Friday, 24 October 2014 / TRUTH-OUT.ORG

With New Constitution, Post-Collapse Iceland Inches Toward Direct Democracy

Sunday, 27 January 2013 07:10 By Sam Knight, Truthout | News Analysis

Birgitta Jónsdóttir, a member of the Icelandic parliament, at the Open Government Camp 2011.Birgitta Jónsdóttir, a member of the Icelandic parliament, at the Open Government Camp 2011. In a conversation with Truthout she insisted she doesn't want "the new constitution to be plagued with (bureaucrats') language, but the language of the people." (Photo: Florian Apel-Soetebeer / Government 2.0 Netzwerk Deutschland)When the global financial system crumbled over four years ago, Iceland played host to one of the most dramatic economic collapses in modern history. Its three largest banks were unable to refinance debt roughly ten times the size of the country's gross domestic product (GDP), causing one of the world's wealthiest nations to limp with hat in hand to the International Monetary Fund (IMF). The island became a symbol for capitalism's systemic failure.

Now, Iceland is making headlines for more positive reasons: activists there are in the process of advancing some of the strongest freedom of information laws and journalist protections in the world, and the Icelandic economy, while still beset by problems, is significantly outperforming other crisis-stricken countries.

Most recently, on October 20, a remarkable constitution - written by an elected council with help from the public - took a step closer toward ratification after it was approved in a referendum by a 2-1 margin.

Before the changes are signed into law, the draft must be approved by the Althingi, Iceland's Parliament, approved again by referendum and finalized once more by the legislature after a fresh parliamentary election in April.

Uncertainty is swirling around the status of the constitution, however. Those opposed to it - primarily right-wingers - claim that the 48.9 percent turnout for October's vote doesn't lend the document legitimacy. There is also fear among the constitution's supporters in Parliament that some of their colleagues are trying to abrogate the public's influence by altering the document's content instead of offering the technical revisions they were given the mandate to make.

"I truly believe that our democracies have been hijacked by bureaucrats," said Parliamentarian Birgitta Jónsdóttir, a self-described "realist-anarchist" elected after the Kitchenware Revolution protests which ensued following the 2008 financial crisis and forced the long-ruling conservative government to resign in 2009.

"I don't want the new constitution to be plagued with their language, but the language of the people," she insisted in a Skype conversation with Truthout. "Their time is over. They just can't get over it."

It's unsurprising that inertia is casting a pall over the constitution's future. In January 2011, the constitutional council's election was controversially nullified by Iceland's Supreme Court. Parliament effectively overruled this decision by appointing the 25 candidates who received the most votes to take seats on the council to rewrite the constitution.

Regardless of the document's final status, the drafting process - inspired by crowdsourcing techniques - has produced a remarkably progressive legal code and generated significant interest from around the world.

"A PBS TV crew of seven or eight followed a group of us around the north of the country before the [October] vote," Thorvaldur Gylfason, an economics professor and member of the constitutional council, told Truthout. (The footage will be part of a four-hour series on the US Constitution set to air in May.)

At home, supporters are hoping that the constitution can create more momentum for innovative reform. Information technology specialists who opened the drafting process to the public through social media are expecting to set up open data projects in partnership with the government. There has also been another web-based open government reform in the city of Reykjavik: the city council passed a law forcing it to consider 16 citizen-initiated proposals made each month through a web site called "Betri Reykjavík" (Better Reykjavik). There has been talk among its boosters that the constitution could mark the beginning of a gradual movement toward direct democracy.

But to better understand the significance and global appeal of the new constitution, it is worth discussing the state of Iceland's economy, which has defined both the constitutional movement and international scrutiny of the diminutive subarctic nation since 2008.

A Shining Beacon of Post-Collapse Economics?

According to bloggers, Facebook memes and some prominent commentators, Iceland is the shining beacon of post-collapse economics.

Their narrative paints a picture of the government, emboldened by protest movements, refusing to be held to the fire for the mistakes of rapacious financiers and corrupt politicians, even sanctioning them for crash-related misdeeds. At least seven bankers have been charged with criminal offenses so far - two were recently sentenced to nine months in prison. Those indicted include the once powerful investor Jón Ásgeir Jóhannesson, who was charged in December with illegally securing loans worth around $50 million. And former Prime Minister Geir Haarde was found guilty of not holding cabinet meetings on important issues - one of four charges brought against him - although the verdict didn't warrant any jail time. This justice has supposedly left the country less burdened by debt and a domineering financial sector that crowded out sustainable industries.

But like most political memes bandied about on the Internet, this overly optimistic commentary must be critically examined.

Iceland is faring better than most countries hit hard by the global meltdown. Write-downs and debtor revolts have undeniably mitigated the consequences of collapse.

Citizens, through referenda brought on by presidential vetoes, rejected Parliament's plan to pay billions of dollars claimed by the British and Dutch governments after one of Iceland's three major banks, Landsbanki, saw its cross-border savings scheme, known as Icesave, fail.

The establishment - perhaps influenced by widespread protests that followed the crisis - has also been somewhat attentive to the plight of debtors. The Supreme Court ruled that loans indexed to foreign currencies - commonly issued during the boom, but rendered absurdly expensive after the krona collapsed - were, in fact, illegal, significantly reducing mortgage principals overnight. The government also announced a plan in December 2010 to cap distressed homeowners' mortgage principals at 110 percent of estimated home values. According to a financial industry-backed report published last February, Icelandic banks, since the end of 2008, have forgiven debt equivalent to 13 percent of GDP.

The government also didn't directly bail out the three major banks - Kaupthing and Glitnir being the other two - but nationalized them (albeit momentarily - more on that later). And crucially, it eschewed sweeping austerity that the IMF typically favors - a strategy that seemingly paid off, as Iceland exited the IMF program in the summer of 2011.

It appears these developments have given Iceland's economy room to grow. The unemployment rate in October was at 4.5 percent, and the country's GDP grew by 3.1 percent in 2011, according to Statistics Iceland. Fairly impressive when considering eurozone misery.

There are also explanations for Iceland's performance that are less dramatic than frenzied demonstrations and white-collar prosecutions. Emergency capital controls have prevented a total collapse of the krona. Some post-crisis years saw net emigration, relieving the labor market of excess supply. The defunct banks invested in assets, like British retail chains, that largely retained value after the global bust - a significant amount of their debts could be covered by liquidating these assets. Finally, the post-collapse devaluation of the krona has made Icelandic commodities more competitive on global markets, giving the country the trade surplus it desperately needs to amass foreign currency.

But the lionization of Iceland glosses over persistent systemic problems.

"Look at what's happening in Europe. The crisis is much deeper and harder in Greece and other countries. It's just horrifying," Jónsdóttir said.

"But," she warned, "we could end up exactly like that."

