ACCOUNTABILITY, TRANSPARENCY AND EFFICIENCY IN DEFENCE OF SMALL STATES HANNES H. GISSURARSON www.europeanreform.org @europeanreform A Brussels-based free market, euro-realist think-tank and publisher, established in 2010 under the patronage of Baroness Thatcher. We have satellite offices in London, Rome and Warsaw. New Direction - The Foundation for European Reform is registered in Belgium as a non-for-profit organisation (ASBL) and is partly funded by the European Parliament. REGISTERED OFFICE: Rue du Trône, 4, 1000 Bruxelles, Belgium. EXECUTIVE DIRECTOR: Naweed Khan. www.europeanreform.org @europeanreform The European Parliament and New Direction assume no responsibility for the opinions expressed in this publication. Sole liability rests with the author. In Defence of Small States Prof Hannes H. Gissurarson AUTHOR TABLE OF CONTENTS 1 INTRODUCTION 7 2 AGAINST SMALL NATIONS: MARX AND ENGELS 8 3 THE PROLIFERATION OF SMALL STATES 11 4 IS ICELAND TOO SMALL? 14 5 ECONOMIC GROWTH AND VOLATILITY 20 6 THE COSTS AND BENEFITS OF SMALL SIZE 22 7 SIZE AND NATURAL DISASTERS 27 8 SIBERT’S ATTACK ON DAVID ODDSSON 28 9 WAS THE CBI LEADERSHIP ACQUIESCENT IN THE FACE OF DISASTER? 30 10 ICELAND RING-FENCED 35 11 NEPOTISM AND CORRUPTION IN SMALL STATES 38 12 POLITICAL PATRONAGE IN ICELAND 40 Prof Hannes H. Gissurarson 13 APPOINTMENTS OF SUPREME COURT JUDGES 44 14 CAUSES OF CORRUPTION 47 Dr Hannes H. Gissurarson, Professor of Politics in the School 15 POLITICAL PATRONAGE IN THE NORDIC COUNTRIES 48 of Social Sciences at the University of Iceland. 16 FAVOURITISM IN THE NORDIC COUNTRIES 51 17 LACK OF EXPERTISE IN SMALL STATES 53 18 THE “SHELTER” THEORY 56 19 IMPLAUSIBLE ACCOUNT OF THE COMMONWEALTH’S DOWNFALL 60 20 WHEN A SHELTER BECOMES A TRAP - THE CASE OF ICELAND 64 21 ENTRAPPED BY ALLIES 66 22 ENTRAPPED BY MULTI-NATIONAL ORGANISATIONS 69 23 STATES AND NATIONS 73 24 RECOMMENDATIONS 79 4 New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform 5 In Defence of Small States Prof Hannes H. Gissurarson 1 INTRODUCTION n 1944, as the Second World War was coming to a and Taiwan. If protectorates and semi-independent close, British historian Alfred Cobban published a territories like Greenland, Puerto Rico, Kosovo and I book for the Royal Institute of International Affairs Palestine are included, then the number would be in London where he criticized the idea of national self- still higher.2 Iceland—one of the countries which determination: Cobban mentioned—had become a sovereign state in 1918, in a personal union with Denmark, and in 1944, To take examples, can it reasonably be believed she unilaterally revoked the Danish-Icelandic Act that the national demands of Wales, White of Union and declared herself a republic. However, Russia, Alsace, or Flanders, would be met, or after the dramatic 2008 Icelandic bank collapse, should be met, by the granting of political some scholars, notably Professors Anne Sibert of independence? Should French Canada self- Birkbeck College, London, and Baldur Thorhallsson determine itself as a separate state? Would it of the University of Iceland, followed Cobban in be better for the national liberty of the Maltese arguing that Iceland was too small a political unit if they abandoned the British connection to be sustainable. She had to forge closer links with and endeavoured to set up as a completely some larger political unit, by which they both had in independent state, regardless of the ambitions mind the European Union.3 The arguments provided of their Mediterranean neighbours? Can Iceland by Sibert and Thorhallsson are of general interest: afford to be without economic links with some Are some states too small to be sustainable? Do larger and more prosperous state?1 economies of scale apply to states as well as to economic products? Does the principle of national Professor Cobban’s words turned out to be less than self-determination make any sense? Does the future prophetic, as both White Russia (or Belarus) and belong to big and powerful federal states rather Malta now are independent states, whereas powerful than to loosely-bound federations of small states? separation movements have risen both in Flanders In this paper, the arguments offered by Sibert and and in French Canada (or Quebec). Indeed, the world Thorhallsson will be examined in some detail from has seen a proliferation of small states since the an Icelandic perspective, but with special reference War. The number of independent countries has gone also to small states inside and outside the European up from 76 in 1946 to 195 in 2016, 193 members of Union, such as Greenland, the Faroe Islands, Estonia, the United Nations, together with the Vatican City the other two Baltic states and Slovenia. • 1 Alfred Cobban, National Self-determination (Oxford: Oxford University Press, 1944), p. 74. 