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Iceland: "It will fix itself"

Tobias Munthe
14 January 2009

Iceland Review staff writer Tobias Munthe explores the upside of downsizing and asks if Iceland's economic collapse might not be an opportunity in disguise.

There is a uniquely Icelandic expression which means something like "it will fix itself" - thetta reddast. While it may sound a little devil-may-care, these two strange words have never had such symbolic significance as they have today. Grammatically, there is no subject in this sentence, no one in particular is meant to do the fixing - Iceland's arcane language allows for such impersonal thinking.

But thetta reddast doesn't exactly mean "someone else will fix it" - in a nation this small the buck always stops pretty close to you anyway. It promotes both the "we can do it" attitude of the Special Olympics and afterschool sitcoms, but crucially also the "it will be done" attitude of the underground railway and the Exodus. As such, it represents a much-needed commitment to curbing panic, maintaining perspective and moving forward despite obstacles.

"For centuries, Icelanders lived in very harsh conditions," says sociologist Helgi Gunnlaugsson, at the University of Iceland, "but we have always adjusted to whatever was thrown at us. If weather conditions were good then we could fish and harvest, but some years there was just no summer! No grass was grown, so we adapted. Some months, years even, there were no fish, so we found alternatives." During its explosive growth over the last decade, Iceland has drawn upon the strengths of its past: resourcefulness, adaptability and stoic faith. But now more than ever, the nation will have to hold tight to its virtues in weathering what the future brings. "We enjoy the sun," Gunnlaugsson adds, "but it is built into our psyche to know that a storm can happen at any moment." And a storm of vast proportions has indeed just hit Iceland.

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Squeezed harder than most in the credit crunch because of a heavily leveraged and vastly outsized market, October 2008 saw the nationalization of Iceland's three biggest banks and the virtual dissolution of any recognizable economic infrastructure. Icelanders have been left reeling as they watch the enormous material growth of the last decade and a half shrinking to unrecognizable proportions. While recently finalized foreign aid, coupled with assurances from the government to alleviate the suffering of ordinary homeowners, promises some stability, these are volatile times. As the dust settles on the rubble of a much altered nation, there is much to question.

Icelanders are angry and confused, there's a growing protest movement set on routing out those responsible for Iceland's predicament and there's an element of despair regarding the vast changes that ordinary people are experiencing in both their professional and personal lives. The three main points of urgent interest today are whether Iceland should change its currency, whether the Icelandic government should apply for EU membership and the question of early elections. Everyone has an opinion, and with issues of such magnitude there is widespread disagreement as to the preferable course of action. Generally speaking however, there is consensus on the need for change, not only in terms of political and economic restructuring, but also in relation to values and even to national identity. The era of Icelandic excess - parading around in shiny Range Rovers (now referred to as Game Overs), weighing up the benefits of Greek versus Spanish extra virgin olive oil - has come to an end.

Despite the anxiety, anger and confusion, there is nonetheless a widespread opinion emerging that this colossal blow to national self-confidence may nonetheless be a masked opportunity. People speak of reviewing the political process, re-imagining Icelandic entrepreneurship, reinforcing commercial self-reliance, reversing the trends of materialistic excess and rebuilding alliances with Iceland's erstwhile friends on the global stage. All over the island, Icelanders are seeking to reconnect with the values buried by the consumerist frenzy that has had the nation in its thrall for over 15 years. While many go so far as to say that this crisis represents Iceland's comeuppance for years of inferiority-complex-driven excess, there is at least consensus for change and for reflection. As psychotherapist Páll Einarsson puts it: "We have indulged in delusions of grandeur. Now we need to look at ourselves in a new light, integrate our feelings, identify our inferiority complexes, review our values and move forward as one nation among many."