Iceland Held Up as Just Model, but Bailouts Still Played Role

Iceland's economy, at its core, remains in a pre-collapse framework. Not long after Kaupthing and Glitnir were nationalized, the banks - now called Arion and Islandsbanki - were sold to claimants of the old banks' assets in January 2010 at a great cost to taxpayers and homeowners. According to economists Olafur Arnarson, Gunnar Tomasson and Michael Hudson, the government priced the old banks' mortgage asset portfolios at 30-50 percent of their value, but allowed the new banks to pursue market value for them (the government's subsequent plan to cap mortgage principles at 110 percent hasn't proved effective either - more on that shortly).

The sale amounted to a backdoor bailout. Enablers of Iceland's old bankers - its new ones - weren't "allowed to fail," as the blogosphere has implied. An inherently flawed and morally hazardous credit system was kept on life support all over the world, and Iceland was no exception. Despite the fact that lenders failed to do due diligence on the old banks, they and the vultures to whom they sold some of their claims were rewarded with a subsidized stake in Iceland's financial sector.

Adding to the injustice is the fact that no one can identify the individuals who actually own these banks. There are rumors that members of the old guard might own a stake in them. As The Guardian detailed in August, former Landsbanki CEO Björgólfur Thor Björgólfsson is "still living the high life" in London - not far from where Her Majesty's Loyal Bureaucrats are trying to claw back the Icesave debt he helped rack up. In November, it was reported that the junior coalition member Left-Green party was considering finding out whether or not he and other "Viking Raiders" are still profiting off of Iceland's banks through a bill which would force all beneficiary owners who hold more than 1 percent in financial institutions to be disclosed.

And if the old bankers do own stakes in the new banks, they might again be able to finance personal ventures with retail deposits. In Iceland, retail banking and investment banking remain integrated - just as they have been in American banks since the repeal of Glass-Steagall.

Even disregarding the financial system's structure and which individuals effectively run it, some creditors that decided against buying stakes in the new banks will remain problematic.

"Vulture funds have bought up the claims for 6 percent of the face value and can take us to court in New York or Paris and have us pay face value for something they paid 6 percent for," said independent parliamentarian Lilja Mosesdottir, explaining via Skype how "distressed asset specialists" loom over Iceland. Over a decade after its last financial collapse, Argentina is still battling vulture funds in a multibillion-dollar case which is currently being heard by a federal appellate court in New York.

Even if vulture funds were to relinquish claims, Iceland could see a significant uptick in sovereign debt with Icesave unresolved, despite voters' persistent defiance. A European court in Luxembourg is currently considering whether or not Icelandic taxpayers must pay Britain $3.1 billion plus interest. According to Moody's, public debt will remain above 100 percent of GDP until 2014. But if the court rules in Britain's favor, public debt could rise overnight to 122 percent of GDP (although much Icesave debt could be recovered from Landsbanki's estate.)

Thus, Iceland remains in peril. Any sort of shock that seems insignificant on a global scale could be a massive blow to the tiny country. Its GDP, after all, was $14 billion in 2011 - an amount not much greater than what JP.Morgan trader Bruno Iksil, a k a the "London Whale," lost on a single trade (reportedly as high as $9 billion). Any hiccups - Icesave, a vulture fund legal victory, a global downturn - could drive Iceland back into the arms of the IMF and, in turn, drive its citizens deeper into trouble. The fund, after all, advised the government to "recapitalize the banks" even if it meant encouraging "debt restructuring outside of the courts." And if Iceland did accept IMF assistance to pay creditors, it's likely that privatization, environmental exploitation and austerity would follow, as it has in other distressed countries where the fund has operated.

Not that Icelanders haven't experienced pain already. Icelandic politicians might like to avoid austerity in rhetoric and attempt to avoid it in policymaking, but evidence of a struggle is there. A proposal floated by an association of municipalities last September advised local governments to shorten the school year and reduce electives. The national police force's budget has shrunk by 25 percent since 2007. Nurses, who make a starting salary of $36,000, have protested declining real wages. Disabled Icelanders have also organized demonstrations against pension cuts. In November, the wait to be treated for depression and anxiety at Reykjavik's main hospital was four months. A cancer patient who could no longer afford to pay for his chemotherapy asked friends on Facebook last March to help him find work. The medical director at a Reykjavik area clinic has warned of an "imminent collapse" of the health care system due to cuts and physicians leaving the country. And representatives from a charity said that an increasing number of people were in need of its Christmas food packages this year.

Amid all this suffering, banks are continuing to assert themselves, as profit-maximizing entities do. In 2011, it was reported that the monthly pay of a bank manager reached over $33,000 - an increase of almost 150 percent since the crash.

Financing this opulence is debtor misery. Despite the haircuts that have already occurred and promises of government help, as of last January, only 15-20 percent of all mortgages had gone through some stage of the write-down process. And a Supreme Court ruling confirmed the legality of loans tied to the consumer price index, rendering state encouraged 110 percent write-downs relatively impotent: foreign bondholders have parked money in property due to capital controls. As a result, property values have surged and inflation indexing has washed out many principal reductions.

It wouldn't seem beyond the pale to assume that the situation is indicative of a housing bubble. In late November, a major mortgage lender called the Housing Finance Fund - owner of 68 percent of the country's liquid guaranteed debt market, according to Bloomberg - was promised an emergency $103 million cash injection by the government. And there will be considerable pain if the bubble bursts. Iceland's mortgage bond market was worth an estimated $7.6 billion in May - just above 50 percent of GDP. Creditors will find it difficult to recoup losses in Icelandic real estate - more so than when creditors were privy to the failed banks' globally recognized assets.

Despite these problems, it's undeniable that Iceland's economy is the envy of many Western economic basket cases - the least foul smelling of the world's dirty laundry. And there is truth to the mythology that has been spun: popular movements have thus far resisted Icesave, root-and-branch austerity and other socialized losses. The Kitchenware Revolution was ahead of its time, gripping the Austurvöllur long before mass demonstrations from Zuccotti Park to Syntagma Square were regular fixtures.

Because Iceland's activists and progressive politicians are aware that problems are destined to linger, they are seeking to consolidate people power through longer-term solutions - an appropriate response for a country brought to the brink of ruination, like many others, by instant gratification.

The constitution is the most prominent example of this newfound outlook - one that began to emerge even as the country gorged on cheap credit.

Culture Shock Therapy

Long before the first container of skyr was pelted at the Althingi, the language of reform emerged during Iceland's near-fatal addiction to libertarianism. As with any cultural shift, it would be wrong to pinpoint a single cause, but a book published in 2006 helped nudge the country's collective consciouness away from the prevailing wisdom.

A few years earlier, politicians controversially sold off sweeping tracts of land in the east to aluminum conglomerate Alcoa to construct a smelter and a hydroelectric dam to power it. Author, playwright and poet Andri Snær Magnason was infuriated by the decision and decided to write about it.

