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Economic Crisis Bruises Iceland’s National Pride

The impact of the global economic crisis has been particularly evident in Iceland with the nation itself left on the verge of bankruptcy. To minimize losses of investments in Icelandic banks, the British government took action to freeze assets of Icelandic companies by citing its Anti-Terror Law.



Journalist Jonas Moody, an American expat living in Reykjavik, discusses Icelanders’ mood amid the island’s turmoil.


JONAS MOODY: My name is Jonas Moody, and I’m a journalist here in Iceland. I’ve been covering the elements of the financial crisis for different foreign media recently. I’ve been speaking to quite a few people out in the malls. It just seems there’s a wide range of reaction and this has just had an effect both financially and emotionally on people, from young to old, really.

I mean, obviously people have been hit really hard financially. People have lost their life savings, people losing their jobs, people losing their mortgages, people losing their cars, but the nation’s pride has taken some pretty heavy hits as well.

Depending on who you talk to, a lot of olderkr people who have to rely on their pension savings now are turning to cheaper products. You see people now who are putting their cars up for sale, or they’re offering buyers a lump sum to take over their loans simply because they can’t handle loans any more, and a lot of people have taken out foreign currency-linked loans, which means that their payments have just skyrocketed to the point where they can’t afford their cars any more.

This one woman in particular, who is reaching her retirement age, her entire retirement savings has been wiped out and she doesn’t really know what to do from there. She could continue working, but she was looking forward to her retirement and now it’s gone.

This is all very new, everything that’s happened here and you haven’t seen a lot of the ripple effects yet. I can say that a lot of small businesses are trying to sort of, you know, hearten the country. For example, there was a restaurant downtown that turned itself into quote-unquote “soup kitchen” and was giving away free soup to people who wanted to come downtown.

There was a bar downtown — I don’t remember which one it was — this weekend that was selling “recession beer” at 290 kronur instead of 500 kronur.

It’s hard to talk to the people who have been hit hardest because Icelanders tend to be closed about financial issues. People are not too willing to talk about it. The only people that I’ve been able to talk — will talk to me in confidentiality. It’s a touchy subject right now.

Iceland has traditionally prided itself on being independent and self-sufficient. It’s very much the national character here. So when you have these moments where you need to rely on someone or something to help them, it ruins the national pride quite a bit, I think. You may not see it all the time, but if you have your feelers out for it, you will see it, and not necessarily in the things people say, but in what they don’t say.

The Ministry of Health has also opened up an emergency mental health care unit in response to the financial crisis. There haven’t been a lot of people coming into it yet. I mean, the idea is that the nation is suffering mentally as well as financially.

People are upset how the situation has been handled, especially with [U.K. Prime Minister] Gordon Brown resorting to anti-terrorism laws to seize the Icelandic companies’ property in the U.K. I think that really hit a lot of people hard. I spoke to the minister of health earlier today and he mentioned that how people are really taking that to heart.

There hasn’t always been, you know, such a warm relationship between the U.K. and to Iceland, especially since the Cod Wars, but that’s been so long ago. England has been one of Iceland’s closest allies.

When Icelanders get to the age where they want to go abroad to school, England and the U.K, is one of their first choices. Culturally, even I mean, there’s a strong connection between the two.

And I think it really shocked a lot of people that, in their minds, they were labeled terrorists by Gordon Brown.

Quite a few students just started to study abroad. At the end of last week, a number of countries froze foreign exchange into and out of Iceland, which meant that a lot of kids who were just starting their school careers abroad didn’t have any access to funds, couldn’t use their debit cards. That’s something that really worried quite a lot of people in the nation and made a lot of headlines. Students abroad substantiate 1 percent of the nation, which weighs pretty heavily in a nation of 300,000.

Yoko Ono was just here last week and she gave the country of Iceland an award for its efforts to promote sustainable energy, and I think this is not something the island has lost sight of. Sustainable energy is something that Iceland has been involved with for decades, not necessarily because it’s so environmentally minded. It’s been a matter of need. There’s no fossil fuels here so the nation has had to turn to other sources to gain their energy like hydropower and geothermal power, and as the rest of the world is coming into sustainable energy, renewable energy, Iceland has a lot of the skills and the knowledge. But I do feel like that’s the next frontier for Iceland.

For the most part, I get that people trust that this will pass soon, not necessarily that they trust the government or the people who sort of have the island’s fate in their hands. It’s still early and I don’t think a lot of people have realized how much money they’ve lost and I don’t think people have experienced the full effect of what this recession will bring to Iceland.

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