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Page last updated at 15:48 GMT, Thursday, 29 May 2008 16:48 UK

Iceland gets well-connected

By Stephen Evans
BBC News, Reykjavik

The signs of the super rich in Reykjavik are as clear as the snow on the black volcanic mountains beyond its harbour.

Iceland is no longer remote, it feels the great global forces

Until a few decades ago, Iceland was dependent on the harsh whims of the North Atlantic. Now, its banks are twice as big as its fishing.

And that means the usual trappings of riches: the Hummers and the Porsche Carreras, driven by young men with chiselled faces, with tans that could not have come from the weak Icelandic sun; and the bankers who split their time between Reykjavik and the City of London, living on adrenaline and caffeine.

One told me he thought breakfast was for losers.

The signs are also at the airport in Reykjavik. While the riff-raff fly to Keflavik, 40 miles (64 km) away on cheap flights, the hyper-rich (dare I say, the hyper-rich riff-raff) fly straight to the capital from New York on private jets.

These fired-up young men from Wall Street are disgorged from the Gulf Stream and Bombardier jets on Thursday night, ready for the night-clubs that roar into action around midnight.

One club is called Goldfinger: "Iceland's only fully-licensed club with private rooms", it says; or there is the Vegas Gentlemen's Club and the Odal Gentlemen's Club, which pitches itself as "for men who are serious about their fun".

Karl Olafsson, who runs Luxury Adventures, which organises tours, told me the troubles on Wall Street have cramped the style.

Icelanders clearly have an enterprising and outward-looking mentality, perhaps from the Vikings

These men, fuelled by testosterone and dollars, are now reduced - can you imagine this? - to scheduled flights, skimping to save more than a few cents for the rest of the weekend which might cost tens of thousands of dollars, what with a helicopter to the glaciers for snow-mobiling or the fancier restaurants, some of which offer "whale done in the Japanese style" or curried guillemot.

Changing times

It is all a long way from the old Iceland.

Ten years or so ago, the Icelandic banks were privatised. With only 300,000 people as potential domestic customers, the banks looked abroad.

Map of Iceland

They borrowed to lend to Icelandic companies which then bought foreign companies, including half the British High Street like, aptly enough, the Iceland supermarket chain and the House of Fraser stores.

Nowhere exemplifies the contrast between the old and the new better than the company CCP, which produces the video game, Eve Online, in flashy offices overlooking the trawlers in the docks in Reykjavik.

Outside, the fishing boats bob and the North Atlantic swells. Inside the incongruous glass and chrome building, software designers create an online alternative universe of spaceships and futuristic warriors for 300,000 subscribers to manipulate on screens around the world.

If it were not for the snow on the black mountains outside the window, you could be in any Californian hi-tech company, complete with the drum kit and pool table and espresso machine and salad bars that young techies the world over seem to demand for their in-work leisure.

It is as though the world has changed in Iceland's favour in the last decade. The internet has destroyed distance, and Icelanders clearly have an enterprising, outward-looking mentality, perhaps from the Vikings, they say, perhaps from the fishing, perhaps from the long winters of reading and thinking. Maybe.

All cod psychology, of course (forgive the pun).

Natural energy

In truth, the country only has one real natural advantage: abundant, cheap power that literally comes out of the ground as steam.

Moreover, this geo-thermal energy, some of which comes up through pipes up to three miles (five km) deep, does not produce global-warming gases.

Icelandic geyser [Photo: Tom Sandars]
Iceland is famous for its hot springs and geysers

This cheap energy is attracting the world's big aluminium companies. Their three big smelters have provoked an intense debate over industry and wages and jobs versus the preservation of the wilderness.

British environmental activists commute to Iceland by ferry and bus, so avoiding aviation and the carbon-dioxide it produces, though the conscience-cleaning journey does take five days, instead of the three hours on the plane.

But Iceland is no longer remote. It feels the great global forces.

Its capitalists look for companies across the sea to buy, and dare I say, to conquer. The money rolls in but so does the credit crisis, buffeting Icelandic banks.

Speculators roll in to bet against the Icelandic currency, and young men roll in from Wall Street for a loud weekend.

It has to be better, does it not, than the old life of scratching a living on a barren, volcanic land or heading out into a hostile ocean for an uncertain catch?

Better, say I, to trawl the web for companies to buy than the ocean for fish in a winter storm.

From Our Own Correspondent was broadcast on Thursday, 29 May, 2008, at 1100 BST on BBC Radio 4. Please check the programme schedules for World Service transmission times.

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