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Page last updated at 09:54 GMT, Wednesday, 15 October 2008 10:54 UK

Iceland: Britain's unlikely new enemy


Ingibjorg Thordardottir
BBC News

Until a few days ago, Britain was admired and respected by the average Icelander. But the UK's moves to seize the assets of this isolated European state have provoked a backlash of feeling and escalating resentment.

"They treated us like terrorists."

Iceland fan in full face paint
You wouldn't like him when he's angry

Talk to the people, the government, the media, in fact anybody in Iceland, and that is the overwhelming feeling about Britain these days.

The collapse of Iceland's banking system - one in which many Britons had a stake - is the reason for this resentment.

In a bid to claw back some of the money, the British government seized Icelandic assets in the UK under the Anti-terrorism, Crime and Security Act 2001. The die was cast. Your average Icelander draws the line at being called a terrorist.

Within days the British have gone from being friends to arch foes. British folk may have been too preoccupied to notice but sharp words have been flying across the North Atlantic.

"It's really simple," says a lawyer in Iceland. "Those that I have spoken to are determined not to go to the UK any time soon, if ever."

Icy words

Public enemy number one is the UK Prime Minister himself. A few days ago, Iceland's health minister threw diplomatic convention to the wind when he attacked Gordon Brown on public radio.

Bemusement on the streets of Reykjavik last week

"Gordon Brown made the calculated decision that to raise his ratings in the polls, it would be ideal to attack Iceland. This has been made very clear," said the minister, Gudlaugur Thor Thordarson.

And in an echo of the cod wars that blighted relations between these two countries between the 1950s and the 70s, Icelanders have started fighting back.

"Ordinary Icelanders are no more responsible for the risk-seeking businessmen who happen to hold our passport than the people of north London are responsible for the destructive behaviour of the talented Amy Winehouse," said Icelandic professor Eirikur Bergmann Einarsson in the Guardian.

"And even though most of us still enjoy most things British, we are furious with the UK government."

For Icelanders, it is all about reputation. This small country of 300,000 people feels it has spent years building a name for itself and is finally being taken seriously by the rest of the world. It's even hoping to get a seat on the next UN Security Council.

Rebirth of cool

Many British people had been seduced by the charms of this exotic, distant Nordic neighbour.

Blue Lagoon
The Blue Lagoon is a tourist magnet

As an Icelandic journalist working in the UK, I've become used to the mutual admiration that has grown between the two countries.

Icelanders liked Britain and flocked here for the culture, shopping, football and the people.

In turn, young Brits have developed a curiosity about this far-flung European nation. It has become a mini-break destination and British stag parties - often reviled by foreign host countries - were largely welcomed because Icelanders are known as party animals.

Icelandic music - with street cred stars such as Bjork and Sigur Ros - and culture is being exported to the UK like never before.

Now London, the once-popular destination for intrepid Icelanders, is bottom of the list.

Those who do make the journey will find British intrigue has turned to pity. Where once people were impressed to meet an Icelander (there are not that many of us), now we are greeted with a sorrowful "poor you".

In just a few days all the good in the relations between the two nations in three decades disappeared
Blogger Stefan Fridrik Stefansson

But there's no chance of these compassionate sentiments being returned. To this self-declared peaceful nation it is incomprehensible that the UK government used anti-terrorism laws to freeze the assets of its banks in Britain. They even blame the British for precipitating the downfall of its biggest bank, Kaupthing, by their hasty and draconian actions.

Icelanders are not blind to the fact that this mess they find themselves in is largely of their own making. And there is sympathy for the British savers who have been locked out of their bank accounts.

But for Iceland it is about survival - many inhabitants have lost not just savings but jobs and pensions and now face years of paying back the banks' debts.

Gunboat fire

For those with long memories, there's a sense of deja vu about the fallout.