He wasn't just disgusted by the mutilation of pristine nature. Magnason thought it was fatally unimaginative for Iceland to put so much faith in a single company - particularly one with a reputation for leaving scorched earth in its wake. Fueled by indignation, he penned a sort of manifesto called Dreamland: A Self-Help Manual for a Frightened Nation. It set the political landscape alight.

"The book completely transformed the way Icelanders saw our nature," Jónsdóttir said. "Andri Snær is truly unique in the sense that he manages to write about these things in such a way that anybody can understand. And it is so admirable that an artist applies himself in that way, because there were very few doing it."

Dreamland, more or less, explained the problem as such: unemployment in the region wasn't particularly problematic - migrant workers had to be flown in to help build the massive dam; locals presided over tourist-trapping natural beauty and globally competitive farmland that stood to be tainted by Alcoa's contributions to the landscape. Yet leaders welcomed the imperious project and citizens offered little resistance for reasons, Magnason theorized, that went beyond the mere corruptive allure of promised wealth. A fearful mindset informed locals' decision to sell their golden geese. Anxiety arising from alienation - from consumers; from the product of their own labor - led Icelanders to accept whatever plan Alcoa dropped in their laps rather than collaborate to explore alternatives. Corporate father knew best.

"There was a very strange psychological dilemma," Magnason explained to Truthout via Skype. "It's a dilemma that is common in rural areas with great natural resources - that people are very far away from the markets, and they, maybe, don't even know why they are doing the things that they are doing."

Dreamland didn't just challenge the conventional wisdom; it brought to the fore the very notion of conventional wisdom as a tool of oppression

Many Icelanders agreed. The book was a number-one bestseller and nurtured the movement against Alcoa. One day in September 2006, a few months after the book's publication, 15,000 demonstrators - 1 in every 20 Icelanders - turned out all over the country to voice their opposition to the project, heeding a call from a retiring television journalist named Ómar Ragnarsson. The movement was noteworthy for a country whose only major protest in the postwar era was a demonstration against NATO membership in 1949.

Although the dam and the smelter were ultimately built, Dreamland left an impression that transcended any one issue. This isn't to credit Magnason himself - Dreamland argues that invention is a social product, citing the concept simultaneous innovation as proof. But the book acted as a lightning rod. Many Icelanders were happy to confront the notion that reality isn't what the ruling classes cram down peoples' throats.

"People found out that they needed collaboration and cross-pollination," Magnason said. "Dreamland was kind of part of that movement. The design people, the tech nerds, the computer geeks, and the tree-huggers kind of teamed up in a kind of movement of creating things out of nothing - music, design, and all sorts of innovation. The political agenda that this was possible to kind of create without destroying everything."

This mindset is found all over post-collapse politics. After the crash, a cohort of highly educated and disillusioned individuals were wrested from lucrative salaries that incentivized soul-crushing work - "design people, tech nerds and computer geeks" laboring for the country's financial barons. Many of these liberated workers not only embraced start-up culture, but an enthusiasm for social innovation and grassroots resilience shared by environmentalists and other activists.

This zeal manifested itself in almost every aspect of the new constitution, which was produced using innovative crowdsourcing techniques.

A Constitution By the People - but to What Extent?

Crowdsourcing might seem like just a high-tech buzzword, but its potential to alter statecraft can't be overstated. As Wikipedia (itself founded on a crowdsourcing model) defines the concept, it "involves outsourcing tasks ... to an undefined public rather than a specific body." And if the task at hand is governance, crowdsourcing can advance an anti-authoritarian agenda; the Internet has made widespread collaboration cheaper and easier than ever. What the printing press did for representative democracy, online social media can do for direct democracy.

To help illustrate how crowdsourcing techniques produced a hierarchy-averse draft constitution, it's worth offering a selective post-crash biography of the IT specialist who eventually became the constitutional council's chief technology officer.

A start-up enthusiast, Finnur Magnusson moved back to Iceland from London in 2008. After the bubble burst in September, he joined in the head scratching, discussing with other horrified Icelanders how citizens can and should respond. Magnusson offered whatever IT expertise he could provide to an entrepreneurially minded grassroots reform group known as The Ministry of Ideas. Its work proved critical to constitutional reform.

In late 2009, the Ministry organized a 1,000-member strong national gathering - a drill in collaborative "Where do we go from here?" brainstorming involving randomly selected citizens and a few handpicked prominent thinkers (Magnusson and Jónsdóttir were there). Groups of participants bounced ideas off each other, ultimately formulating a list of shared values. The summit organizers, through Magnusson and his tech-nerd compatriots, took those suggestions and came up with an aggregation of cherished mores in short order. Not long after the discussions finished - thanks to social media crowdsourcing - Iceland had a decent estimate of its moral compass.

"The event that we formatted was pretty tech driven," Magnusson explained to Truthout via Skype. "We were running around with feedback from the tables and putting it up on the screen and live on the web. And it was good fun, you know? It was a good project."

Iceland's center-left coalition government agreed. In June 2010, the Althingi commissioned a similarly organized gathering tasked with crowdsourcing a review of the constitution. Reform-minded Icelanders had been keen on using the constitution as a post-crash vehicle for reform - the current document is a barely amended copy of an old Danish constitution. That review, as per the law that created it, was eventually presented to the elected constitutional council, which was founded and given a mandate to draft a constitution by the same law.

After the constitutional assembly wrapped up, the 950 randomly selected participants advised the council to codify environmental, cultural, social, and political protections into law while promoting transparency, international cooperation, human rights and social welfare.

And while the draft constitution strains to account for these concerns, Magnusson warned against treating the draft like it was written by a cast of thousands on Google Docs.

"The one thing I ask of you is please don't put 'crowdsourced constitution' in the title," he stressed. Open and inclusive the drafting process may have been, but crowdsourced it was not; the drafting itself was done by a handful of elected officials.

Magnusson also said that the participation rate put a damper on the feel-good factor of the process. About 2 percent of the population weighed in on the draft.

"The interest has been more from abroad than in Iceland," he said. "There's a very hard-to-translate saying in Icelandic: 'Nobody's a prophet in their own country.'"

Dreamland Awakens

Organizers and activists behind the constitution were prophetic in that their leap of faith has, thus far, been widely accepted (or, at least, unopposed). The constitutional assembly might have - somewhat controversially - involved less than a thousand randomly selected people. But its sample size and horizontalist framework seem to have led it to extrapolate widespread sentiment from a chosen few.

"That cross-section was a very interesting concept itself," Andri Snær Magnason opined, "because even in a group of ten friends, there's always one friend that, you know, would organize the next party. Or who will be kind of the leader of the group. What this does, this randomness - it boycotts all the people that would want to be a leader in a very small group."

