Former Icelandic PM convicted for negligence over financial collapse

Former Icelandic PM convicted for negligence over financial collapse

In 2009, Iceland’s Geir Haarde became the first European leader to lose power as a result of the financial crisis. (Dutch Prime Minister Mark Rutte seems to be the latest.) He is now also the first country leader in the world convicted of negligence because of the crash, though he was cleared of three other charges and will face no jail time. Haarde’s prosecution has unsurprisingly been controversial:

Mr Haarde pleaded not guilty and called the accusations “political vendetta” that would set a “terrible precedent”. “Nobody predicted that there would be a financial collapse in Iceland” in 2008, he said.

Criticism of the trial has been widespread throughout Iceland. Many questioned why the centre-left controlled parliament chose to put only Mr Haarde on trial while rejecting charges against Social Democratic ministers who were serving in government at the same time.

Others have criticised that fact that the trial was not televised and complained that much of the political elite of Iceland chose to support Mr Haarde with their testimony.

The case against him was based partly on the charge that he had ignored the economic recommendations of a government committee in 2006. The notion of prosecuting a politician for ignoring sound advice seems pretty odd in the U.S. political context, though under the principle of "ministerial responsibility" that, in theory at least, prevails in parliamentary systems, ministers are held responsible for the actions of their subordinates, even if they are not solely to blame.

Of course, criminal liability for an act of mere incompetence is another thing entirely. As I wrote in 2010, Haarde was charged under a century-old Icelandic law, which has never before been invoked, that "stipulates that ministers can be held responsible not just for actions that put the country in danger, but for not taking action to prevent that danger."

Other European leaders are probably safe from Haarde’s fate. (Former Prime Minister Silvio Berlusconi is currently on trial for a different type of indiscretion.)

The good news is that the financial bleeding seems to have stopped in Iceland, which is expected to exceed euro area growth rates this year.