High-level talks in 1976
1976: Foreign Office minister Roy Hattersley meets Iceland's prime minister to talk about the cod war

The cod wars between the two countries that started in the 50s came to a head in the mid-70s when an Icelandic gunboat opened fire on a British ship after a clash of boats within Iceland's territorial waters.

Iceland eventually came out on top, winning the right to keep British fishing vessels outside its 200-mile exclusion zone.

Gudni Th Johannesson, a history professor at Reykjavik University, says there are parallels between the fishing and the financial crises.

The hostilities between the two nations dominated the agenda in Iceland then as it does now, and there is the same anger on the streets that this tiny nation is being attacked by the might of the British, he says.

Series of confrontations between 1958 and 1976 over fishery rights
Ships rammed in third and last cod war, Nov 75- June 76
Ended when UK accepted expansion of Iceland's territorial waters
UK felt forced to accept after pressure from Nato

In the 70s, the UK embassy in Reykjavik received threats from angry Icelanders. Now it is the turn of the Icelandic embassy in London to be the recipient of rude and threatening phone calls from British savers and investors.

But there's a long way to go before any shots are fired. Mr Johannesson stresses the situation is a far cry from the anger of the cod wars.

"It is a miracle that the UK did not sink one of Iceland's ships and lives were not lost. Now of course it is all about the money."

While some seem to harbour resentment against Britain per se, he says most Icelanders are capable of making the distinction between the authorities and the man in the street.

"Anyone who gets to know the British people knows they are gentle souls with a great sense of humour."

It's an important distinction and many Icelanders are at pains to stress they do not bear any ill feelings towards the British public. In fact, with the economy in a critical condition, Icelanders will welcome Brits with pounds to spend.

The cost of flights has risen slightly but with the currency, the krona, in freefall this once cripplingly expensive destination has become more affordable. At 3 for a pint of beer, your average Londoner and Reykjaviker might even feel kindred spirits.

Below is a selection of your comments.

As an Icelander living in the Netherlands I have been able to view these events from afar and I must say that the British tabloids (and the PM) have conveniently forgotten to correct a misunderstanding (read: "lie") on behalf of Alistair Darling: The Icelandic government never stated that they would not honour their obligations to the owners of the Icesave savings accounts. We are all mad at the greedy bunch that owned the banks and we are all mad at the government for not keeping a better control of them. However, we are furious at the UK government for kicking us while we are down and that we will not forget in a long time.

We will not forget the treatment some Icelandic nationals are receiving in the UK these days: One woman received threats from her neighbours, just for being Icelandic and my cousin got verbally abused by the staff of her phone company when she wanted to change her subscription from pre-paid to account. I hope you never have to feel so disgraced and insulted as these women.
Arna Hrund, Groningen, Netherlands

It was NOT anti-terror legislation used. The legislation used was from the Anti-terrorism, Crime and Security Act 2001. I believe the specific laws were from the Crime section of that bill.
Vinny R, London

Perhaps the UK need to start looking at the education system a bit more if you lot and your politicians are unable to grasp the simplest of English. If at any point our PM said we had no intention of paying our debts, that must have happened in a parallel universe, because since this happened the message from Reykjavik, and in the Queen's English no less, has been, that Iceland is not and will not now, or ever, walk away from its debts. So once again the gullible English public has fallen for a cheap stunt by the man who ironically as chancellor presided over this bank mess and allowed this to happen on his watch.
Jon Gunnarsson, Reykjavik

The British government made the right move in freezing the Landsbanki assets. Icelanders had "no intention of honouring their compensation obligations" - this is theft in the day light.
Valery, Aberdeen, Scotland

What do the Icelandic people think we should have done? Many thousands of ordinary people in the UK sank their life savings or a good proportion of them into Icelandic banks which, I clearly remember, gave guarantees of repayment in the event of default. Whatever legal instrument Brown used to freeze Icelandic assets is irrelevant because he did the right thing. Any talk from some quarters about him doing it for his poll ratings is just pure claptrap from political opponents. If Icelanders wish to turn it into a personal thing then so be it.
Bruce, London

