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


The recent surge of violence in the Gaza strip reopens a hot spot in US foreign relations. The new administration will have to face an increasing number of international issues left unresolved by the outgoing Bush administration, including the resurgence of Russia as an international power.

In this scenario, the tiny country of Iceland has contributed to creating some of the features of the new foreign policy strategy being developed by the Kremlin, seeking closer relationships with both former allies (i.e. Cuba) and unconventional new ones (namely, NATO member, Iceland), which will ultimately lead to an enlargement of Russia’s sphere of influence. There are probably many reasons for Russia’s move towards Iceland. It is too early to say whether Iceland will constitute the second phase of a new “cold war” era that some argue has initiated together with the Georgia crisis.

In the context of the much larger global financial turmoil, the Icelandic banking crisis found the NATO countries unprepared to bail out Iceland promptly and thus provided an opportunity for Russia to further enlarge its sphere of influence in the North Sea area by making available part of the funds that Iceland needs to pay back its foreign currency denominated liabilities. Consistently with other contributions, this article argues that this choice is part of Russia’s new strategy to regain strong influence in the Arctic region.


Buiter, Willem H. and Anne Slbert (2008), “The Icelandic banking crisis and what to do about it: The lender of last resort theory of optimal currency areas”. CEPR Policy Insight n. 26, Oct 2008.

Buiter, Willem H (2008), “Can the UK government stop the UK banking system going down the snyrting without risking a sovereign debt crisis?” in the Financial Times.

De Bonis, Mauro (2008), “La Russia si prende l’Islanda” in LIMES Rivista Italiana di Geopolitica.

Heartland (2008), “The Polar Game”, Eurasian Review of Geopolitics, no. 2/2008

Kallestrup, René (2008), “The volatility of the Icelandic Króna,” Monetary Bulletin 10, Central bank of Iceland, 101-112.

Miskin, Frederic S. and Tryggvit Herbertsson (2006),”Financial Stability in Iceland,” Iceland Chamber of Commerce, Reykjavik, Iceland.

Portes, Richard, Fridrik Már Baldursson and Frosti Ólafsson (2007), “The Internationalization of Iceland’s Financial Sector,” Iceland Chamber of Commerce, Reykjavik, Iceland.

The Economist (2008), “Cracks in the Crust” a briefing on Iceland, in The Economist, December 13, 2008.

The Economist (2009), “Iceland Hunts the Euro” in The Economist, January 24, 2009.

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