Tag Archives: Iceland

The Icesave Dispute: A Case Study into the Crisis of Diplomacy during the Credit Crunch


The legal and political dispute Iceland fought with the UK and Dutch governments over responsibilities of deposits in the fallen cross-border Icesave Bank in wake of the international financial crisis – which hit Iceland severely hard in autumn 2008 when its three oversized international banks fell – not only revealed inhered weakness of the European financial system but also led to profound crisis of diplomacy during the Credit Crunch. The legal ambiguity of responsibilities was testing understandings and interpretations of international law in cross-border finance. Not fitting squarely within EU- diplomatic- or financial law it can be argued that the case in its process illustrates contested and hybrid construction of legality as here is explored. Rajkovic et al, (2016) understand international legality as interrelated processes of social and interpretive contestation in the construction of what is understood as (legal) rule in the world. In this regard the Icesave dispute illustrates how larger and more powerful countries were politically able to pressure a much smaller state in time of crisis into abiding to their own interpretation of law and in doing so rallying behind them support of international organizations like the EU and the IMF.

The Icesave dispute was thus not only a matter of international law, but rather also a case of contestation between cross border actors over determination of authority during the crisis. By empirically studying the Icesave dispute this paper discusses a profound crisis of diplomacy and the political processes of international legality of the financial sector during the Credit Crunch. This can be coined as case of perfect legal storm in international relations; a crisis of public international law, diplomatic law, EU law and finance law. This case study traces the dynamics of how international legality is produced and remade during the course of this particular inter-state crisis and in doing so thus contributes to analysis of political construction of international legality.

The study deals with interpretive contest in international relations on what is considered legal, in this particular instance dispute of responsibility over guarantying deposits of a fallen cross border bank. In this case intersecting practices and expertise were to revolve in a struggle over cross border insolvency law. By pressuring the Icelandic government into accepting responsibility of the fallen bank in UK and the Netherlands this was an international push towards sovereign socialization of private debt through twists of circumstances and practise.

At its core, perhaps, this is a study of struggle over who decides authoritative interpretations, of what in this particular instance is understood as international legality, which is constructed, construed and contested through multi-actor and multi-level interaction of multi-national relations.

The Crisis

Iceland was the first victim of the of the global Credit Crunch when its three international banks came tumbling down in October 2008, amounting to one of the world’s greatest national financial crises. This was a financial tsunami without precedent. Glitnir Bank was the first to run into trouble when planned nationalization was announced on 29. September 2008. On the basis of emergency laws rushed through Parliament, Landsbanki was taken into administration On October 7th. The following day then British Prime Minister Gordon Brown invoked the UK Anti-Terrorism, Crime and Security Act 2001 (passed after ‘9/11’ in 2001) to freeze all Icelandic assets in the UK. Operating with little information and in a climate of confusion this was, he argued, to protect UK depositors in the bank. That act served as the final blow to Iceland’s last and largest bank still standing, Kaupthing. The vastly oversized Icelandic financial system was wiped out. Iceland is one of the smallest countries in the world and borders on being a microstate with just over 300,000 inhabitants. However, this experience ranks third in the history of the world’s greatest bankruptcies (Halldórsson & Zoega, 2010). Iceland also responded significantly differently to the troubles than most other states, allowing its financial system to default rather than throwing good money after bad.

Iceland had few good options. The IMF would not consider Iceland’s loan application until the dispute with the UK and Dutch governments over the Icesave deposits accounts was settled. The fallen Landsbanki had set up these deposit accounts in those countries, leaving many of their citizens without access to their money. Even though the Icelandic government steadfastly argued that it wasn’t legally at fault and that the state would fulfil all its legal obligations regarding Icesave, the IMF wouldn’t budge. Iceland was being pressured by the UK and Dutch governments, which were backed by the whole EU apparatus.

This was a staring contest Iceland could not afford to drag out as the state was running out of foreign currency. Early agreements in October and November 2008, first so-called Memorandum of Understanding with the Dutch government and then a more broad based Brussels Guidelines, which included EU involvement, were signed by Icelandic ministers in order for the IMF to be allowed to be brought in to stabilize the economy, not least through the introduction of capital controls and the co-funding of a loan package with the Nordic and Polish governments. By mid 2009, after change in government, these early agreements were abandoned for bilateral agreements with the finance ministries of the Netherlands and the UK, where Iceland accepted responsibilities for deposits of the fallen bank. In an extraordinary move the President, however, refused to sign the bills, referring them to referendums, in which they were rejected by large majority, spurring one of the greatest international disputes Iceland had ever fought.

