The Almost Nearly Perfect People Page 14
The other Nordic countries might be alternative candidates, I suppose. The similarities between them are striking: the strong, extensive welfare states; the social cohesion, the interconnectedness and collectivism; the economic equality, and the masochistic licorice obsession – all are common to the people of the North.
This started me thinking: what would happen if you were to extract the very essence of Nordicness to create some kind of ultimate Nordic society? Would you end up with a society that was even more successful, even happier than the Danes’? Or could a country perhaps be too Nordic?
It turned out someone has already tried this.
* * *
1 Similarly, while the Danes are generally appalled by the notion of capital punishment and the death penalty – it was abolished in Denmark in 1933 – can you guess which country provides America with most of its pentobarbital, the drug used for executions?
ICELAND
Chapter 1
Hakarl
YOU COULD ARGUE that Iceland shouldn’t even be in this book – the Icelanders probably would. After all, their country was founded by people who wanted to get away from Scandinavia, and they went to a great deal of inconvenience to achieve this, so it hardly seems fair to drag them back again. Plus, it is located halfway to North America and has more trade with Germany, the US and the UK than with any of the Nordic countries. Besides, there are only 319,000 of them. I have no intention of dedicating chapters to Gothenburg or Aarhus, which have roughly the same number of inhabitants, so why Iceland? Why not Greenland or the Faroe Islands, both of which have equally strong, quasi-national identities? And in terms of gaining an insight into Nordic exceptionalism, the only aspect in which the Icelanders could be described as exceptional in recent years is their economic mismanagement, which isn’t the kind of exceptionalism we are looking for.
There are, though, several compelling reasons why we are about to visit this idiosyncratic people and their mesmerising landscape. Genetically speaking, Iceland is more Scandinavian than Scandinavia. It was populated by escapees – let’s be honest, outlaws – from western Norway, together with the Scottish and Irish sex slaves they picked up on their journey west. They still speak a version of Old Norse, a purer version of the Scandinavian languages of the past. Geneticists from around the world have long flocked to Iceland, so pure- (the uncharitable might say in-) bred are they. Also, Iceland was ruled by Denmark for 682 years and, as we’ll see, it still has a close and somewhat complex relationship with its former masters in Copenhagen. Plus, it is a member of the Nordic Council, which pretty much settles the whole ‘Nordic or not?’ question.
Most of all, the chief reason Iceland is worthy of our attention is that its recent financial escapades are highly revealing of the latent dangers of the classic small, homogenous, tightly knit Nordic social model. A country can, it turns out, be too Nordic, and Iceland is that country.
First, a quick ‘recent Icelandic economic history’ primer. Between 2003 and 2008, Iceland’s three main banks, Glitnir, Kaupthing and Landsbanki, borrowed over $140 billion, a figure equal to ten times the country’s GDP, dwarfing its central bank’s $2.5 billion reserves. A handful of entrepreneurs, egged on by their then government, embarked on an unprecedented international spending binge, buying everything from Danish department stores to West Ham Football Club, while a sizeable proportion of the rest of the adult population enthusiastically embraced the kind of cockamamie financial strategies usually only mooted in Nigerian spam emails – taking out loans in Japanese Yen, for example, or mortgaging their houses in Swiss francs. One minute the Icelanders were up to their waists in fish guts, the next they they were weighing up the options lists on their new Porsche Cayennes.
The tales of un-Nordic excess are legion: Elton John was flown in to sing one song at a birthday party; private jets were booked like they were taxis; people thought nothing of spending £5,000 on bottles of single malt whisky, or £100,000 on hunting weekends in the English countryside. The chief executive of the London arm of Kaupthing hired the Natural History Museum for a party, with Tom Jones providing the entertainment, and, by all accounts, Reykjavik’s actual snow was augmented by a blizzard of the Colombian variety.
