Ex-PM to go on trial for Iceland banking crisis

REYKJAVIK: Iceland's former prime minister Geir Haarde goes on trial on Monday over the country's 2008 financial meltdown, a case he describes as a "farce" and which his lawyers will ask the court to dismiss.

Haarde is the only politician to face trial before the Landsdomur, a never-before used special court for cabinet ministers, over the country's stunning economic collapse in which all the major banks failed.

Haarde, 60, told AFP in an email his lawyers would ask the court to throw out the charges, his third request for a dismissal.

Political analysts have criticised parliament's decision to press charges against the former prime minister.

"Unfortunately the Althingi (the parliament) did not move wisely when it decided to press charges," Gunnar Helgi Kristinsson, a political science professor at the University of Iceland, told AFP.

He claimed that personal vendettas by members of the then-opposition lay behind the charges.

Current Finance Minister Steingrimur Sigfusson has been one of Haarde's toughest opponents and has argued the case is important in principle.

"When it became clear we were heading towards catastrophe ... the record shows very little was done to avoid it," Sigfusson told AFP in a July interview, explaining why he felt the trial was needed.

Kristinsson said that while finding Haarde guilty "may well be in accordance with the law ... to single him out and make him alone accountable for the crash is obviously not in accordance with the people's sense of justice."

In an interview with AFP in July, Haarde called the trial "a political farce motivated by some old political enemies who are cloaking this farce under the cover of a criminal trial.

"We saved the country from going bankrupt," he insisted, claiming that if he and his government had acted differently when the banks failed in October 2008, the economy could have fallen off a cliff.

"That is evident if you look at our situation now and you compare it to Ireland or not to mention Greece," he said, adding that the two debt-wracked EU countries "made mistakes that we did not make ... We did not guarantee the external debts of the banking system."

When Iceland's bloated financial sector imploded, its three largest banks alone held assets equal to 923 percent of gross domestic product.

"We had to let them go. They went bankrupt. And it turns out now that this was the right thing to do," Haarde said, pointing out that "there was a banking collapse but the real economy, all the productive capacity in the country, was kept intact and is still running."

The bank failure plunged Iceland into a deep recession and sent the value of its krona spiraling.

Haarde, the head of the right-leaning Independence Party who held the reins of government from mid-2006 to early 2009, was ousted after a public uproar over the crisis.

The economy has gradually returned to growth and observers say it may not need to draw on the last installments of an International Monetary Fund bailout.

Among Haarde's most outspoken opponents is Finance Minister Sigfusson, the head of the current government's junior partner, the Left Green Party.

He has lamented the fact that parliament failed to indict other former government ministers and recalled that a parliamentary commission into the crisis found that Haarde had shown negligence.

"I don't think anyone is saying the crisis could have been completely avoided but couldn't you at least have done something to minimise the damage?" he told AFP, insisting "this is not political or personal."

Copyright AFP (Agence France-Presse), 2011