I was an Icesave customer until about 10 months ago newspaper stories indicated that Iceland was in trouble - their credit rating (Standard and Poor) was reduced. But, people liked their high interest rates and ignored the warning signs. If people took the risk, they should take the responsibility, and not blame Iceland.
Helen, Devon

To say that I was surprised when Mr Brown acted in such a manner would be an understatement - to see T-shirts with threats to attack my peaceful country makes me horrified. Why did Mr Brown decide to take this action, a typical bully's reaction to any problem: pick on the smallest kid at school? Especially since the Icelandic government had every intention of honouring their obligations towards the banks and their customers. See, there was never any talk of not doing so - someone has either made a huge translation error or misunderstood things on purpose. Somehow the latter seems more likely. I think Mr Brown made a calculated choice and decided that it would be a good political move to attack Iceland publicly - "see how big and brave I am" - and it seems to have worked for him, at least no-one is pointing out just how badly he has messed up in his own country.
Gudrun, Reykjavik, Iceland

It seems to be a common misconception that the Icelandic government refused to hold up to their obligations regarding savings in foreign branches of our banking system. They have never said anything of that kind so how Brown and Darling could "misunderstand" it so horribly is simply beyond my understanding. A plot by desperate politicians to divert anger from themselves is my guess.
Sunna, Reykjavik, Iceland

I was in Iceland last week, as I am frequently. On the crucial Sunday, when the sterling exchange rate leapt to 278 and beer became affordable, the Icelanders were dazed and bewildered. When Gordon Brown came out with his astonishing threat - bypassing the advice from the Foreign Office as usual, and prompting a very dignified riposte from the Icelandic PM - he became public enemy number one and the blitz spirit took over. When the daughter of a friend reported in distress that there were T-shirts in London emblazoned with "Bomb Iceland" I had to explain that this too was anti-Brown - he doesn't have the Falklands or Iraq to win points from, so he is taking it out on our closest friend. I am with Icelanders in Edinburgh this week, and the blitz spirit has turned to steadfast determination. This tiny country has survived worse crises, and we are still good friends.
Tom Burnham, Jedburgh, Scotland

Surely the tourism cuts both ways? We have not had a holiday this year, so my wife and I were actually planning to book a long weekend visit to Iceland in November or December. However, our our entire savings were in an Icesave account, so we cannot book anything now until at least we find out what is happening with our savings. I've heard that it may take up to three months to reclaim our savings, so it looks like we will not be going anywhere soon.
Angus, Scotland

To the people of Iceland: We don't like the Brown government's use and abuse of anti-terrorist laws any more than you do - please accept the apologies of normal free-thinking British people.
Howard, London, UK

So Icelanders think they have nothing to do with what their government does? Ignoring what politicians do and not being politically active is giving them freedom to do what they want. We are all responsible for our governments, an ugly truth, like it or not.
Sandra, Gloucester

Sandra, the Icelandic public was held in the dark of how the system was running. There were multiple red alerts going on which our government and the wealthy hushed down. We are ready to take fair responsibility towards those failures. Having the UK PM treat us like terrorists and devalue the assets/investments the Icelandic nation has to get out of this mess however does not go down well and is by far from fair. Your PM alone has caused us years to come of suffering and blatantly just for a few more votes. I have noticed many despicable politicians through my life but Gordon Brown just jumped up to number one on that list.
Gunnar, Kopavogur, Iceland

As someone who transferred funds out of Icesave on the Friday before it went bust, had the transaction "cleared and processed" and then saw the funds transferred back by way of "posting correction", I do not have a particularly high regard for Icelandic bankers. I would not have minded so much if they had not actually stated that the transaction would be processed; that would at least have been honest. As I have said jokingly to a number of people since, if there was a plug on the island, I think we should pull it out and scuttle it into the bottom of the Atlantic.
Neil, Aberdeen