The collapse of Lehman Brothers in late 2008 exposed Iceland’s debts which, at one point, were said to be around 850 per cent of GDP (compared with the US’s 350 per cent), and set off a chain reaction which resulted in the krona plummeting to almost half its value. By this stage Iceland’s banks were lending money to their own shareholders so that they could buy shares in . . . those very same Icelandic banks. I am no Paul Krugman, but even I can see that this was hardly a sustainable business model. The government didn’t have the money to cover its banks’ debts. It was forced to withdraw the krona from currency markets and accept loans totalling £4 billion from the IMF, and from other countries. Even the little Faroe Islands forked out £33 million, which must have been especially humiliating for the Icelanders. Interest rates peaked at 18 per cent. The stock market dropped 77 per cent; inflation hit 20 per cent; and the krona dropped 80 per cent. Depending who you listen to, the country’s total debt ended up somewhere between £13 billion and £63 billion, or, to put it another way, anything from £38,000 to £210,000 for each and every Icelander.
Within weeks unemployment rose from its customary 2 per cent (‘the retarded and refuseniks,’ as one Icelander described them to me; up to that point anyone who wanted a job could have had one), to over 10 per cent. Inflation kicked in with a Weimar-esque vengeance. The cost of all those Yen mortgages and Swiss-franc loans – now illegal – more than doubled, leaving many with negative equity in their homes and cars. There were stories on the news about bottles of olive oil costing the equivalent of £130. Unsurprisingly, a third of Icelanders said they wanted to leave. As one Times headline put it, they had become ‘The Little Economy That Couldn’t’.
Arriving in Reykjavik for the first time shortly after the economic collapse, I wondered what it had been like to live in a society on the brink. ‘It was like a bomb went off when the three banks fell,’ Gísli Pálsson, a professor of anthropology at the University of Iceland told me. ‘Yet everything sort of kept going: social services and even the banks. In the weeks after the crash there was extreme uncertainty. Would there be food shortages? There was a real fear of social breakdown. Some of it was scary. We have had a significant increase in crime in Reykjavik. People are installing alarms. There was a fire at the parliament, smashing of windows. There was extreme anger. At times there has been a kind of public depression, many people see no way out as they are losing their cars, their jobs and will lose their homes. I know many people who are in really bad shape. I owe a couple of million and I’m feeling the strain.’
In January 2009 came the so-called ‘cutlery revolution’: two thousand protesters clanged items of kitchenware together outside parliament and threw pots of skyr (the Icelandic yoghurt more usually employed as a stomach lining before the traditional Friday-night drinking binge). It was the first time tear gas had been used in Iceland since protests against joining NATO in 1949. The right-wing coalition, led by Prime Minister Geir Haarde and in power since the 1940s, were finally ousted. Haarde blamed the ‘global financial hurricane’, but eventually ceded power to a coalition led by the Social Democratic Alliance party’s Jóhanna Sigurðardóttir, sixty-eight, ex-air stewardess, mother of two and grandmother of six, not to mention the world’s first openly gay head of government. After further public protests, central bank chief Davíð Oddsson – a former PM – was replaced by a Norwegian economist, Svein Harald Øygard. Sigurðardóttir promptly announced 30 per cent cuts in spending, raised taxes, and tried to flog a few embassies.
The crash appears to have been a crime with no criminals. Haarde was eventually prosecuted for negligence at the Landsdómur criminal court, the first political leader anywhere in the world to be called to account for what happened in 2008. He faced up to two years in prison for his role in the widespread fi
nancial mispractice that had ruined Iceland, but was found not guilty. The president throughout all of this, Ólafur Ragnar Grímsson is, quite remarkably, still president, having been re-elected in 2012: the fact that he has consistently vetoed all attempts by the Icelandic parliament to repay the money they owe their foreign debtors might have something to do with his enduring popularity.
Reykjavik had the feel of a house the morning after a truly epic party. I had arrived just in time to catch the hosts emptying ashtrays into bin liners and rounding up the stray underwear. Those I spoke to seemed at turns weary, bewildered, angry and shell-shocked.
The city was once famed for its magnificent panoramas across the fjord to the mountains beyond, but these days the views were dominated by the large office and apartment towers that had erupted along the waterfront. Sparkling and new, they were also empty, like stacks of freshly robbed jewellery cases. Apart from those working on the extravagant harbour-front concert hall/opera house, Harpa, which they had started to build at the height of Iceland’s economic hubris and which, I was assured, would have cost more to leave unfinished, the cranes stood silent on Reykjavik’s building sites.
