Compared to most of the rest of the world, Iceland has a strong reputation as a clean country. In the most recent version of Transparency International’s Corruption Perception Index (CPI), Iceland ranks in 14th place—quite impressive overall, though behind Iceland’s Nordic neighbors Denmark, Finland, Norway, and Sweden. Yet Iceland’s high CPI score obscures a number of incidents over the last several years, where public officials in Iceland were involved in conduct that seems to raise concerns about potential conflicts of interest. Consider a few of the most high-profile examples:

• In 2017, Iceland’s Minister of Justice was criticized in connection with the appointment of judges to the newly-established Court of Appeals. Notably, at least three of the fifteen judges appointed had personal ties to the Minister: one was a partner at a law firm where the Justice Minister had worked prior to her appointment, another was the spouse of a partner at the same law firm, and a third was the spouse of her fellow party member and colleague in parliament (see here and here).
• In 2019, after revelations of allegations that a major Icelandic fishing company had been involved in bribing Namibian government officials (the so-called Fishrot scandal), demonstrators called for the resignation of the Minister of Agriculture and Fisheries. The reason was his connections to the company, where he had once served as chairman of the board, and his longtime personal friendship with the company’s CEO. Indeed, the Minister said publicly that his first reaction to the scandal had been to phone his CEO friend to ask him how he was feeling (see here, here and here).
• In 2022, the Minister of Finance found himself in hot water after it became known that his own father was among a select few allowed to bid for valuable holdings in a state-owned bank (see here and here).
• In December 2022, the Finance Committee of the Parliament proposed adding to the government’s budget a 100 million ISK grant (approximately US$ 727,000) to a media company, whose CEO was the sister-in-law of one of the committee members. (The proposal was promptly withdrawn when this was disclosed.)

To be clear, none of these incidents necessarily involves corruption. But they all raise concerns about potential conflicts of interest, and the appearance of impropriety. And while each of these incidents arose out of its own distinct set of circumstances, there is a common underlying factor that may have contributed to all of them, and that generally poses challenges to effectively preventing corruption and regulating conflicts of interest: Iceland is very small, with a population of only 370,000 people. Although Iceland is in many ways most similar—culturally and politically—to its larger Nordic neighbors, with respect to population size and the distinct anticorruption challenges it presents, Iceland may turn out to share some common features with other small-population jurisdictions, such as Belize, the Bahamas and Vanuatu. Consider some of the ways in which fighting corruption and conflict of interest may be more challenging—or at least pose different sorts of challenges—in very small countries: Continue reading →