One example of how the dynamic might have effectively boycotted special interests pertains to environmental anxieties that were raised in Dreamland - fears that have been exacerbated since the collapse. These concerns were raised frequently in both the 2009 and 2010 assemblies. On the October ballot, alongside other questions pertaining to constitutional articles, voters were asked if they approved of a provision that put unowned natural resources into public ownership - unavailable for sale, but leasable for "a modest period of time." It passed by the widest margin of all the questions, with 82.5 percent of voters favoring public ownership.

"I think it's a response to this extreme capitalist greed that people were witnessing, and the possibility of somebody just coming in and buying everything up in a fleeting moment in our history," Magnason said.

Foreign investors have already tried to snap up natural resources since 2008. A Canadian company called Magma Energy purchased a local-government-owned geothermal utility called HS Orka in September 2009. The national government only bought back a majority share in November 2011, after a popular outcry and a series of protests led by singer Björk. And Chinese billionaire Huang Nubo attempted to purchase 118 square miles of land (roughly 0.3 percent of the country's landmass) to build a luxury resort, but was thwarted by a law stopping non-Europeans - as per European treaty agreements - from owning land (Magma sidestepped law this by starting a shell company in Sweden).

Even before Iceland privatized its banking system, natural resource allocation was a hot topic. There has been longstanding discontent over fishing policy - no small matter on an island nation.

"The rights to fish were given to individuals and they could then sell this as an asset. Many of them became extremely rich," Magnason said.

The fishing barons also bankrupted villages "by moving the quota out," according to Jónsdóttir.

"There is this underlying anger towards them. I think that people just have had enough of the way they use money, influence and media to interact to get their will," she said.

Economist and constitutional council member Thorvaldur Gylfason wrote in an email to Truthout that for decades opinion polls have shown Icelanders in favor of making fishing giants pay more for their quotas - roughly 70 percent of the electorate has consistently supported vessel resource depletion fees. Vessel owners were given quotas, which were made permanent in 1990, and they have only been forced to pay the government "a nominal fee" for them since 2004.

"Political parties, liberally oiled by interested parties, no doubt - as they were by the bankers - have managed to thwart the popular will in Parliament," Gylfason said.

"The constitutional bill aims to correct the situation," he added.

But the importance of the natural resource provision mustn't be exaggerated.

Parliamentarian Lilja Mosesdottir pointed out that Icelanders don't need either the private sector or foreigners to plunder their country.

"The constitutional clause will make sure that property rights to the natural resources are in the hands of the Icelandic people, but they may utilize it completely and destroy it," she said.

Jónsdóttir echoed this point, stressing that the resources should be in the guardianship, not the ownership, of the nation.

"Nobody owns nature. That's a crazy concept," she argued.

Nor should the provision be thought of as some sort of bold radical act, she added, lamenting that the constitutional draft neither nationalizes resources nor explicitly mentions water rights.

Magnason also pointed out that the provision isn't exactly "some kind of socialist revolution of taking people's assets."

"Most of the hydro and geothermal energy has been kind of under the government authorities already, anyway," he said

Gylfason added that it would be wrong to describe the move as nationalization.

"It is matter of the rightful owner of the country‘s natural resources being paid proper rent for someone else’s use of the resources," he said.

But future legislation affecting Iceland's natural resources and the stability of its ecosystems will, at least, be open to challenges by voters if the draft constitution passes. The electorate would be afforded considerable checks on Parliament. One article would mandate that international agreements - for example, whether or not Iceland should join the EU - must be put to a popular vote. Another provision would allow 10 percent of voters to demand a referendum on newly signed laws up to three months after they're passed. The draft also affords citizens the chance to introduce legislation to Parliament - counterproposals must be put to referendum. Voters would also be granted the power of approving constitutional amendments and the removal of a president by Parliament. And speaking of that office, presidential candidates would have to be endorsed by 1 percent of voters.

"What's coming out of the crisis is this demand for greater democracy, that the people should interfere when their representatives are not doing their jobs," said Mosesdottir, by no means an ardent supporter of the constitutional movement. "A lot of people felt when the banks crashed that their representatives did not make sure that the interest of the people was safeguarded."

Radical safeguards punctuate the draft in other ways, too. The new law of the land would grant protected status based on disability, sexual orientation, and genetic character, and would oblige the government to guard against rights violations committed by non-state actors.

Even if the movement fails, organizers could learn from the methodology the council used to draft such a comprehensive egalitarian set of laws.

Social Media, IT Concepts Nudge Iceland Toward Direct Democracy

Although the crowdsourced part of the drafting process - the assembly - was completed before the constitutional council put pen to paper, the council's members attempted to adhere to the open and inclusive spirit of the project.

 Gylfason said that suggestions made by the public were all read "carefully" and "virtually all of them" were considered.

"For example, a couple of suggestions came from farmers who wanted us to make sure that the environmental protection provision protected both private and public lands from cross-fence grazing, a centuries-old problem in Iceland. Others came from Internet specialists who were keen on seeing a state-of-the-art freedom-of-information clause. They got one. Their input was very helpful," he said.

Not all suggestions were adopted. Gylfason said a Europol official encouraged the council to adopt a clause that would have facilitated asset forfeiture "in the spirit of modern European legislation."

"We did not go for that one, not as a constitutional issue," he said, "even if the case that was made by the police officer was very well put."

The ways in which outsiders were given opportunities to influence the drafting boiled down to the way start-up culture informed the process. The council used an iterative "quick sprint" methodology - inspired by software developers seeking as much constructive criticism as possible.

"You do quick iterations and you try to get as much feedback as you can. And you keep iterating until you have a final product," Magnusson said. Rather than revising obsessively behind closed doors, the council invited the public via social media to help.

"That enabled us to get a lot of feedback and involve many more participants within the nation," he claimed.

Whether or not organizers could have solicited more input is up for debate. But a group of scholars from The Comparative Constitutions Project described the approach as "novel" and hailed the constitution as "one of the most inclusive in history."

The iterative approach is, in many ways, symbolic of the grander significance of the constitution itself.

"I'm pleased with this as the next very big, big step towards a more open and direct democracy," Jónsdóttir said,

She acknowledged that there could have been more crowdsourcing, but that distractions - time constraints and affronts to the constitutional council - hampered efforts.

"There were some very serious attempts to destroy the process by the conservatives," she lamented.

Magnusson stressed that the imperfections of the drafting process shouldn't be downplayed - particularly in the context of whatever comes next. Using the current reform for more inclusive crowdsourcing-inspired endeavors could build "a foundation for a more direct democracy," he said.

"We have a way to go until we put the voting buttons on the Internet," he added.

That Icelanders are even discussing this endgame is reason for the rest of the world to take notice.

Copyright, Truthout. May not be reprinted without permission.

Sam Knight

Sam Knight is a Truthout contributor and freelance journalist living in Washington, DC.


