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AN ISLAND OF HOPE
On 9 October, 1986, US President Ronald Reagan climbed aboard Air Force One for the five-hour and 20-minute flight from Andrews Air Force Base just outside Washington to the Iceland capital, Reykjavik. As the aircraft climbed into the autumn sky Reagan was already being briefed for what lay ahead. The Cold War had almost turned hot a few years earlier when the Soviet Union believed the US was about to launch a nuclear attack, and prepared to launch a counter-strike. Reagan was on his way to meet the newly elected Secretary General of the Soviet Union, Mikhail Gorbachev. Publicly it was just a meeting as a preliminary basis for discussions about nuclear arms control. But Reagan had another plan: to negotiate a nuclear arms reduction treaty, which some hoped might rid the world of atomic weapons forever. What happened during two days in October 1986 in Reykjavik did not eliminate nuclear weapons, but it did lead to negotiations which would in the end eliminate Intermediate Nuclear Forces (INF) â short range land based missiles â and, it is argued, helped thaw the frigid relations between Washington and Moscow which until then had been as dark and full of foreboding as an Icelandic winter. As Gorbachev told his foreign secretary on the flight back from Reykjavik to Moscow, before Reykjavik the âconversation was only about limiting nuclear arms. Now it is about reduction and liquidation [of those].â1 The choice of Reykjavik as the site of the summit was portrayed at the time as a symbolically midway point between the two nations â a place where in the event of a nuclear war the opposing missiles would cross paths not far away. However, Reykjavik was anything but neutral turf. Right next to the Keflavik airfield where President Reagan landed on that drizzly autumn day was a North Atlantic Treaty Organization (NATO) base, and not far away, a major eavesdropping facility run by the US Naval Security Group, part of the largest surveillance system in the world, the US National Security Agency (NSA). The Reykjavik base operated a program code named Classic Bullseye. Its ground-based antennas and wire fences structured in two huge circles acted as a ârange fingerâ to identify the location of Soviet electronic transmissions, such as radar and communications. This information â and data from undersea listening devices â helped US maritime spy planes discover the position of Russian submarines as they crossed over international telecommunications cables snaking across the ocean floor, carrying data and voice traffic from Canada, through Greenland, Iceland and on to Europe. At least some of the Soviet subs were seeking an opportunity to break into the cable to plant listening devices. They also had another mission as they made their way south-west from the Soviet port of Murmansk: eavesdropping on military and industrial communications off the coast of the US, gathering signals intelligence.
As the world increasingly embraced digital communications, Iceland was among the first to realise their incredible potential. Sitting at a mid-point between North America and Europe, the tiny island of slightly more than 330,000 people had swiftly embraced the use of high speed internet. In 2007 the town of Seltjarnarnes became the first place in the world where every member of a community had access to fibre optic communications. By 2009 Iceland was number one in the world for internet use. It was a natural place for an internet provider to set up shop. Strategically placed in a perfect time zone to serve a huge part of the worldâs major capitals, Icelandâs cheap carbon neutral electricity, produced from natural hot springs, kept the cost of the power-hungry computer systems to a minimum. Even its cool climate made it a perfect place to maintain servers which generated a huge amount of heat. Telecommunications companies, sensing the advantage, began upgrading the links to Iceland with super high-speed fibre optic cables.
Whether or not Icelandâs internet capability was aided by the presence of the US military base and its spying program is still debated. What is clear is the internet helped open up Iceland to the rest of the world and the rest of the world to Iceland. What emerged was perhaps predictable for a nation that for centuries has fought to harness its harsh natural environment. Iceland would become a major player in a battle just as demanding: support for challenging journalism, and the democracy it underpins.
The issue of self-determination runs deep in the Icelandic body politic. Not until 1944 did the country win its complete independence from Denmark, the nation that had ruled it since 1814. A binding plebiscite found that 95 per cent of voters wanted to establish an Icelandic Republic. Five years later the Cold War intervened in the fledgling nationâs first steps and despite riots in the streets, in 1951 the Icelandic government signed an agreement for US troops â who had left the country seven years earlier after the Second World War â to return. It was the beginning of a prolonged period of military ping-pong. In September 2006, with the Cold War a distant memory, the foreign troops again moved out. Then, late in 2016, with Russia reasserting its presence in the world, the US government announced it again wanted to reopen its base at Keflavik. If Iceland had become an index for the earthâs military pressure points it was also about to become an indicator of a completely different phenomenon, but the issue was just as dangerous.