Not only was Iceland denied any access to united efforts within Europe to bailout banks but the UK and the Netherlands were able use their position within the EU to pressure Iceland to accept their own interpretation of EU laws Iceland was to follow. Though ambiguity still remained as to who was legally liable for the loss, the UK government was using all means available to pressure Iceland to accept responsibility, as is documented later in this paper.

On 28 January 2013, the EFTA Court finally ruled on the case, concluding that no state guaranties were in place on the deposits and, thus, dismissing the claim of the British and Dutch authorities (Judgment of the Court, 2013). The ruling vindicated the Icelandic state of any wrongdoing. In early 2014 the Dutch and the Brits filed claim against only the privately held Icelandic Depositors Guaranty Fund before the District Court of Reykjavik.

A Systemic Flaw

The collapse of the Icelandic banks clearly revealed a serious weakness in the European banking passport system, a macroeconomic imbalance within the Single European Market. It was a weakness that some of the more established banking nations had warned against when the system was being constructed (for more, see Benediktsdottir, Danielsson, & Zoega, 2011). The main flaw lay in the fragmented nature of supervision on an otherwise common market – European-wide regulation but only state level supervision resulting in a tapestry of schemes and insurance levels across the EU. This had caused a mismatch between access to market and adequate supervision.

There was also an inhered flaw in the setup of Iceland’s link to the EU through the EEA agreement. Being in the Single European Market through the European Economic Area agreement (EEA) but outside the fence of EU institutions left Iceland without shelter when the crisis hit. This neither-in-nor-out arrangement – with one foot in the Single European Market, with all the obligations that entailed, and the other foot outside the EU institutions, and therefore without access to back-up from, for example, the European Central Bank – proved to be flawed when the country was faced with a crisis of this magnitude: The oversized Icelandic banks were operating in a market that included 500 million people but with a currency and a Central Bank that was backed up by only roughly 330,000 inhabitants. As a participant in the EU Single Market, Iceland was inside the European passport system so the banks were able to operate almost like domestic entities throughout the continent.

Landsbanki had in 2002 acquired the British Heritable Bank and in 2005 furthermore opened a separate subsidiary in London. However, when marketing the Icesave deposit accounts in October 2006 Landsbanki decided to bypass both and instead opened a branch from the Icelandic Landsbanki collecting the deposits. This was done to be able to transfer the money upstream to the mother company in Iceland (SIC 2010, Vol. 6, Ch. 18: 8), something the subsidiary system does not allow. Furthermore, branches were under general surveillance in the home country of the parent bank, while subsidiaries were subject to such monitoring in the host country. However, according to this setup, liquidity surveillance should have been in the hands of the British FSA, which also had authority to intervene in marketing of the deposit scheme in the UK. Interestingly, however, when setting up the accounts, Landsbanki had negotiated exemption from the FSA liquidity surveillance until 2011 – liquidity surveillance of Icesave was thus only in the hands of the mother company in Iceland.

At the time no one seemed to even contemplate the risk involved. Without any objections from either Icelandic or UK authorities, the bank quoted the EU/EEA Directive 94/19/EC on Depositors Guarantee Schemes, they insisted was in place in Iceland, which, they said, would protect all deposits up to €20,887. Then they referred to the British top up guaranty for the rest – British authorities were by then promising to cover up to 50.000 Pounds per account. This was however always very ambiguous.

Kaupthing opened a similar high-yielding Internet deposits scheme, named Kaupthing Edge. However, unlike Landsbanki with Icesave, Kaupthing used its subsidiary, Kaupthing Singer & Friedlander, to host the deposits. Edge deposits therefore had to be kept in the UK and were under British banking regime surveillance. At the time, few noticed the difference, which after The Crash left those involved in the two cases a world apart.

Playing on an Icelandic symbol, Icesave was marketed to tap into the trust associated with Nordic economies. Soon attracting the favourable attention of the financial media, the scheme became an instant success. The Sunday Times, for example, wrote enthusiastically about the scheme under the headline: ‘Icesave looks like a hot deal’ (Hussain, 2006). Before the end, Icesave had attracted almost as many savers as there were inhabitants in Iceland. Landsbanki had for a while enjoyed better ratings than the other two because it was able to tap into the Icesave deposits to keep liquidity flowing. This was, however, a mixed blessing, as reliance on deposits leaves a bank much more vulnerable to bad news than if it is funded in the wholesale market. Even a minor issue can result in a run on a bank with avalanche of withdrawals if it is portrayed in the wrong light. Still, all three banks were passing the Icelandic Financial Supervisory Authorities (FME) stress tests with flying colours. In theory, the banks were all doing well. Amongst those buying this story was the Financial Times, which as late as August 2008 wrote that ‘fears of a systemic financial crisis in Iceland have dissipated after the country’s three main banks announced second-quarter results showing that they are suffering amid the downturn – but not too badly’ (Ibson, 2008).