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With New Constitution, Post-Collapse Iceland Inches Toward Direct Democracy

Sunday, 27 January 2013 07:10 By Sam Knight, Truthout | News Analysis

Birgitta Jónsdóttir, a member of the Icelandic parliament, at the Open Government Camp 2011.Birgitta Jónsdóttir, a member of the Icelandic parliament, at the Open Government Camp 2011. In a conversation with Truthout she insisted she doesn't want "the new constitution to be plagued with (bureaucrats') language, but the language of the people." (Photo: Florian Apel-Soetebeer / Government 2.0 Netzwerk Deutschland)When the global financial system crumbled over four years ago, Iceland played host to one of the most dramatic economic collapses in modern history. Its three largest banks were unable to refinance debt roughly ten times the size of the country's gross domestic product (GDP), causing one of the world's wealthiest nations to limp with hat in hand to the International Monetary Fund (IMF). The island became a symbol for capitalism's systemic failure.

Now, Iceland is making headlines for more positive reasons: activists there are in the process of advancing some of the strongest freedom of information laws and journalist protections in the world, and the Icelandic economy, while still beset by problems, is significantly outperforming other crisis-stricken countries.

Most recently, on October 20, a remarkable constitution - written by an elected council with help from the public - took a step closer toward ratification after it was approved in a referendum by a 2-1 margin.

Before the changes are signed into law, the draft must be approved by the Althingi, Iceland's Parliament, approved again by referendum and finalized once more by the legislature after a fresh parliamentary election in April.

Uncertainty is swirling around the status of the constitution, however. Those opposed to it - primarily right-wingers - claim that the 48.9 percent turnout for October's vote doesn't lend the document legitimacy. There is also fear among the constitution's supporters in Parliament that some of their colleagues are trying to abrogate the public's influence by altering the document's content instead of offering the technical revisions they were given the mandate to make.

"I truly believe that our democracies have been hijacked by bureaucrats," said Parliamentarian Birgitta Jónsdóttir, a self-described "realist-anarchist" elected after the Kitchenware Revolution protests which ensued following the 2008 financial crisis and forced the long-ruling conservative government to resign in 2009.

"I don't want the new constitution to be plagued with their language, but the language of the people," she insisted in a Skype conversation with Truthout. "Their time is over. They just can't get over it."

It's unsurprising that inertia is casting a pall over the constitution's future. In January 2011, the constitutional council's election was controversially nullified by Iceland's Supreme Court. Parliament effectively overruled this decision by appointing the 25 candidates who received the most votes to take seats on the council to rewrite the constitution.

Regardless of the document's final status, the drafting process - inspired by crowdsourcing techniques - has produced a remarkably progressive legal code and generated significant interest from around the world.

"A PBS TV crew of seven or eight followed a group of us around the north of the country before the [October] vote," Thorvaldur Gylfason, an economics professor and member of the constitutional council, told Truthout. (The footage will be part of a four-hour series on the US Constitution set to air in May.)

At home, supporters are hoping that the constitution can create more momentum for innovative reform. Information technology specialists who opened the drafting process to the public through social media are expecting to set up open data projects in partnership with the government. There has also been another web-based open government reform in the city of Reykjavik: the city council passed a law forcing it to consider 16 citizen-initiated proposals made each month through a web site called "Betri Reykjavík" (Better Reykjavik). There has been talk among its boosters that the constitution could mark the beginning of a gradual movement toward direct democracy.

But to better understand the significance and global appeal of the new constitution, it is worth discussing the state of Iceland's economy, which has defined both the constitutional movement and international scrutiny of the diminutive subarctic nation since 2008.

A Shining Beacon of Post-Collapse Economics?

According to bloggers, Facebook memes and some prominent commentators, Iceland is the shining beacon of post-collapse economics.

Their narrative paints a picture of the government, emboldened by protest movements, refusing to be held to the fire for the mistakes of rapacious financiers and corrupt politicians, even sanctioning them for crash-related misdeeds. At least seven bankers have been charged with criminal offenses so far - two were recently sentenced to nine months in prison. Those indicted include the once powerful investor Jón Ásgeir Jóhannesson, who was charged in December with illegally securing loans worth around $50 million. And former Prime Minister Geir Haarde was found guilty of not holding cabinet meetings on important issues - one of four charges brought against him - although the verdict didn't warrant any jail time. This justice has supposedly left the country less burdened by debt and a domineering financial sector that crowded out sustainable industries.

But like most political memes bandied about on the Internet, this overly optimistic commentary must be critically examined.

Iceland is faring better than most countries hit hard by the global meltdown. Write-downs and debtor revolts have undeniably mitigated the consequences of collapse.

Citizens, through referenda brought on by presidential vetoes, rejected Parliament's plan to pay billions of dollars claimed by the British and Dutch governments after one of Iceland's three major banks, Landsbanki, saw its cross-border savings scheme, known as Icesave, fail.

The establishment - perhaps influenced by widespread protests that followed the crisis - has also been somewhat attentive to the plight of debtors. The Supreme Court ruled that loans indexed to foreign currencies - commonly issued during the boom, but rendered absurdly expensive after the krona collapsed - were, in fact, illegal, significantly reducing mortgage principals overnight. The government also announced a plan in December 2010 to cap distressed homeowners' mortgage principals at 110 percent of estimated home values. According to a financial industry-backed report published last February, Icelandic banks, since the end of 2008, have forgiven debt equivalent to 13 percent of GDP.

The government also didn't directly bail out the three major banks - Kaupthing and Glitnir being the other two - but nationalized them (albeit momentarily - more on that later). And crucially, it eschewed sweeping austerity that the IMF typically favors - a strategy that seemingly paid off, as Iceland exited the IMF program in the summer of 2011.

It appears these developments have given Iceland's economy room to grow. The unemployment rate in October was at 4.5 percent, and the country's GDP grew by 3.1 percent in 2011, according to Statistics Iceland. Fairly impressive when considering eurozone misery.

There are also explanations for Iceland's performance that are less dramatic than frenzied demonstrations and white-collar prosecutions. Emergency capital controls have prevented a total collapse of the krona. Some post-crisis years saw net emigration, relieving the labor market of excess supply. The defunct banks invested in assets, like British retail chains, that largely retained value after the global bust - a significant amount of their debts could be covered by liquidating these assets. Finally, the post-collapse devaluation of the krona has made Icelandic commodities more competitive on global markets, giving the country the trade surplus it desperately needs to amass foreign currency.

But the lionization of Iceland glosses over persistent systemic problems.

"Look at what's happening in Europe. The crisis is much deeper and harder in Greece and other countries. It's just horrifying," Jónsdóttir said.

"But," she warned, "we could end up exactly like that."

