Page last updated at 08:03 GMT, Wednesday, 15 October 2008 09:03 UK

Cash freeze hits Iceland festival

By Ian Youngs
Music reporter, BBC News

CSS's Lovefox is due to lead her band at the Airwaves festival

A music festival in Iceland is hoping to lift the gloom of the country's economic crisis, despite being hit by severe cash problems itself.

Biffy Clyro, Vampire Weekend and CSS are due to headline the Iceland Airwaves event in Reykjavik.

"People need something uplifting and positive in this tense situation," said event promoter Thorsteinn Stephensen.

But the foreign bands have not yet been paid because of spiralling costs and paralysis in the banking system.  

Iceland has been badly hit by the global economic crash, with its banks on the brink of collapse and its currency in freefall.

International acts have agreed to perform despite not receiving their fees in advance, as would normally happen, Mr Stephensen said.

'Not a usual situation'

"We have a longstanding working relationship with most of the agents. We've been doing this for 10 years now and I believe there's trust there, so the bands will get paid in cash in Iceland if we don't manage to make the transfers," Mr Stephensen said.

The Icelandic banking system nearly collapsed last week
"They will get paid on the day of the show in cash. It's not a very usual situation, but that's the way it has to be."

The event will start as planned on Wednesday, he said, even though it will mean the organisers losing money.

"It's still going ahead," he said. "We keep our heads up and we're going to put together a great festival. It was never an option in our opinion to cancel the whole thing.

"We're not making any money. The cost of artists has almost tripled."

Fees were agreed in foreign currencies and the exchange rates have shifted radically since the contracts were signed.

"And on top of that all, airline tickets have gone up and all our costs have gone up, so we are going to have to support this one with our own money,"  Mr Stephensen said.

Cash from ticket sales has also been cut off after the ticket agent's bank account was closed, he said.

If the country's problems continue, "it's going to be really hard to put on the festival in the same form next year", he added.

'Dance to forget'

Iceland has produced unique, acclaimed artists like Bjork and Sigur Ros, and became a favoured hangout of rock stars like Damon Albarn and Jarvis Cocker.

Arni Hlodversson, of Icelandic band FM Belfast, who are appearing at the festival, said: "I think people will try to dance to forget this weekend and deal with things next Monday.

Biffy Clyro
Biffy Clyro played at this summer's Reading and Leeds festivals
"I went to a meeting with all the Icelandic bands and the mood there was really good, and everyone seemed really happy that the festival is coming and relieved that now they can forget about their worries and just play music."

Keane, Klaxons, Fatboy Slim and the Kaiser Chiefs have all appeared at Iceland Airwaves in the past.

This year's event takes place in various venues across Reykjavik until Sunday.

"The downtown area is usually in a really festive mood during the festival," Mr Stephensen said.

"That hasn't quite happened yet. People are still in a state of shock. But I'm sure when it all starts people will put their smiles on again."

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