In its 2005 annual report the Central Bank of Iceland was particularly upbeat in its assessment of the countryâs economic performance. Iceland had âexperienced one of the highest growth rates of GDP among OECD countriesâ,2 it said. In 2004 the countryâs GDP had risen by 6.1 per cent. The bank was positive about the countryâs financial system too. It was âequipped to withstand shocks to the economy and financial marketsâ.3 But all was not as it seemed. Barely two years later, when the greatest financial crisis since the Depression of the 1930s swept across the world, the economy of the smallest member of the OECD crashed with a horrific thud. This confluence of financial failure and the rise of the internet would produce an unlikely outcome.
On 1 August, 2009, Birgitta Jonsdottir settled down to watch the local 7 p.m. news in Reykjavik. Jonsdottir, an unusual mixture of computer programmer, poet and anarchist, had exchanged her street demonstration skills for parliamentary process. Just four months earlier she had been elected to the Icelandic parliament as a member of The Movement, a political party that campaigned for democratic reform âbeyond the politics of left or rightâ.4 She had risen to power on a wave of public concern about how Iceland had suffered so badly during the global financial crisis. It had been hit worse than most other countries and was left close to insolvency.
One of Icelandâs major savings banks had been among the first to harness the power of the internet and produce online banking. Called Icesave, it had attracted 350,000 investors in the UK and the Netherlands, with ÂŁ4.5 billion of deposits. But the financial crash had destroyed its investments and now it was owned by the Icelandic government, which was keeping it afloat. With Icelandâs tiny population the debts alone were enough to take the country to the brink of insolvency. As the short days of winter turned into the near never-ending days of summer, it was estimated that the local population faced the dreadful likelihood that the equivalent of every man, woman and child in the nation would have to pay up US $50,000 each to bail out the bank. With unemployment increasing and the economy in rapid decline, Iceland stood on the brink of economic collapse. Other banks had been in trouble too. Icelandâs largest bank, Kaupthing, received a âŹ700 million loan from Icelandâs Central Bank, announcing that it was âcommitted to working with the government to ensure regular workings of the Icelandic financial systemâ.5 In other words, with all that debt, if Kaupthing failed Icelandâs finances would be in tatters. Any hopes that Icelanders could be guaranteed the benefits of a stable nation state, with a strong social security net and free public health and public education programmes, were now seriously threatened. Most people understood what was at risk, but they had no idea what had actually gone on inside the secretive banking system.
Iceland had experienced a boom like none other in its history. Stefan Olafsson, an Icelandic professor called it âprobably the most rapid expansion of a banking system in the history of mankindâ.6 The country had been awash with cash. Imported cars jammed the roads; consumer goods flooded in. Bang and Oulfsen sold more television and sound systems in Reykjavik than any other city apart from Moscow. Now, with the economy laid waste, Iceland was friendless. The US would not support its banks, neither would the Europeans, who were demanding vast amounts of money from the Icelandic Government to cover the banking debts. In what became indicative of how legislation passed in the heat of the moment could have far-reaching and unintended applications, Britain invoked anti-terrorism laws, passed after the 2001 attacks on the US, to freeze the assets of Icelandâs banks in the UK.
At the local TV station, Kristinn Hrafnsson, an investigative journalist, was unusually flustered. A few weeks earlier Hrafnsson had received a tip that a then little-known website, WikiLeaks, was about to publish a document which might interest him. It involved one of the financial institutions bailed out by the Icelandic government, the Kaupthing bank. What the WikiLeaks document â the bankâs âloan bookâ â revealed was shocking even by the standards of the global financial crisis, which had come close to destroying the world economy. It showed that borrowings of billions of dollars made by customers of the bank were backed by virtually no security at all. The leaked documents revealed the bank had loaned billions of euros to its major shareholders, including a total of âŹ2 billion to a company with large shareholdings in the bank and subsidiaries meaning it now owned nearly a quarter of the bank. The biggest borrowers had no collateral at all.