Iceland Held Up as Just Model, but Bailouts Still Played Role

Iceland's economy, at its core, remains in a pre-collapse framework. Not long after Kaupthing and Glitnir were nationalized, the banks - now called Arion and Islandsbanki - were sold to claimants of the old banks' assets in January 2010 at a great cost to taxpayers and homeowners. According to economists Olafur Arnarson, Gunnar Tomasson and Michael Hudson, the government priced the old banks' mortgage asset portfolios at 30-50 percent of their value, but allowed the new banks to pursue market value for them (the government's subsequent plan to cap mortgage principles at 110 percent hasn't proved effective either - more on that shortly).

The sale amounted to a backdoor bailout. Enablers of Iceland's old bankers - its new ones - weren't "allowed to fail," as the blogosphere has implied. An inherently flawed and morally hazardous credit system was kept on life support all over the world, and Iceland was no exception. Despite the fact that lenders failed to do due diligence on the old banks, they and the vultures to whom they sold some of their claims were rewarded with a subsidized stake in Iceland's financial sector.

Adding to the injustice is the fact that no one can identify the individuals who actually own these banks. There are rumors that members of the old guard might own a stake in them. As The Guardian detailed in August, former Landsbanki CEO Björgólfur Thor Björgólfsson is "still living the high life" in London - not far from where Her Majesty's Loyal Bureaucrats are trying to claw back the Icesave debt he helped rack up. In November, it was reported that the junior coalition member Left-Green party was considering finding out whether or not he and other "Viking Raiders" are still profiting off of Iceland's banks through a bill which would force all beneficiary owners who hold more than 1 percent in financial institutions to be disclosed.

And if the old bankers do own stakes in the new banks, they might again be able to finance personal ventures with retail deposits. In Iceland, retail banking and investment banking remain integrated - just as they have been in American banks since the repeal of Glass-Steagall.

Even disregarding the financial system's structure and which individuals effectively run it, some creditors that decided against buying stakes in the new banks will remain problematic.

"Vulture funds have bought up the claims for 6 percent of the face value and can take us to court in New York or Paris and have us pay face value for something they paid 6 percent for," said independent parliamentarian Lilja Mosesdottir, explaining via Skype how "distressed asset specialists" loom over Iceland. Over a decade after its last financial collapse, Argentina is still battling vulture funds in a multibillion-dollar case which is currently being heard by a federal appellate court in New York.

Even if vulture funds were to relinquish claims, Iceland could see a significant uptick in sovereign debt with Icesave unresolved, despite voters' persistent defiance. A European court in Luxembourg is currently considering whether or not Icelandic taxpayers must pay Britain $3.1 billion plus interest. According to Moody's, public debt will remain above 100 percent of GDP until 2014. But if the court rules in Britain's favor, public debt could rise overnight to 122 percent of GDP (although much Icesave debt could be recovered from Landsbanki's estate.)

Thus, Iceland remains in peril. Any sort of shock that seems insignificant on a global scale could be a massive blow to the tiny country. Its GDP, after all, was $14 billion in 2011 - an amount not much greater than what JP.Morgan trader Bruno Iksil, a k a the "London Whale," lost on a single trade (reportedly as high as $9 billion). Any hiccups - Icesave, a vulture fund legal victory, a global downturn - could drive Iceland back into the arms of the IMF and, in turn, drive its citizens deeper into trouble. The fund, after all, advised the government to "recapitalize the banks" even if it meant encouraging "debt restructuring outside of the courts." And if Iceland did accept IMF assistance to pay creditors, it's likely that privatization, environmental exploitation and austerity would follow, as it has in other distressed countries where the fund has operated.

Not that Icelanders haven't experienced pain already. Icelandic politicians might like to avoid austerity in rhetoric and attempt to avoid it in policymaking, but evidence of a struggle is there. A proposal floated by an association of municipalities last September advised local governments to shorten the school year and reduce electives. The national police force's budget has shrunk by 25 percent since 2007. Nurses, who make a starting salary of $36,000, have protested declining real wages. Disabled Icelanders have also organized demonstrations against pension cuts. In November, the wait to be treated for depression and anxiety at Reykjavik's main hospital was four months. A cancer patient who could no longer afford to pay for his chemotherapy asked friends on Facebook last March to help him find work. The medical director at a Reykjavik area clinic has warned of an "imminent collapse" of the health care system due to cuts and physicians leaving the country. And representatives from a charity said that an increasing number of people were in need of its Christmas food packages this year.

Amid all this suffering, banks are continuing to assert themselves, as profit-maximizing entities do. In 2011, it was reported that the monthly pay of a bank manager reached over $33,000 - an increase of almost 150 percent since the crash.

Financing this opulence is debtor misery. Despite the haircuts that have already occurred and promises of government help, as of last January, only 15-20 percent of all mortgages had gone through some stage of the write-down process. And a Supreme Court ruling confirmed the legality of loans tied to the consumer price index, rendering state encouraged 110 percent write-downs relatively impotent: foreign bondholders have parked money in property due to capital controls. As a result, property values have surged and inflation indexing has washed out many principal reductions.

It wouldn't seem beyond the pale to assume that the situation is indicative of a housing bubble. In late November, a major mortgage lender called the Housing Finance Fund - owner of 68 percent of the country's liquid guaranteed debt market, according to Bloomberg - was promised an emergency $103 million cash injection by the government. And there will be considerable pain if the bubble bursts. Iceland's mortgage bond market was worth an estimated $7.6 billion in May - just above 50 percent of GDP. Creditors will find it difficult to recoup losses in Icelandic real estate - more so than when creditors were privy to the failed banks' globally recognized assets.

Despite these problems, it's undeniable that Iceland's economy is the envy of many Western economic basket cases - the least foul smelling of the world's dirty laundry. And there is truth to the mythology that has been spun: popular movements have thus far resisted Icesave, root-and-branch austerity and other socialized losses. The Kitchenware Revolution was ahead of its time, gripping the Austurvöllur long before mass demonstrations from Zuccotti Park to Syntagma Square were regular fixtures.

Because Iceland's activists and progressive politicians are aware that problems are destined to linger, they are seeking to consolidate people power through longer-term solutions - an appropriate response for a country brought to the brink of ruination, like many others, by instant gratification.

The constitution is the most prominent example of this newfound outlook - one that began to emerge even as the country gorged on cheap credit.

Culture Shock Therapy

Long before the first container of skyr was pelted at the Althingi, the language of reform emerged during Iceland's near-fatal addiction to libertarianism. As with any cultural shift, it would be wrong to pinpoint a single cause, but a book published in 2006 helped nudge the country's collective consciouness away from the prevailing wisdom.

A few years earlier, politicians controversially sold off sweeping tracts of land in the east to aluminum conglomerate Alcoa to construct a smelter and a hydroelectric dam to power it. Author, playwright and poet Andri Snær Magnason was infuriated by the decision and decided to write about it.