For a population as small, interconnected and homogenous as Iceland, the possibility of a genuine cultural shift is less of a pipe dream than it might be for a larger nation with greater class, race and net-worth inequality than this insular outpost in the North Atlantic. In that sense the historic election of Barack Obama, closely followed here in Iceland, came as an inspiring call to arms for a society driven to the brink of despair. "The 'Urgency of Now' is a phrase of his," says Gudmundur Steingrímsson, a writer and junior politician, "and this sense of urgency is something that our generation very much relates to. We have the ability to work effectively across party boundaries and make bold decisions to reinvigorate our political landscape. We've been consuming too much and the crisis brings with it a new sense of realism."

Iceland has never had such an educated work force, and has the opportunity to imagine (and implement) an economy in proportion to its size and specific skill-sets (which are ever-growing). "We have a well educated, motivated and entrepreneurial population," says Dr. Svafa Grönfeldt, Rector of Reykjavík University. "We need to design a framework to foster that talent, recognize what we do best, learn from our mistakes and emerge again stronger and wiser." One of her solutions to what is commonly referred to here as the kreppa (or "crisis") is to encourage innovation by tapping into the entrepreneurial spirit of Icelanders. The House of Ideas or Hugmyndahus organized by Reykjavík University and the Icelandic Art Institute following a series of successful workshops on sustainable innovation with the artist, Björk, nattura.info and Klak, the Icelandic Innovation Center is a venue designed to bring entrepreneurs, designers, artists, business people engineers and others together to develop projects with the help of seed grants to contribute to Iceland's economic sustainability.

"If you want to sustain the high quality of life here, you have to be creative," Grönfeldt explains. To this end the initiative is establishing a so-called ideas lab, a sort of mass rain dance or think tanks to precipitate large-scale brainstorming. However, Idea House seeks to engage the nation's brightest minds not only to devise solutions, but also to "encourage people to stay and rebuild", that is, to keep us engaged and stem the real threat of brain drain. Grönfeldt sees the crash as an opportunity to rebuild with an eye to a more diverse, sustainable future, "a more flexible economy based on our basics - energy, healthcare, education, fishing, high-tech, nature. Finally there's an open playing field not dominated by a small number of conglomerates."

And already, the games have begun.

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If Iceland is to re-imagine its economy constructively, entrepreneur- ship is clearly going to be the key. Taking their cue from a small handful of older companies that are currently weathering the storm with much better prospects than the gargantuan conglomerates, entrepreneurs across sectors are looking at the opportunity to build on tangible skills and put the ravenous appetite for intangible assets aside.

"I'm not looking for a quick kill like inventing the new Facebook," says Ólafur Gauti Gudmundsson, a specialized programmer and co-founder of Rendezview, an Icelandic IT start-up. "I like working for myself, doing something that I enjoy and I believe that for a start-up to have a chance of success, you have to be scratching your own itch!" Gudmundsson is in his early 30s and very much representative of the new Icelandic school of entrepreneurship: "It has been tempting for people to look for quick, short-term money-making solutions, but you need to look out for the long-term. The key is innovation because it drives diversity. People talk about financial bubbles, but the thing about bubbles is that they burst. What I would like to see is a culture of ‘bubble wrap', meaning that one or two sectors can explode without affecting the integrity of the whole."

Dr. Gylfi Magnússon, a professor of economics at the University of Iceland, has been watching Icelandic business practice with increasing concern over the last years and feels that economic restructuring will happen when Iceland harnesses its ‘real' assets: "We have everything that we need to produce and export our own goods and services. There needs to be greater distribution of ownership and control and we need to scale down our dependence on foreign borrowing and imports."

Because there has traditionally been a high amount of flexibility within the Icelandic labor market, Magnússon is fairly hopeful that unemployment will not cripple the nation for long. People are happy to diversify, and it has not been uncommon for people with white-collar educations to take on blue-collar jobs when the need arises, but there are some misconceptions too. Icelanders like to say that fishing was their mainstay for generations and it can continue to be that in times of strife. But perhaps more than any other sector, fishing practices have changed drastically in recent years and it is highly unlikely that unemployed bankers are going to go back to fishing to earn their livings.