On the plus side, the nice lady in the tourist office told me that, thanks to the collapse of the krona, visitor numbers were up a tad, at a time when tourism had declined drastically in much of the rest of the world. Iceland had always been a famously costly destination – pre-crunch, The Economist named it the most expensive place to visit in the world – but with an exchange rate of 200 kronur to the pound (nearly double its previous rate), it had become, if not a bargain – they still have to import virtually everything apart from electricity and fish – then at least on a par with London. Getting reyked, as Reykjavik’s infamous Friday- and Saturday-night pub crawl was termed, was now suddenly much more affordable, with beer around 600 kronur a pint. That explained why most of the voices I heard in the shops and restaurants in Reykjavik city centre were foreign. The streets, bars and restaurants were largely empty of locals.
There were other signs that all had not gone quite to plan recently: walking on the main high street, Laugavegur, I spotted in a shop window a T-shirt bearing the slogan ‘Brown is the Colour of Poo’. It featured a picture of former British Prime Minister Gordon Brown, who had become a hate figure in Iceland after his government had moved to reclassify Iceland under anti-terrorist laws in order to freeze the country’s assets. (‘Interest-rate whores is all you were!’ one Icelander grumbled to me.)
I had lunch on my first day sitting between a Chilean couple and a Frenchman, in a small fisherman’s-shack restaurant, Sægreifinn (‘Sea Baron’), amid the warehouses on the harbourfront. We sat, squeezed around communal tables on blue plastic fish-packing barrels, tucking into steaming bowls of Humarsúpa (langoustine soup – one of Iceland’s culinary glories). Hákarl is another famous Icelandic delicacy. Humarsúpa I would be happy to taste again, but I shall fight for as long as I remain conscious to avoid ingesting hákarl again. Apparently, the shark meat caught in these parts is toxic if eaten fresh but, rather than giving up on the whole eating shark business altogether, they eventually hit upon the idea of burying it in the ground for between eighteen months and four years until it has decayed to the point where it becomes, in the very loosest sense of the word, edible. This is hákarl.
I tried some at a bar in central Reykjavik. Clearly used to tourists ‘just wanting a taste’, a waitress brought me two small, sugar-cube sized chunks of unappetising-looking greyish meat in a sealed jar. ‘Don’t worry, it doesn’t taste as bad as it smells,’ she said, smiling. ‘If you can get past the smell then that’s the worst of it.’
She was lying. True, the smell from quite some distance away as she opened the jar was indeed abominable: redolent of a multistorey carpark staircase on a hot summer’s day, with accents of urine and vomit. But that wasn’t the worst of it. The burning, fishy-cheese flavour was much, much worse. I concluded that hákarl’s name was onomatopoeic. It was the noise one made upon upon eating it.
After that, whale sushi, guillemot and smoked puffin – all of which I tried during my time in Reykjavik – were relatively pleasant, but hákarl did get me wondering about the Icelanders. What kind of a people, when surrounded by some of the greatest, freshest fish on the planet, along with ice in which to store it, would decide they would rather eat toxic, putrefied shark? It seemed to demonstrate an extraordinary bloody-mindedness.
I began to explore the country’s history. Though relatively short, it makes for unremittingly grim reading.
Early Iceland was a lawless, irreligious place peopled with Norwegian outlaws and their Scottish and Irish companions. Human sacrifices to appease the terrible forces that raged just beneath the surface of their meagre soil were not unknown. There was no executive authority, no king and no army, just a ragbag of laws mostly concerned with the apparently pressing issue of incest. In the thirteenth century, unable to control themselves, the Icelanders finally asked the Norwegians to intervene. King Olaf of Norway somehow managed to convert the Icelanders to Christianity, but theirs was always a half-hearted observance, at best.
