A blog by Luke Akehurst about politics, elections, and the Labour Party - With subtitles for the Hard of Left. Just for the record: all the views expressed here are entirely personal and do not necessarily represent the positions of any organisations I am a member of.

Wednesday, October 08, 2008

Iceland and Russia

I would share the concern of Iceland's PM, expressed here, that they have had to turn to Russia for a financial bailout because, as he says, "We have not received the kind of support that we were requesting from our friends".

The heavy involvement of Russia in rescuing Iceland's economy isn't altruistic, it's geopolitical, and the West (i.e. primarily the US) have been very foolish in not acting as a kind of financial NATO to a fellow NATO member.

We were extremely lucky that even in the midst of such a deep crisis, Iceland did not allow itself (as some media reports yesterday said it had) to trade access for the Russian military to the former US airbase at Keflavik for the propping up of its banks with Russian capital - as that was obviously the long term prize the Russians were angling for.

Why do the Russians care about Iceland and why should we?

It sits at the middle of the strategically vital Greenland-Iceland-UK (GUIK) gap - the bottleneck that controls access to the North Atlantic for Soviet, oops sorry Russian, submarines and ships operating from naval bases on the Kola peninsula.

Control the GIUK gap - as NATO historically has, not least because this was the primary role of the Royal Navy in the Cold War and explains why we still have so many ships designed for anti-submarine warfare - and you can safely get men, food and equipment across the North Atlantic from the US to Western Europe if there was ever a confrontation with Russia.

Lose control of it - because for instance there are Russian aircraft based at Keflavik, using Iceland like it was a very large, immobile, granite aircraft carrier, and this becomes rather problematic.

Well done Iceland for not giving the Russians access to Keflavik, and shame on the rest of the West for allowing the Russians to get this kind of financial leverage.


Blogger Letters From A Tory said...

And remind us which Western nations are financially in a position to save someone else's economy when they are trying to save their own?

9:39 am, October 08, 2008

Anonymous Anonymous said...

Would this be the Webber Shandwick Q and A paper for BAe Defence Systems?

You might try and tempt John Le Carre to revisit that era but even he might find BAe dorks too improbable a fictional proposition these days.

10:18 am, October 08, 2008

Blogger Merseymike said...

The point, surely, is that as Iceland are not in the EU, then its ability to act is limited. And as for the US, there is this little question of an upcoming election - can you imagine how bailing out Iceland would go down with the electorate? Can you imagine a British Government making that case? You claim to be a pragmatist, Luke, but this position is hardly 'realpolitik'

11:53 am, October 08, 2008

Blogger Luke Akehurst said...

Nice idea anon 10.18 but unfortunately Weber Shandwick doesn't work for BAE Systems. They get their political advice from the Tories at Bell Pottinger Public Affairs.

Merseymike, Iceland isn't in any multilateral organisation with Russia either, but it didn't stop the Russians bailing them out/investing in them.

It's entirely pragmatic - if we (the West) want influence in the world we need to help countries when they are in trouble - we are facing the same geopolitical crisis in Africa where the Chinese are buying influence and allies through funding infrastructure projects.

12:14 pm, October 08, 2008

Anonymous Anonymous said...

Luke, do you want to talk to Alistair then? Because so far today he's threatened to sue the Icelandic Government (for what assets I don't know, in which court I don't know), and forced the UK subsidiary of another Icelandic bank into administration (probably rightly, but they're not going to like it).

2:46 pm, October 08, 2008

Anonymous Anonymous said...

ha ha - still readying to fight those damn Soviets Luke?

Good job the free market is "what works", eh?

3:26 pm, October 08, 2008

Anonymous Anonymous said...

Your totally right Luke. The west won the cold war not because it was more liberal, good though that is, than the USSR and China but because it was more efficent economically.

Now democracy is on the retreat in Russia and never really got moving in China and their economies are developing much faster the West needs both to maintain its economic advantage and act in a strategic sense to counter the threat.

The US Navy is now distributed 55% in the pacific and 45% in the atlantic a 10% swing on ten years ago to counter a rapidly expanding chinese navy. If Russia turns Iceland into its own economic/military principality who is going to look after the GIUK gap? the Royal Navy whose fleet gets smaller and smaller...?

6:27 pm, October 08, 2008

Anonymous Anonymous said...

I'm starting to wonder where how on earth the UK is going to raise the £500 billion needed for the current bailout....let alone helping those in Iceland.

Labour will be in for a rocky ride come 2009/2010 when they have to either raise taxes or cut public spending.

I think for people who think that capitalism is flawed this was a good time to let it fry to prove it. But we've bailed out capitalism and extended the problems for even longer. The problem of unsustainable growth will never go while we follow the capitilist model.

6:36 pm, October 08, 2008

Anonymous Anonymous said...

Parbury don't count on the US Navy or ours. The Chinese are spending billions on their nazy and airforce and they have managed to save 10 trillion in reserve.

Only last week Russia sent a plane capable of delivering a nulcear device into British air space but was unchallenged because we don't have enough planes or men to guard our skies. Surely this is a test of our readiness....or lack of.

6:40 pm, October 08, 2008

Blogger Merseymike said...

Luke: that's because Russia is a law unto itself and the EU isn't!

I think what this crisis has displayed is the failure of the free trade approach - expect more regulation and protectionism in future.

6:59 pm, October 08, 2008

Anonymous Anonymous said...

Not to mention how this will affect West Ham supporters in East London!

7:17 pm, October 08, 2008

Anonymous Anonymous said...

Ruski Cruise Missles in Iceland! Yanks won't be happy

8:30 pm, October 08, 2008

Anonymous Anonymous said...

Merseymike, I'm not sure the FREE TRADE approach will stop. We've basically bailed out capitalism, and I don't think capitalism is that eager to change.

If anything we have just reinforced the principles of capitalism with tax payers money. This could end up being very dangerous as it paves the way to a new era where those at the top have zero risk and us paying the bill when it goes wrong.

The nightmare isn't over and I'm predicting fewer but much larger banks. These will hold even more power and more influence and will be very difficult to regulate in this global market.

The tax payer will never see it's share certificates and no matter what spin you put on it these bailouts it paints a very grim picture of the world we live in.

The sort of money being thrown around here could end world poverty and resolve many of the bigger issues facing our world.

Does everyone really think the world would end if the financial system collasped. However, if we continue to eat up world resources at the rate we are doing then this whole debate will seem insignificant.

I think we have kissed our freedom goodbye for cheap loans and plastic houses.

8:43 pm, October 08, 2008

Blogger Mark Still News said...

Its a shame Russia did not have a decent government now, like it did before that prat Gorbechov and his Glasnost con trick, sold out 70 years of successful socialism? If Russia had stayed strong it would be more economically powerful than the capitalist countries and the USA would have been on its knees and maybe we could have overthrown the Ruling classes of Gt Britain. Then we could have a democratic Socialist republic and close down parliament. The government was warned a long time ago about the capitalist crisis.I can't wait to get a 650 Neval Dnieper Combo to rebuild, so I can ride down the Road with the old soviet emblem custom painted on the tank and run over any capitalist parasite who gets in my way!!

1:26 am, October 09, 2008

Blogger Mark Still News said...

When the soviet Union was a Socialist Democracy, even the Vodka was pure, now its contaminated and ruined by capitalist additives and impurities. In Moscow the beer used to be nice now its crap and tastes like Budweiser knats p---s !

1:31 am, October 09, 2008


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