The Central Bank stretched itself to the limit to keep the banks liquid in domestic króna, for example accepting their own bonds as collateral – the so-called love letters. However, to back up the overinflated banking system in such dire straits it needed a sizable sum in foreign currency. The Central Bank thus went knocking on doors in the neighbouring countries asking to open similar swap lines as others were negotiating, that could be drawn on in time of need. This was meant to boost confidence in Iceland’s capacity to back up the financial system. To the surprise of the government, however, apart from earlier limited swap-lines with the Nordics, Iceland met with closed doors in most places. This was at a time when the neighbouring states were still upholding much more extensive currency swapping agreements.

Not only had the banks been pushed out of the international capital market, but the government had as well. For the international financial system tiny Iceland was as a state not thought to be too big to fail. Iceland first approached the Bank of England in March 2008 for a swap-line agreement. Initially, the request was positively received, but with a suggestion that the IMF would analyse the need. A month later, the climate had changed. It had become clear that the central banks of Europe, the US and the UK had collectively decided not to assist Iceland. Later it became known that the governor of the Bank of England, Mervin King, offered instead to co-ordinate a multinational effort to help scale down our financial system. His offer was instantly turned down by the leading governor of the Icelandic Central Bank, Mr. Davíð Oddsson (See for example, Wade & Sigurgeirsdottir, 2010.

UK Concerns

When Northern Rock was running into trouble in late 2007 and taken into receivership in February 2008 worries over further volatility in the banking system were spreading in the UK, raising concerns of health of many other banks. By 2008 Landsbanki had collected around 4 billion pounds through the Icesave scheme. With the International Financial Crisis now blazing and the apparent wide exposure of Iceland’s oversized banking system this was causing increasing concerns in the UK, especially because of the poor state of the Icelandic Depositors Guaranty Fund holding only around 1 per cent of the liabilities of the Icelandic banks now facing headwind (Jónsson, 2009). This caused an avalanche of negative reporting in the UK media on the Icelandic banks. On 5th February 2008 The Daily Telegraph for example asked in a headline: “Is Iceland headed for meltdown?”(“Is Iceland headed for meltdown?,” 2008). Subsequently increased withdrawals were almost amounting to a run on the bank, which the bank was barely able to withstand, before deposits started picking up again in April.

These events lead the British FSA to push for restructuring of the online branch, for example proposing revoking an exemption Icesave had negotiated from liquidity surveillance in the UK. This was raised in meetings between governors of the Icelandic Central Bank and the Bank of England on 3d March 2008 and again in meeting the FSA had with Landsbanki management on 14th March 2008. In these meetings the FSA furthermore proposed moving the deposits to Landsbanki’s Heritable subsidiary and thus entirely under jurisdiction of the British Financial Services Compensation Scheme  (SIC 2010, Vol. 6, Ch. 18: 12, 13). For this, however, demands were made that assets had to follow from the parent bank in Iceland to the UK, which Landsbanki had trouble meeting (Ibid). The liability amounted to half Iceland’s GDP. Additionally such transfer would have to be with depositors consent, though force majeure situation might justify a quicker move. This was the start of increased tension between Iceland and the UK over the Icesave deposits, ultimately resulting in the UK authorities seizing the bank in October 2008 when the parent bank was falling in Iceland.

The tension was heightening in frequent exchange of letters over the coming weeks and months. In a letter dated 29th May 2008 the FSA finally revoked the exemption from UK liquidity surveillance and subsequently demanded that the Icesave deposits be moved to subsidiary (SIC 2010, Vol. 6, Ch. 18: 16). The FSA had concerns that neither the Icelandic Guaranty Fund nor the Central Bank had ability to back up the bank in times of crisis. The FSA also asked that the Icesave deposits would be capped at 5 billion pounds level which they were now reaching close to and that interests would be set below featuring on best buy tables (SIC 2010, Vol. 6, Ch. 18: 17). Landsbanki replied on 15th July 2008 agreeing with the general aim of moving the deposits to subsidiary but refusing both capping the deposits and the request of setting interest below best buy level. In the meantime the issue had been reported widely in the UK, for example discussed in the House of Commons were MPs quoted report in The Times on 5th July stating that collectively the deposits of the Icelandic banks in the UK were amounting to 13,6 Pounds or “twice the country’s entire GDP”  (SIC 2010, Vol. 6, Ch. 18: 19).

