion towards the administration, the unraveling of the financial crisis and the stretched out US army forces between Iraq and Afghanistan, all contributed to the growing political inability to confront the rise of Russia. Russia has been trying to restore its past influence especially in South America (namely, in Cuba and Venezuela) but also, unexpectedly, in northern Europe[2].

In this context, maybe not surprisingly, Russia offered financial relief to Iceland, a NATO country. Among the reasons that may have led Russia to come forward, there is speculation that it might also be interested in the former NATO Keflavík Air Base. However, Russia’s interest, as well as that of its neighboring countries, namely, Norway, has again been been focused on the North Sea: its offshore petrol fields and its naval routes that become increasingly viable following the melting of the North Pole[3]. The race to exploit oil and gas reserves has led to legal disputes over the precise position of the borders running below the ice pack. Russia has gone ahead with a number of unilateral declarations and has sent “scientific” expeditions to establish the exact location of borders, etc. (which led to the placing of a  Russian flag 4km below sea level).

In this context of revived interest in the region, Iceland is in a strategic geographical position at the beginning of what is known as the “Polar route” (approximately 2,500km away from the Barents Sea, see fig. 2). For a long time this route was considered too harsh to be used due to the extreme weather conditions. Indeed, it is being reconsidered in light of the ongoing climatic changes as a future viable option. Russia’s interest in the region is that the Polar sea is military important in as much it constitutes its only unrestricted access to the Atlantic[4].

Fig. 2 New Arctic Routes
  cartina carlo2(1)


Source: Heartland (2008). The map highlights, in particular, the three major routes that connect the Atlantic to the Pacific Ocean passing through the Arctic region.

[1] The military escalation in Georgia has demonstrated the willingness and the ability of Russia to become once again a major international player. Its attitude towards the former soviet republic has been however somewhat pushed by the pressure the Bush administration had put on Russia both trough the installation of the missile defense base in Poland (according to Washington against the Iranian threat) the desire to enlarge NATO to both Ukraine and Georgia and ultimately the speeding up of the independence process regarding Kosovo.

[2] In “Flux in Latin America Affects Russia’s Diplomacy” published on the NYT, Romero, Schwirtz and Barrionuevo stress however that for the time being its attempt to do so in South America seems to have clashed, except in Chavez’s Venezuela, with the optimistic expectations that many countries (in particular Raul’s Castro Cuba and Lula’s Brazil) have placed towards the new Obama presidency.

[3] For an extensive analysis of the developing scenario in the Arctic region in both geopolitical and geostrategic terms see “The Polar Game”, Heartland Eurasian Review of Geopolitics, no. 2/2008.

[4] Jacob BØrrensen “The Great Arctic Game” in The Polar Game, Heartland Eurasian Review of Geopolitics, no. 2/2008, pp. 5-17.

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