2 Alberto Alesina, The Size of Countries: Does It Matter? Journal of the European Economic Association, Vol. 1, (2–3: 2003), 301–16. The present number of UN countries is from the UN website, http://www.un.org/en/members/index.shtml 3 Anne Sibert, Undersized: Could Greenland be the new Iceland? Should it be? Voxeu.org 10 August 2009, http://www.voxeu.org/article/could-greenland-be- new-iceland. Baldur Thorhallsson, Domestic buffer versus external shelter: viability of small states in the new globalised economy, European Political Science, Vol. 10 (2011), pp. 324–336. 6 New Direction - The Foundation for European Reform www.europeanreform.org @europeanreform 7 In Defence of Small States Prof Hannes H. Gissurarson 2 AGAINST SMALL NATIONS: MARX AND ENGELS n his scepticism about, or even hostility towards, Probably Engels had read the same sensationalist small nations and states, Professor Alfred Cobban reports of Iceland as French philosopher Jean-Jacques I had many forerunners, including the German Rousseau who had written almost a century earlier revolutionaries Karl Marx and Friedrich Engels. that the Icelanders, like other primitive nations, were They despised those small and “backward” nations, ill at ease in civilized society. Those Icelanders who including the Nordic ones, that they considered had been brought to Denmark either withered away impediments to the necessary evolution of human there, Rousseau said, or drowned at sea when trying society. In December 1846, for example, Engels wrote to swim back to their homeland!5 The Swede contended that the Dane had become many other small European nations. For example, to Marx that he had been studying Denmark: “Germanized” and had degenerated, the Norwegian Engels wrote that in the Habsburg Empire, only Engels was soon to comment again on the Nordic said the same of the Swede and the Dane, and the the Germans, the Poles and the Magyars could be You would find it a beastly place. Better the nations. In a war breaking out in 1848 between Icelander of all three. Obviously, the more primitive regarded as progressive: “All the other large and smallest German than the greatest Dane! Such Denmark on the one hand and German separatists in a nation is, the more closely its customs and way of small nationalities and peoples are destined to perish a miserable atmosphere of morality, guild- Schleswig and Holstein on the other hand, supported life resemble those of the Old Norse people, the more before long in the revolutionary world storm.” Engels cliquishness and consciousness of social status by Prussia and Austria, he and Marx firmly sided with “Scandinavian” it must be.6 added: “There is no country in Europe which does exists nowhere else any more. The Dane thinks the Germans. In a newspaper edited by Marx, Neue not have in some corner or other one or several of Germany as a country one visits in order “to Rheinische Zeitung, Engels discussed the proposal Marx seems to have agreed with Engels on both ruined fragments of peoples, the remnant of a former keep mistresses with whom one can squander that the Danes should receive help from their Nordic Danes and Icelanders. In one of his letters to Engels population that was suppressed and held in bondage one’s wealth”. cousins under the banner of Scandinavian solidarity: he reported on a conversation with Bruno Bauer by the nation which later became the main vehicle of taking place in London on 12 December 1855. Bauer historical development.” He specifically mentioned The Nordic nations all were coarse and primitive, Engels Scandinavianism is enthusiasm for the brutal, sordid, had remarked that the English language had been Gaels in Scotland, Bretons in France, Basques in said, and the more backward the nation was, the more piratical, Old Norse national traits, for that profound corrupted by Latin. Marx responded by telling Bauer Spain and Southern Slavs in the Habsburg Empire. it considered itself to be genuinely Nordic. Thus, the inner life which is unable to express its exuberant that Dutchmen and Danes said the same about Engels ended his diatribe against small nations on a Icelanders were of course the real Nordic people: ideas and sentiments in words, but can express them the German language and that the “Icelanders” (to threatening note: “The next world war will result in the only in deeds, namely, in rudeness towards women, show his disdain, Marx put inverted commas around disappearance from the face of the earth not only of The Icelander still speaks the very same perpetual drunkenness and the wild frenzy of the the name) were the only true people untainted by reactionary classes and dynasties, but also of entire language as the greasy Vikings of anno 900. Berserker alternating with tearful sentimentality… Southern European influences.7 reactionary peoples. And that, too, is a step forward.”8 He drinks fish-oil, lives in an earthen hut and Scandinavianism was the pattern of the Danes’ After the United States annexed large parts of Mexico breaks down when the atmosphere doesn’t appeals for Swedish and Norwegian support.