Viking macho meets the credit crunch: Icelanders are used to stormy weather
When the credit crunch first hit, Icelanders blamed everyone but themselves: international banks for their loss of faith, hedge-funders in London for betting on the country going bankrupt. Seven months later, though, with its current troubles and the recent central bank rescue of Glitnir, Iceland’s third largest bank, the mood is one of anger amid the dawning realisation that perhaps Iceland’s own politicians and bankers may have played a part in the crisis all along. In bars and restaurants along Laugavegur, Reykjavik’s main shopping street, people are critical of Geir Haarde, the Prime Minister of a beleaguered coalition, while his finance minister, Arni Mathiesen, whose only qualification to a knowledge of high finance would appear to be a masters degree in fish pathology from the University of Stirling, risks becoming a national joke. In an emotional policy statement earlier this month, Haarde assured his countrymen that for centuries they have shown stamina in the face of adversity, but for ordinary Icelanders, facing rocketing inflation, increased debt and the value of the Icelandic crown in freefall, group therapy isn’t enough. Action should have been taken when the Althing, Iceland’s ancient parliament, gave Haarde the goahead in May to seek an international bail-out and this week’s rescue plan may be too late. The only real player is being seen as David Oddsson, Iceland’s longest-serving premier, and chairman of the central bank. His role in the takeover of Glitnir — at the expense of its existing shareholders — is viewed as a continuation of his long-standing vendetta against Jon Asgeir Johannesson, chief executive of Baugur, which owns a swath of household names such as Hamleys and Karen Millen in the UK, Magasin du Nord in Copenhagen, and has a stake in Saks, New York. As a result of the Glitnir takeover, Stodir, an investment company controlled by Baugur and the largest shareholder in Glitnir, filed for administration, leaving Baugur to lick its wounds. Meanwhile, the ramifications from the Glitnir debacle secure Oddsson a political doublewhammy. The one person who could have vetoed the Glitnir takeover was Ingibjorg Solrun Gisladottir, foreign minister and chairman of the Social Democratic Alliance in the coalition government with Haarde’s Independence party. During Oddsson’s premiership between 1991 and 2004, Gisladottir was his main adversary but a benign brain tumour, discovered during a recent visit to New York, removed her temporarily from the stage, burdening Haarde, Oddsson’s natural successor, with almost total humiliation. As Major was to Thatcher, as Brown became for Blair, so Haarde is to Oddsson.
Baugur’s takeovers are emblematic of the neo-Viking raids launched by Icelandic consortia over the past five years. The country’s biggest banks, Landsbanki (which was nationalised on Tuesday) and Kaupthing, have funded dozens of deals, mainly in the retail sector, as well as offering highly competitive internet savings accounts in the UK such as Icesave and Kaupthing Edge, which have attracted 150,000 British savers. These adventures account for the banks’ current liabilities, which equate to eight times the country’s total domestic product and, as Iceland’s credibility shrinks with rating agencies such as Standard & Poor’s, Icelanders are asking themselves how the situation was allowed to get so out of hand. The answer lies in the Icelandic temperament, which necessarily tends to optimism in the face of unpredictable weather. One never knows when the sun will shine next, so during fine weather Icelanders tend to fill their boots, prompted not by greed but the hard times that undoubtedly lie ahead. Such zeal often comes unstuck, as was the case a few years ago with attempts to establish fish and mink farms, and more recently with the speedy privatisation of the banks at the turn of the millennium. Then there is the tragic tale of bioscience company deCODE Genetics, whose stock has plunged from $68 to $0.33 on Nasdaq, and the ambitious Karahnjukar Dam project, whose hasty construction by state-owned Landsvirkjun was of concern to Alcoa, the US aluminium giant which buys the hydro-electricity generated from it to power a huge smelter here. Perhaps Britain is responsible for encouraging such unrestrained zest. When British troops invaded Iceland in the spring of 1940, to save it from falling into German hands, they found a country largely stuck in the mid-19th century, with very little infrastructure. In order to build roads and aerodromes quickly, and to take advantage of the 24-hour daylight, the indigenous workforce was fed amphetamines. Nearly 70 years later, the drug of choice for the rampaging youngsters one sees at weekends on Reykjavik streets is speed (and since you ask, elsewhere in the Nordic capitals it’s heroin for Oslo, cocaine for Stockholm, marijuana for Copenhagen and in Nuuk, Greenland’s biggest town, anything they can lay their hands on).
Criticism is avoided in a country whose population is so tiny that, somewhere down the line, everyone is related to everybody else. If you call a man a fool behind his back, you risk upsetting the Icelander to whom you are speaking who is, unbeknown to you, the second cousin of the fool. Instead, Icelanders use euphemistic terms to signal disapproval, such as ‘he’s rather special’. Should direct confrontation arise, the Icelander will revert to a position of defiance. It is quite common to hear a minister declare, ‘The measure I intend to introduce has been universally criticised but I’m going ahead with it anyway’ — and what’s more, his Viking machismo will receive universal applause. In this respect, Icelanders can at times resemble the character of Bjartur, the sheep farmer whose wilful ignorance ends up destroying his family in Halldor Laxness’s 1935 epic Independent People. Of course the Icelander has mellowed since the novel’s publication; still, nothing will get his back up more than criticism from abroad, especially about the Icelandic economy or environment. The television news item most guaranteed to evoke groans in a Reykjavik bar is one reporting on environmentalists, invariably foreign nationals, being arrested for chaining themselves to Alcoa cranes or bulldozers.
Icelanders like to talk shop in ‘hot pots’ — giant, outdoor Jacuzzis — just as their forebears did over 1,000 years ago. Astute foreigners doing business here will gain brownie points for suggesting a conference at a pool — and the really smart will suggest meeting at Seltjarnarnes, the only pool in the Reykjavik area to blend geothermal with sea water. It makes your skin tingle.
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