He wasn't just disgusted by the mutilation of pristine nature. Magnason thought it was fatally unimaginative for Iceland to put so much faith in a single company - particularly one with a reputation for leaving scorched earth in its wake. Fueled by indignation, he penned a sort of manifesto called Dreamland: A Self-Help Manual for a Frightened Nation. It set the political landscape alight.

"The book completely transformed the way Icelanders saw our nature," Jónsdóttir said. "Andri Snær is truly unique in the sense that he manages to write about these things in such a way that anybody can understand. And it is so admirable that an artist applies himself in that way, because there were very few doing it."

Dreamland, more or less, explained the problem as such: unemployment in the region wasn't particularly problematic - migrant workers had to be flown in to help build the massive dam; locals presided over tourist-trapping natural beauty and globally competitive farmland that stood to be tainted by Alcoa's contributions to the landscape. Yet leaders welcomed the imperious project and citizens offered little resistance for reasons, Magnason theorized, that went beyond the mere corruptive allure of promised wealth. A fearful mindset informed locals' decision to sell their golden geese. Anxiety arising from alienation - from consumers; from the product of their own labor - led Icelanders to accept whatever plan Alcoa dropped in their laps rather than collaborate to explore alternatives. Corporate father knew best.

"There was a very strange psychological dilemma," Magnason explained to Truthout via Skype. "It's a dilemma that is common in rural areas with great natural resources - that people are very far away from the markets, and they, maybe, don't even know why they are doing the things that they are doing."

Dreamland didn't just challenge the conventional wisdom; it brought to the fore the very notion of conventional wisdom as a tool of oppression

Many Icelanders agreed. The book was a number-one bestseller and nurtured the movement against Alcoa. One day in September 2006, a few months after the book's publication, 15,000 demonstrators - 1 in every 20 Icelanders - turned out all over the country to voice their opposition to the project, heeding a call from a retiring television journalist named Ómar Ragnarsson. The movement was noteworthy for a country whose only major protest in the postwar era was a demonstration against NATO membership in 1949.

Although the dam and the smelter were ultimately built, Dreamland left an impression that transcended any one issue. This isn't to credit Magnason himself - Dreamland argues that invention is a social product, citing the concept simultaneous innovation as proof. But the book acted as a lightning rod. Many Icelanders were happy to confront the notion that reality isn't what the ruling classes cram down peoples' throats.

"People found out that they needed collaboration and cross-pollination," Magnason said. "Dreamland was kind of part of that movement. The design people, the tech nerds, the computer geeks, and the tree-huggers kind of teamed up in a kind of movement of creating things out of nothing - music, design, and all sorts of innovation. The political agenda that this was possible to kind of create without destroying everything."

This mindset is found all over post-collapse politics. After the crash, a cohort of highly educated and disillusioned individuals were wrested from lucrative salaries that incentivized soul-crushing work - "design people, tech nerds and computer geeks" laboring for the country's financial barons. Many of these liberated workers not only embraced start-up culture, but an enthusiasm for social innovation and grassroots resilience shared by environmentalists and other activists.

This zeal manifested itself in almost every aspect of the new constitution, which was produced using innovative crowdsourcing techniques.

A Constitution By the People - but to What Extent?

Crowdsourcing might seem like just a high-tech buzzword, but its potential to alter statecraft can't be overstated. As Wikipedia (itself founded on a crowdsourcing model) defines the concept, it "involves outsourcing tasks ... to an undefined public rather than a specific body." And if the task at hand is governance, crowdsourcing can advance an anti-authoritarian agenda; the Internet has made widespread collaboration cheaper and easier than ever. What the printing press did for representative democracy, online social media can do for direct democracy.

To help illustrate how crowdsourcing techniques produced a hierarchy-averse draft constitution, it's worth offering a selective post-crash biography of the IT specialist who eventually became the constitutional council's chief technology officer.

A start-up enthusiast, Finnur Magnusson moved back to Iceland from London in 2008. After the bubble burst in September, he joined in the head scratching, discussing with other horrified Icelanders how citizens can and should respond. Magnusson offered whatever IT expertise he could provide to an entrepreneurially minded grassroots reform group known as The Ministry of Ideas. Its work proved critical to constitutional reform.

In late 2009, the Ministry organized a 1,000-member strong national gathering - a drill in collaborative "Where do we go from here?" brainstorming involving randomly selected citizens and a few handpicked prominent thinkers (Magnusson and Jónsdóttir were there). Groups of participants bounced ideas off each other, ultimately formulating a list of shared values. The summit organizers, through Magnusson and his tech-nerd compatriots, took those suggestions and came up with an aggregation of cherished mores in short order. Not long after the discussions finished - thanks to social media crowdsourcing - Iceland had a decent estimate of its moral compass.

"The event that we formatted was pretty tech driven," Magnusson explained to Truthout via Skype. "We were running around with feedback from the tables and putting it up on the screen and live on the web. And it was good fun, you know? It was a good project."

Iceland's center-left coalition government agreed. In June 2010, the Althingi commissioned a similarly organized gathering tasked with crowdsourcing a review of the constitution. Reform-minded Icelanders had been keen on using the constitution as a post-crash vehicle for reform - the current document is a barely amended copy of an old Danish constitution. That review, as per the law that created it, was eventually presented to the elected constitutional council, which was founded and given a mandate to draft a constitution by the same law.

After the constitutional assembly wrapped up, the 950 randomly selected participants advised the council to codify environmental, cultural, social, and political protections into law while promoting transparency, international cooperation, human rights and social welfare.

And while the draft constitution strains to account for these concerns, Magnusson warned against treating the draft like it was written by a cast of thousands on Google Docs.

"The one thing I ask of you is please don't put 'crowdsourced constitution' in the title," he stressed. Open and inclusive the drafting process may have been, but crowdsourced it was not; the drafting itself was done by a handful of elected officials.

Magnusson also said that the participation rate put a damper on the feel-good factor of the process. About 2 percent of the population weighed in on the draft.

"The interest has been more from abroad than in Iceland," he said. "There's a very hard-to-translate saying in Icelandic: 'Nobody's a prophet in their own country.'"

Dreamland Awakens

Organizers and activists behind the constitution were prophetic in that their leap of faith has, thus far, been widely accepted (or, at least, unopposed). The constitutional assembly might have - somewhat controversially - involved less than a thousand randomly selected people. But its sample size and horizontalist framework seem to have led it to extrapolate widespread sentiment from a chosen few.

"That cross-section was a very interesting concept itself," Andri Snær Magnason opined, "because even in a group of ten friends, there's always one friend that, you know, would organize the next party. Or who will be kind of the leader of the group. What this does, this randomness - it boycotts all the people that would want to be a leader in a very small group."

