Is Sweden using Iceland to save it's own skin?

Swedish influence on the currency laws and its implications on IceSave

According to Iceland Talks sources there is more to the Aserta currency fraud case than meets the eye. The media picked this up a few days after Iceland Talks got weather of this matter, so we decided to wait and see what the media here in Iceland would say about this issue. The Icelandic media fell short as they often do, and failed to address the main point of the whole currency fraud scandal. They did not get the point.

In short….

To start at the beginning, here is an article about this case, but in short it goes like this: Four men have been arrested and interrogated by the police financial fraud squad. Three of them used to work for Straumur investment bank (owned by the Björgólfur father and son).

They are believed to have landed between 500-800 million ISK into their own pockets in those shady currency deals, that directly went against the emergency laws and the Icelandic currency, and the whole fragile financial system. Through the Swedish based company Aserta AB, they are believed to have traded around 13 billion ISK in violation of the laws mentioned above.

According to media reports the 13 billion ISK went through the companies Aserta AB and Glacier Capital Partners. These companies used the off-shore market where ISK is traded 20-30% lower than at the local on-shore market in Iceland that is supported by the central bank of Iceland.

It is believed that around 200 million ISK worth of assets have been frozen in Iceland and Sweden because of this Aserta AB fraud case. The Swedish tax authorities are aware of the matter and are looking into it, and the Swedish police financial fraud office EBM is investigating tax fraud in connection to Aserta AB.

Here is where the Icelandic media coverage more or less ended.

The plot thickens….

Iceland Talks sources claim that there is a deeper and more sinister matter at hand, issues that are larger than just a case of currency fraud. The political side of the whole matter has much more serious aspects than it seems at first.

To be able to sell and buy currency you need a buyer and a seller. The bank in question is the old Wallenberg family bank called Skandinaviska Enskilda Banken (SEB). The bank is rumoured to have transferred money into the Icelandic bank accounts of Aserta AB. The media in Iceland mention this bank, but not the fact that the bank has been one of the biggest ISK currency trader outside Iceland, since the icelandic banking system crashed.SEB

The dubious currency trades has two sides. The parties involved make a lot of money bypassing the laws, but the serious consequences are that the Icelandic nation looses out and the Icelandic krona stays weak and the nation cannot get back on its feet because deals are being done to serve private interests of individuals and corporations. They only seek the profit, no matter if they are bending or breaking laws in order to make the profit they seek.

It is very likely that they currency traders arrested did a lot of business with the Swedish banks to get the „off-shore“ prices, especially because of the persistent rumour about the Skandinaviska Enskilda Banken has been one of the biggest player on the ISK off-shore market.

Even though foreign banks are not breaking any rules doing business with Swedish clients, they are fully aware that they are doing business in Iceland kroner (ISK) on an off-shore market.

They know full well the serious consequences of their actions. Not only are they preventing economic rebuilding in Iceland and hurting the nation and its citizens seriously, but they are profiting immensely on the off-shore market at that same time, on the expense of Iceland as a whole.

The political implications

Sweden and the Baltic nations

This might seem far fetched but the case is simple. Sweden has been lending money to the Baltic nations, Estonia, Lithuania and Latvia for a long time now. „For Sweden, tiny Latvia, Lithuania and Estonia are too big to fail“. This was said in the NY Times a year ago. „Another article from the same time claimed that: In the last decade, Sweden’s banks plowed billions of kronor into their tiny but booming neighbors across the Baltic Sea. Now severe recessions are turning the Baltic states into the Swedish equivalent of what subprime mortgages were to American banks.“

The Baltic Times report that: The three main lenders Swedbank, Nordea and SEB could loose an estimated 27 billion Swedish kroner (SEK) in 2009 and similar in 2010. The Swedish Central Bank detected at a relatively early stage that the Swedish banks’ lending in the Baltic region was not sustainable and that it would lead to significant risks“.

How is this connected to Iceland?Swedish-Chef-002

The well reported fact that the Swedish government was the one that put massive political pressure on the other Scandinavian nations, the IMF and the EU to make sure the Iceland would not get any loans unless the IceSave deal is done and paid by Iceland.  Sweden could be in serious trouble if the Baltic nations do not pay their debts.

So Iceland is a kind of scapegoat in a larger political scheme of things and is used as an example to prevent the one thing that could be dangerous to Sweden, that an example could be set, that small nations like Iceland are allowed to not pay the debts of their banks. If Iceland will not pay IceSave, then the Baltic nations could refuse to pay as well.

The self interests of Swedish politics and financial risk taking are taken out on Iceland. It sounded strange when it came out last year that it was Sweden that stood in the way of Iceland getting loans outside the IMF deal. This now makes complete sense.

Sweden is directly hurting Iceland to save their own skin. They bend backwards to fight against Iceland by standing in the way of loans to Iceland, all because of the IceSave deal. A deal they have no interest in, in the first place.

By doing this, Sweden is not only hurting Iceland as a nation, but its chance to rebuild itself. The IceSave debate is by no means clear cut. What tops the whole mess is the fact that the Swedish banks get away with helping the dubious currency traders to execute off-shore deals, that hurts Iceland and its economy massively.

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