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Context of 'October 8, 2008: Britain Uses Anti-Terrorism Legislation against Iceland'

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Leading radical cleric Abu Hamza al-Masri performs a property transaction while in prison awaiting trial on terrorism charges (see May 27, 2004). This is despite the fact that Abu Hamza, an informer for the British security services (see Early 1997), had his assets frozen by the British government in April 2002 (see April 2002). First, Abu Hamza sells a flat in Hammersmith, London, for £228,000 (about US$410,000). He had purchased the flat from the local government for £100,000 in 1999 under legislation allowing council tenants to buy property. He then uses the money to purchase a semi-detached house for £220,000 in another part of London. At this time, Abu Hamza is using government money to pay for the costs of his legal defense, estimated to be already over £250,000 (about US$450,000), under the legal aid scheme, which provides funding to people thought to be too poor to be able to afford proper legal representation. The transaction is uncovered by investigators working for the Legal Services Commission, which administers legal aid. Conservative Party homeland security spokesman Patrick Mercer says, “This is outrageous and makes an utter mockery of how the chancellor [Gordon Brown] has slipped up in dealing with terrorist financing.” [O'Neill and McGrory, 2006, pp. 74; Times (London), 10/12/2006]

Entity Tags: Patrick Mercer, Abu Hamza al-Masri, Legal Services Commission

Timeline Tags: Complete 911 Timeline

British Prime Minister Gordon Brown confirms that talks are taking place to secure a private sale of ailing mortgage bank Northern Rock. However, he also says he has not ruled out the possibility of nationalizing the bank. [BBC, 8/5/2008]

Entity Tags: Northern Rock plc, Gordon Brown

Timeline Tags: Global Economic Crises

The government of Iceland takes a 75 percent stake in the country’s third-largest bank, Glitnir, after the bank runs into short-term funding problems. [BBC, 2/2/2009]

Entity Tags: Glitnir

Timeline Tags: Global Economic Crises

The government of Iceland offers an unlimited guarantee for all savers in local banks. In addition, Iceland’s parliament passes emergency legislation enabling the government to intervene extensively in Iceland’s financial system. [BBC, 2/2/2009]

Timeline Tags: Global Economic Crises

The government of Iceland takes control of the country’s second and third largest banks, Landsbanki and Glitnir; it already had a majority in Glitnir (see September 29, 2008). The financial crisis hit Icelandic banks so severely because they owe relatively more money than banks in other countries. When the crisis starts in earnest, they owe around six times the country’s total gross domestic product. Therefore, when the world’s credit markets dry up, they are unable to refinance their loans. [BBC, 2/2/2009]

Entity Tags: Landsbanki, Glitnir

Timeline Tags: Global Economic Crises

Following the seizure of two Icelandic banks by that country’s government (see October 7, 2008), the British government invokes anti-terrorism legislation to seize Icelandic assets in Britain. Iceland’s Prime Minister Geir Haarde criticizes Britain, saying he is upset and shocked that it has used “hostile” anti-terrorism legislation to freeze Icelandic banks’ assets. However, British Prime Minister Gordon Brown condemns Iceland’s handling of the collapse of its banks and its failure to guarantee British savers’ deposits. He says Iceland’s policies are “effectively illegal” and “completely unacceptable.” Iceland will later threaten legal action against Britain. [BBC, 2/2/2009]

Entity Tags: Gordon Brown, Geir Haarde

Timeline Tags: Global Economic Crises

Iceland’s government takes control of the country’s biggest bank, Kaupthing. This follows a decision by the British government to invoke anti-terrorism legislation to freeze Icelandic assets in Britain (see October 8, 2008). [BBC, 2/2/2009]

Entity Tags: Kaupthing Bank

Timeline Tags: Global Economic Crises

October 20, 2008: New Banks Formed in Iceland

Iceland’s financial authorities formally announce the establishment of new Glitnir, Landsbanki, and Kaupthing banks. The old banks were taken over by the government two weeks previously as their condition had deteriorated due to the global credit crisis (see October 7, 2008 and October 8, 2008). [BBC, 2/2/2009]

Entity Tags: Glitnir, Landsbanki, Kaupthing Bank

Timeline Tags: Global Economic Crises

Prime Minister of Iceland Geir Haarde calls a general election for the spring, two years early. The decision to have early elections is triggered by the global financial crisis, which has hit Iceland particularly badly. Haarde adds that he will not stand again because he has throat cancer. Two days previously, protesters angry at the economic crisis had surrounded his car, banging on its windows and pelting it with eggs. [BBC, 2/2/2009]

Entity Tags: Geir Haarde

Timeline Tags: Global Economic Crises

Icelandic Prime Minister Geir Haarde announces the immediate resignation of the country’s government. The government became unstable when Iceland was hit particularly hard by the global financial crisis and the government had to take over three major banks. Haarde had already called an early election in Iceland (see January 23, 2009), but could have remained in office until voting. However, talks about continuing until the election with his coalition partner, the Social Democratic Alliance, break down and he leaves office. [BBC, 2/2/2009]

Entity Tags: Geir Haarde, Social Democratic Alliance

Timeline Tags: Global Economic Crises

Following the resignation of the previous cabinet (see January 26, 2009), a new government is formed in Iceland by the Left-Green Movement and the Social Democratic Alliance. The new government will be in office for only a few months, until fresh elections in the spring. New Prime Minister Johanna Sigurdardottir sets out her government’s plan to deal with the financial crisis. She says her priority will be to replace the central bank’s board, which failed to prevent the collapse of the country’s banking system. She also says she will ask a parliamentary committee to look into joining the EU. [BBC, 2/2/2009]

Entity Tags: Social Democratic Alliance, Left-Green Movement, Johanna Sigurdardottir

Timeline Tags: Global Economic Crises

The new Director of National Intelligence (DNI), Dennis Blair, tells the Senate Intelligence Committee that the economic crisis, not global terrorism, is the biggest national security issue facing the US today. “The primary near-term security concern of the United States is the global economic crisis and its geopolitical implications,” Blair says. If the crisis continues for more than two years, Blair says, governments could topple, with all the unrest that would entail. About 25 percent of the world’s governments, mostly in Europe and among former Soviet Union client states, have already experienced “low-level instability,” including government changes, because of the economic climate (see February 1, 2009). Blair also warns of “high levels of violent extremism” as seen during the downturn in the 1920s and 1930s, along with “regime-threatening instability.” He explains, “Besides increased economic nationalism, the most likely political fallout for US interests will involve allies and friends not being able to fully meet their defense and humanitarian obligations.” US allies in Europe are angry over the Obama stimulus bill’s provision to “Buy American,” Blair notes, and says the provision is being used to question the US’s leadership in shoring up the global economy and international financial structure. The biggest beneficiary of this global chaos, Blair says, could be China, if that nation’s government can “exert a stabilizing influence by maintaining strong import growth and not letting its currency slide.” Global coordination is essential to rebuild trust in the financial system and to ensure that the crisis does “not spiral into broader geopolitical tensions,” Blair recommends. [EUObserver, 2/13/2009]

Entity Tags: Dennis C. Blair, Senate Intelligence Committee

Timeline Tags: Global Economic Crises

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