Page last updated at 01:51 GMT, Wednesday, 15 October 2008 02:51 UK

Icelandic cool gives hope for future

By Clive Myrie
BBC News, Reykjavik

Fishing boat in Reykjavik
Icelanders have known bad times and poor catches before

The Sauvignon Blanc was chilled to perfection as I sat in the restaurant and sipped from a frosted glass surrounded by the BBC team on assignment in the Icelandic capital.

The chairs were in black leather, the walls all white, lights dimmed low with "lounge music" oozing out of the Bang and Olufsen sound system.

The word "cool" was invented for this place, and I don't mean ICEland.

We were enjoying a little down time after a week's reporting covering this country's economic crisis.

Only the depreciation of the local currency, the krona, allowed us to dine in this place.


The Hotel 101, once part owned by Blur frontman Damon Albarn, now belongs to one of the richest women in Iceland.

It is a symbol of affluent Reykjavik, just a week ago one of the wealthiest countries per capita on earth; now Iceland is a nation facing bankruptcy.

The recent global economic crisis has hit Iceland hard.

Fishing once sustained this North Atlantic volcanic isle, but in the last decade it was finance and banking that brought in the cash.

Free market reforms, and a privatised banking sector allowed Icelandic financial institutions to flourish, spreading and expanding aggressively abroad, a little like Vikings of old.

Up until last week 76% of trading on the Icelandic stock market was in banking shares.

So guess what? When those shares plummeted and the banks' assets were frozen by the government which nationalised the three biggest institutions, the country was pushed close to bankruptcy.

Trading on the stock market was suspended and the krona became virtually an untradeable currency.


I interviewed the President of the Icelandic Stock Exchange Thordur Fridjonsson and the Prime Minister Geir Haarde twice during my reporting trip.

I was struck by how calm they came across in the interviews.

Geir Haarde
PM Haarde managed to be relaxed, despite the crisis

They were relaxed, jokey - could the same have been said of Gordon Brown in similar circumstances?

And yet at the same time they were deadly serious about the dire straits their country was in.

The Government is working "day and night," the prime minister told me, to get emergency loan packages from other countries including possibly Russia and the International Monetary Fund.

Loan deals have already been agreed with Holland and the UK.

The stock market eventually reopened this week and despite fears of a 20%-25% fall in stocks, on the first day the fall was a mere 5.84 points, nothing to write home about.

I have a feeling the calm, philosophical demeanour of two of the most important people in the country charged with getting Iceland out of its current financial mess, is indicative of the nation.

This is a people used to boom and bust, good years, bad years, used to times when the trawler nets are full, then the next year virtually empty.

Oh yes, make no mistake, there is anger that the nation's leaders had allowed the markets to run wild, putting everyone at risk.

But there seems to be deep down a belief that the country will rise again and ride out this storm, roll with the punches!

Now that is the true essence of cool.

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