One example of how the dynamic might have effectively boycotted special interests pertains to environmental anxieties that were raised in Dreamland - fears that have been exacerbated since the collapse. These concerns were raised frequently in both the 2009 and 2010 assemblies. On the October ballot, alongside other questions pertaining to constitutional articles, voters were asked if they approved of a provision that put unowned natural resources into public ownership - unavailable for sale, but leasable for "a modest period of time." It passed by the widest margin of all the questions, with 82.5 percent of voters favoring public ownership.

"I think it's a response to this extreme capitalist greed that people were witnessing, and the possibility of somebody just coming in and buying everything up in a fleeting moment in our history," Magnason said.

Foreign investors have already tried to snap up natural resources since 2008. A Canadian company called Magma Energy purchased a local-government-owned geothermal utility called HS Orka in September 2009. The national government only bought back a majority share in November 2011, after a popular outcry and a series of protests led by singer Björk. And Chinese billionaire Huang Nubo attempted to purchase 118 square miles of land (roughly 0.3 percent of the country's landmass) to build a luxury resort, but was thwarted by a law stopping non-Europeans - as per European treaty agreements - from owning land (Magma sidestepped law this by starting a shell company in Sweden).

Even before Iceland privatized its banking system, natural resource allocation was a hot topic. There has been longstanding discontent over fishing policy - no small matter on an island nation.

"The rights to fish were given to individuals and they could then sell this as an asset. Many of them became extremely rich," Magnason said.

The fishing barons also bankrupted villages "by moving the quota out," according to Jónsdóttir.

"There is this underlying anger towards them. I think that people just have had enough of the way they use money, influence and media to interact to get their will," she said.

Economist and constitutional council member Thorvaldur Gylfason wrote in an email to Truthout that for decades opinion polls have shown Icelanders in favor of making fishing giants pay more for their quotas - roughly 70 percent of the electorate has consistently supported vessel resource depletion fees. Vessel owners were given quotas, which were made permanent in 1990, and they have only been forced to pay the government "a nominal fee" for them since 2004.

"Political parties, liberally oiled by interested parties, no doubt - as they were by the bankers - have managed to thwart the popular will in Parliament," Gylfason said.

"The constitutional bill aims to correct the situation," he added.

But the importance of the natural resource provision mustn't be exaggerated.

Parliamentarian Lilja Mosesdottir pointed out that Icelanders don't need either the private sector or foreigners to plunder their country.

"The constitutional clause will make sure that property rights to the natural resources are in the hands of the Icelandic people, but they may utilize it completely and destroy it," she said.

Jónsdóttir echoed this point, stressing that the resources should be in the guardianship, not the ownership, of the nation.

"Nobody owns nature. That's a crazy concept," she argued.

Nor should the provision be thought of as some sort of bold radical act, she added, lamenting that the constitutional draft neither nationalizes resources nor explicitly mentions water rights.

Magnason also pointed out that the provision isn't exactly "some kind of socialist revolution of taking people's assets."

"Most of the hydro and geothermal energy has been kind of under the government authorities already, anyway," he said

Gylfason added that it would be wrong to describe the move as nationalization.

"It is matter of the rightful owner of the country‘s natural resources being paid proper rent for someone else’s use of the resources," he said.

But future legislation affecting Iceland's natural resources and the stability of its ecosystems will, at least, be open to challenges by voters if the draft constitution passes. The electorate would be afforded considerable checks on Parliament. One article would mandate that international agreements - for example, whether or not Iceland should join the EU - must be put to a popular vote. Another provision would allow 10 percent of voters to demand a referendum on newly signed laws up to three months after they're passed. The draft also affords citizens the chance to introduce legislation to Parliament - counterproposals must be put to referendum. Voters would also be granted the power of approving constitutional amendments and the removal of a president by Parliament. And speaking of that office, presidential candidates would have to be endorsed by 1 percent of voters.

"What's coming out of the crisis is this demand for greater democracy, that the people should interfere when their representatives are not doing their jobs," said Mosesdottir, by no means an ardent supporter of the constitutional movement. "A lot of people felt when the banks crashed that their representatives did not make sure that the interest of the people was safeguarded."

Radical safeguards punctuate the draft in other ways, too. The new law of the land would grant protected status based on disability, sexual orientation, and genetic character, and would oblige the government to guard against rights violations committed by non-state actors.

Even if the movement fails, organizers could learn from the methodology the council used to draft such a comprehensive egalitarian set of laws.

Social Media, IT Concepts Nudge Iceland Toward Direct Democracy

Although the crowdsourced part of the drafting process - the assembly - was completed before the constitutional council put pen to paper, the council's members attempted to adhere to the open and inclusive spirit of the project.

 Gylfason said that suggestions made by the public were all read "carefully" and "virtually all of them" were considered.

"For example, a couple of suggestions came from farmers who wanted us to make sure that the environmental protection provision protected both private and public lands from cross-fence grazing, a centuries-old problem in Iceland. Others came from Internet specialists who were keen on seeing a state-of-the-art freedom-of-information clause. They got one. Their input was very helpful," he said.

Not all suggestions were adopted. Gylfason said a Europol official encouraged the council to adopt a clause that would have facilitated asset forfeiture "in the spirit of modern European legislation."

"We did not go for that one, not as a constitutional issue," he said, "even if the case that was made by the police officer was very well put."

The ways in which outsiders were given opportunities to influence the drafting boiled down to the way start-up culture informed the process. The council used an iterative "quick sprint" methodology - inspired by software developers seeking as much constructive criticism as possible.

"You do quick iterations and you try to get as much feedback as you can. And you keep iterating until you have a final product," Magnusson said. Rather than revising obsessively behind closed doors, the council invited the public via social media to help.

"That enabled us to get a lot of feedback and involve many more participants within the nation," he claimed.

Whether or not organizers could have solicited more input is up for debate. But a group of scholars from The Comparative Constitutions Project described the approach as "novel" and hailed the constitution as "one of the most inclusive in history."

The iterative approach is, in many ways, symbolic of the grander significance of the constitution itself.

"I'm pleased with this as the next very big, big step towards a more open and direct democracy," Jónsdóttir said,

She acknowledged that there could have been more crowdsourcing, but that distractions - time constraints and affronts to the constitutional council - hampered efforts.

"There were some very serious attempts to destroy the process by the conservatives," she lamented.

Magnusson stressed that the imperfections of the drafting process shouldn't be downplayed - particularly in the context of whatever comes next. Using the current reform for more inclusive crowdsourcing-inspired endeavors could build "a foundation for a more direct democracy," he said.

"We have a way to go until we put the voting buttons on the Internet," he added.

That Icelanders are even discussing this endgame is reason for the rest of the world to take notice.

Copyright, Truthout. May not be reprinted without permission.

Sam Knight

Sam Knight is a Truthout contributor and freelance journalist living in Washington, DC.


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