Indeed as Arthur Bogason, Chairman of the National Association of Small Boat Owners in Iceland (and Co-Chair of the World Forum of Fish Harvesters and Fish Workers), puts it, "It would mean that we were in a truly desperate situation if people were going back to subsistence fishing." Clearly the "In Cod We Trust" mentality is not enough to save the nation at this stage, but that is not to say that Iceland might not find some salvation in its old religion. "We can make changes to boost production and increase employment: using our produce to make more ready-made meals for example, increasing the export of our technologically advanced boats, or distributing more fishing rights to the small boats sector to create jobs and strengthen coastal communities." Bogason argues that the nation needs to find creative ways of extracting itself from its predicament and reconnecting with what he terms "fundamental values". "We need to be humble and focus on making money by doing what we're good at," he says. "Knowledge has been passed down through countless generations so that today we have one of the most effective, technologically advanced small boat fleets in the world. This is a very valuable asset."

Bogason's point about "fundamental values" is that - in addition to developing smaller businesses and encouraging entrepreneurial gusto - certain social changes also need to be effected. With a nation holding its head in its hands and certain small factions occasionally letting their anger spill over into violence (a recent demonstration in front of Reykjavík's police headquarters turned into a minor riot), there is also a sense that the crisis is bringing people together in an unprecedented way. As Thórir Gudmundsson, head of International Projects at the Icelandic Red Cross, puts it: "I have noticed that people have started going to handball games again. Families are spending time together in a way that they hadn't done for many years. Extended families are meeting up of a weekend to make slátur (home made blood sausages). There's a realigning of priorities, and things that seemed important during times of prosperity cease to be so."

Until recently Ásgeir Ingvarsson, a political science student and secretary of the Association of Icelandic Students Abroad, had been weighing his options and considering how best to enact what he refers to as his ‘little Napoleonic plan'; to become a successful international entrepreneur. Now the landscape in which he finds himself considering his future is alarmingly tenuous. In the short-term, Iceland's Great White Hope - its pioneering students abroad - have been severely threatened because their student loans have become worthless abroad; in the long-term, their prospects are equally fragile as the economy they had been planning to enter is now in ruins.

But Ingvarsson remains sanguine: "Lack of funds is much less worrying than lack of confidence. I'm still ambitious and confident. Yes the outlook has changed drastically, but we haven't lost our resources, there has been no nuclear spill polluting our waters, no plague killing our livestock. Our intellectual and natural resources are still intact, and we have both a strong work ethic to back them up and a sturdy welfare system to lean on."

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For several weeks now the blame game has been the order of the day, with Davíd Oddsson (Chairman of the Central Bank), Geir H. Haarde (Prime Minister), Ingibjörg Sólrún Gísladóttir (Minister for Foreign Affairs and leader of Samfylkingin - the Social Democratic Alliance), the owners of Glitnir, Landsbanki and Kaupthing (the three largest banks) and the small handful of imprudent Icelandic billionaires among the main focus of the nation's ire. Charged with everything from rapaciousness to incompetence to lack of accountability to ignorance and outright deception, this motley crew has a lot to answer for. At the same time though, it is impressive to see that the general public is willing to assess their own shortcomings frankly and confront the future accordingly.

"We have to look in the mirror and be more truthful than we've ever been before," says Gudmundur Oddur Magnússon (a.k.a Goddur), an artist and professor of graphic design at the Iceland Academy of the Arts. "We have an opportunity here: we can't change the past and we have no idea what the future holds, so we have to do something positive today. Collect good days and create a brand new past for ourselves to give us the courage to deal with the future!" There's much to rebuild and relief will take a long time to arrive, but this buoyant, resourceful nation is already demonstrating that the war cry of Thetta reddast may hold deeper truths than it ever has before. 

Photos by Tobias Munthe  

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