Working swiftly, Hrafnsson put his scoop together for that eveningâs news broadcast. It was a classic story of insider trading, with the public being asked to bail out the bank because it was too big to fail. But just before the TV news titles rolled the bankâs lawyers intervened, managing to secure an injunction to stop the broadcast. Under legal pressure, the station pulled the story, and all its newsreader could do was point viewers to the WikiLeaks website. It was a significant moment, showing how information could bypass the old legal gatekeepers who had controlled the dissemination of information for so long.
Jonsdottir, like many Icelanders, was furious. She wondered why it took so long for the information about the bankâs practices to be revealed â and why it had come from a website sheâd never heard of before. Whoever had done the leaking was well informed and courageous.
There were other questions too about how it was possible for an Icelandic court to prevent the publication of information that had already been published on the internet. For although the Kaupthing bank had managed to stop Kristinn Hrafnsson, there wasnât an Icelander with even the vaguest interest in the future of their country who did not know about the contents of the WikiLeaks cable.
If the banks were friendless in Iceland, it was just the opposite for WikiLeaks. It seems that the people and WikiLeaks realised they were fighting the same battle. Despite the legal trickery which saw the Kaupthing bank story stopped at the last moment, Iceland has some of the most robust freedom of speech laws in the world. The Icelandic Constitution outlaws censorship and Reporters Without Borders once described the country as having the freest media in the world. The Icelandic population could not have been more grateful to WikiLeaks for the revelations. The organisation was being spoken of in near reverential terms. Just a few weeks later, in late 2009 WikiLeaks founder Julian Assange and his then deputy Daniel Domscheit-Berg, were invited to be the guests of honour at a conference in Reykjavik organized by the Digital Freedom Society, an internet activist group. Assange, fond of quoting Rahm Emanuel, President Obamaâs former Chief of Staff â famous for saying a good crisis should never be wasted â laid out an audacious blueprint to protect WikiLeaks. He suggested embracing the systems multinational corporations, intelligence agencies and the very wealthy used to hide their activities from scrutiny:
If you look at how multinational organisations move their tax structuring through offshore jurisdictions or just through trusts within countries like the UK, we have to do the same thing in order to protect our sources [from] malicious, vexatious lawsuits affecting our ability to continue.7
Assange said donations needed to be anonymized through offshore bank accounts, so that security equipment such as encrypted telephones, internet infrastructure and postal addresses could be rented, without the funds being traceable. He argued that if you wanted to publish high-level material like WikiLeaks without suffering vexatious lawsuits, there was no choice but to use trusts or international cross jurisdictional arrangements to protect the organisation. He said the issue was not evading a judicial system but preserving an organisationâs ability to continue to publish while the judicial process played out. Most big organisations would drop their cases before they got to final judgement but they wanted to force publishers, like WikiLeaks, to bleed financially in the meantime. The idea of Iceland being a sanctuary for freedom of speech had first been raised at the conference exactly one year earlier by a founder of the Electronic Frontier Foundation and lyricist for the 1970s rock band the Grateful Dead, John Perry Barlow. Jonsdottir recalls Barlow took the âessence of the mess we were in because of the lack of transparencyâ8 and used the ânotion of Switzerland in a reverse wayâ.9 Iceland would become âthe Switzerland of bitsâ.10
Ironically, WikiLeaks, whose motto is âSunlight is the best disinfectantâ had chosen to launch its grand scheme just before Christmas in the depths of an Icelandic winter when the Arctic sun barely lifts above the horizon.
Impressed by their ideas, Jonsdottir, who made her speech on freedom of information and digital copyright, could see plenty of opportunities for WikiLeaks and her party to work together on the issue that united them both: whistleblowing and the protection of sources.
Over tapas at a local Spanish restaurant, Jonsdottir and her political allies discussed drawing up a shopping list to identify the best laws from tax havens and legal entities which protected freedom of speech, and adapt them to provide a safe haven, particularly for those involved in the legally hazardous business of investigative journalism. Jonsdottir wanted to make a âlegal shieldâ11 for both whistle-blowers and sources. Just as important for journalists would be a guarantee that internet service providers managing the servers containing the journ...