Plagues, pirates, volcanic eruption and the sheer unrelenting hideousness of Iceland’s climate pegged back its population to mere tens of thousands for most of the latter part of the last millennium. A museum diorama of these centuries would feature a smallpox outbreak here, a bubonic plague there, famine, choking clouds of volcanic ash over everything, and a carpet of dead cattle underfoot, with perhaps the odd beheading of a bishop or the arrival of an equally unfortunate wayward polar bear aboard an iceberg – which occasionally still happens. The most cataclysmic event was the 1783 eruption of the volcanic fissure of Laki, which had a major cooling effect on much of Northern Europe. A quarter of the population died as a result of the ensuing famine; Denmark, which by then had taken over Norway and Iceland, seriously considered evacuating the rest of the Icelanders to Jutland and leaving the cursed place to its 10 million puffins. In the early 1700s there were 50,358 people living in Iceland. A century later, there were 47,240. Virtually every other European country’s population exploded during this period.
In the nineteenth century the Icelanders finally began to muster a half-hearted independence movement but, as we’ve already heard, they only obtained full independence thanks to the intervention of the most unlikely of liberators: Adolf Hitler. ‘The 120,000 people of Iceland,’ wrote The Times at the time, ‘were completely undismayed that Adolf Hitler had bagged His Majesty Christian X, King of Denmark, and separately King of Iceland.’
The Danes were soon replaced by another quasi-occupying power, the US military, which maintained a base in Iceland until 2006. Iceland had been the poorest country in Europe, but all that changed with Marshall Plan money and massive infrastructure projects. Iceland began to flourish and grow in confidence.
In recent years Iceland has held its head high in the Nordic-exceptionalism stakes as the most developed country in the world according to the United Nations Human Development Index, as well as the fourth most productive country per capita in Europe. It ranked highly, too, on the Index of Economic Freedom; per capita gross national income had long been higher than the UK’s; and at one point it was the fifth richest country in the OECD. Iceland had the highest birth rate in Europe, and has long been a model of gender equality. It was the first country in the world to have a female president, and a single mother to boot – Vigdís Finnbogadóttir, elected in 1980. Icelandic men live longer than any other men in the world, with an average life expectancy of 78.9 years, but the women are even more durable, living, on average, to the age of 82.8 years. Also, the Icelanders buy more books per capita than anyone else in the world, which has to be a good thing.
Since the kreppa (the crash), of course, all of the above achievements, as admirable as they were, have been eclipsed by the Icelanders’ epic economic hubris. Iceland has become a single-issue nation.
Many books and articles have been written on what exactly ha
ppened to the Icelandic financial system in 2008–9, so I do not propose to go into great detail about it here, but I was interested in getting to the root of just why things had gone quite so awry for the Icelanders. After all, much of the success of the Nordic countries has been ascribed to three key factors: their homogeneity, their egalitarianism, and their social cohesion, all of which Iceland boasted in abundance, in some cases to a greater degree than any of its Nordic siblings.
But something, somewhere, went catastrophically wrong. Did Iceland lose its Nordic mojo? Did it have its head turned by distant sirens, or was it never really Nordic in the first place?
Chapter 2
Bankers
‘We assume they are more or less Scandinavian – a gentle people who just want everyone to have the same amount of everything. They are not. They have a feral streak in them, like a horse that’s just pretending to be broken.’
Michael Lewis, writing in Vanity Fair, April 2009
IN 2009 THE US economic commentator Michael Lewis wrote a now famous – and famously unflattering – article on Iceland for Vanity Fair, detailing everything from its deluded debt orgy to the rudeness of its men and, rather ungallantly, the plainness of its women. Iceland was, Lewis concluded, a macho, patriarchal, risk-prone society.
Lewis drew a direct causal link to the economic crash from the introduction of fishing quotas in the early 1980s. It used to be that Icelanders fished as everyone else did: they got on a boat and went out and tried to catch stuff. Some days they came home empty handed, others with a worthwhile catch. But, in 1983, following several bad fishing years due to atrocious weather, the Icelandic government decided to implement a quota system. Icelanders are famously risky fishermen, willing to go out in all weathers, and the system was intended to discourage this. The government awarded licences to all existing boats allowing them to catch a certain percentage of the total annual quota in proportion to the size of their boat. It was a controversial initiative: some argued that the government had no right to carve up a natural resource in this way. On the other hand, knowing they had a year to catch their quota, it was hoped that the fishermen would take fewer risks.