We went on our honeymoon to Iceland in June and without exception we found the Icelandic people to be friendly and welcoming. It is a beautiful country too. I moved my ISA (10k) to Icesave in August because they were good rates and I had faith in Landsbanki, when the news of problems emerged I did not move my money because I thought I was covered by the Bank Guarantee scheme. The Icelandic Government then said that they would not honour this, so I believe our government had to step in and guarantee those savings. It is also obvious that Iceland has a tiny population and its people should not have to be paying for this for years to come. This was a problem created by all the wealthy nations not regulating finance properly, therefore we should all chip in so there is not a disproportionate impact on any one nation.
Ryan Taylor, Clapham, London, UK

Having grown up in the Grimsby area and having fishing connections, bad feeling between Iceland and ourselves is the norm rather than a newsworthy exception.
Mike Gott, Grimsby

For many Brits (and other nationals) war has commenced against Iceland. Telling our Chancellor that they had "no intention of honouring their compensation obligations" did not endear them or the entire Icelandic nation to the world. They had the nerve to send me a tourist board e-mail begging me to come over to visit at the weekend. Fat chance of that! I won't knowingly put any money into the Icelandic economy from now on. Not while they have 6k+ of my money sitting in their coffers.
Barry, Peterborough, England

Barry: "You can't renege on deals". And we didn't. Our government said it would not assume obligations in foreign countries *beyond* its legal obligation of deposit insurance. It did say it would honour that legal obligation. In response, Brown guillotined our remaining functional, solvent and liquid bank - doubling our catastrophe and the damage to UK depositors, and scoring political points for himself. Brown notably did not seize JP Morgan's assets in the UK in retaliation for the US government not assuming all liabilities of the failed Lehman Brothers. Why not? Because the US is big and brawny, can seize British assets in return, and is not as easily vilified as Iceland is.
Gunnlaugur Briem, Reykjavik, Iceland

What Icelanders fail to understand is that the tsunami spreading from Kaupthing's woes has damaged Iceland's reputation worldwide, not because of the financial disaster, but because the new owner of Kaupthing (the Icelandic government) has disowned an irrevocable and binding guarantee to cover every penny held in Kaupthing's Isle of Man subsidiary, opening the prospect of years of international litigation against Iceland and inevitable asset seizures of Icelandic assets around the world. One only needs to look at the frosty treatment of Iceland by Norway, Sweden and Denmark to realise the depth to which Reykjavik's reputation has plunged.
Rory MacKay, Canada

Come on Iceland! Don't tarnish us all with the same brush. I love Iceland and couldn't give a monkey's about the banking system. Can't we all just get along and show the politicians how it should be done?
Mark, London, UK

Many Scots feel just as angry like the Icelanders with Mr Brown and Mr Darling for the disgraceful treatment of the Scottish Banks and how they sank the Bank of Scotland and put it under English control with the HQ in London not Edinburgh. They are acting like 19th Century Imperialists sending in the gunboats and bankers to save London and English interests and the Union.
Neil Brown, Newtonhill

I'm with you on that one Neil. Why not let the Scottish parliament rescue the Scottish banks? And let the Scots taxpayer pay for the privilege.
Martin Pallister, Whitstable

Neil, there are no Scottish banks. There are UK banks, now owned by the UK government. Just be glad the profitable bits weren't sold to Spain like Bradford and Bingley.
Chris, London

Neil, they're trying to save our - the UK's - economy. Open your eyes. It's either that or RBS goes to the wall. Reykjavik - pay up or shut up, you can't renege on deals, especially when you have man on the street's savings in your banking system.
Andy Jones, London

This very interesting human interest topic is highly relevant right now, however, why do foreigners constantly talk of "Londoners" when referring to the British... there are another 50 million or so of us who live and prosper outside of the capital.
Bob Kilsby, Birmingham, England

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