On July 22nd 2008 the FSA wrote back saying that Landsbanki’s reply was worrying, that risk of run on the bank was increasing and that the FSA would be forced to consider applying its legal measures against the bank if its requests were not being met. That is; a solid cap, solid liquidity buffer and firm time tabled intention of subsidiarisation. (SIC 2010, Vol. 6, Ch. 18: 19). Though Landsbanki voiced willingness to comply in its letter to the FSA on 28th July it also explained why it might have difficulties in implementing what was being requested unless the FSA would agree on flexibility regarding some of its conditions in the transition period. On these conditions Landsbanki and the FSA were never able to agree on. While the FSA was operating in order to protect UK based depositors the Landsbanki management was rather concerned with saving the mother bank in Iceland. These aims proved contradictory and caused prolonged frictions (see SIC 2010, Vol 6.).

The FSA was not only applying its pressure in letters and meetings with Landsbanki but also in ongoing correspondence with the Icelandic FME and Central Bank. In a letter to Landbanki on August 5th 2008 the British FSA demanded Landsbanki to confirm within a week how the bank would comply with conditions set by the FSA in order to move the Icesave deposits to its subsidiary in London, otherwise it might be forced to apply its formal legal measures (SIC 2010, Vol. 6, Ch. 18: 23). This was the second time the FSA threatened in a letter to directly intervene in the bank’s operations.

The Icelandic Central Bank was now directly involved. Reportedly it considered openly defying the FSA but decided against that approach as it might risk the stability of the entire Icelandic financial system (SIC 2010, Vol 6). On 11th August 2008 the Icelandic FME wrote back to the FSA pleading on behalf of Landsbanki for flexibility while transferring Icesave to the Heritable Bank in London. The two surveillance authorities talked in a teleconference a week later where the FSA suggested that Landsbanki might sell Icesave. In the meantime, the FSA had written Landsbanki once more on 15th August 2008, demanding increasing reserves to 20 per cent of deposits. At the end of the letter the FSA threatened for the third time that it might apply its formal authoritative legal measures against the bank and stop deposit collection into Icesave accounts (SIC 2010, Vol. 6, Ch. 18: 25). The Icelandic actors, that is, the Landsbanki, the Icelandic FME and the Central Bank however believed that would only trigger liquidity crisis – not only for Landsbanki but for all Icelandic banks and indeed also the UK fragile banking system (SIC 2010, Vol 6).

It was now clear that the British FSA considered Landsbanki being in non-compliance with its conditions and that it was already failing. The Landsbanki management pleaded with the Icelandic Minister of Commerce to intervene, who with a team of officials met with UK Chancellor of the Exchequer Alistair Darling in London on 2nd September 2008. Mr. Darling has since reported that he was disappointed with the Icelanders as he felt they did not appreciate the seriousness of the situation (SIC 2010, Vol. 6, Ch. 18: 31, 229). Following up on the meeting few days later, leading official in the British Treasury dealing with the Icelandic case, Clive Maxwell, called the Icelandic Ambassador in London, expressing the Chancellors concerns and explaining how politically difficult the relationship with Iceland had become in the UK. This was perhaps a warning that tougher measure might be taken against Iceland.

In a letter on 3d September 2008 the FSA once again wrote to Landsbanki saying it was considering applying its formal legal measures if the bank would not before 8th September 2008 explain how it would comply with the conditions. Before the deadline Landsbanki replied by again voicing willingness to comply but explaining why it might be difficult to meet all the requests. In wake of several subsequent meetings and correspondence between agencies in the two countries the FSA wrote back on 17th August 2008 announcing that it would apply its legal measures. It was now ordering the bank to fully comply with bringing assets to the UK to underpin withdrawals from Icesave accounts and in order for them being transferred into the British financial space (SIC 2010, Vol. 6, Ch. 18: 33). The state of the international financial system had by then gone from bad to worse when Lehman Brothers collapsed in the US on 15th September 2008.

In a desperate reply on 19th September 2008 Landsbanki indicated that it would comply before turning straight to the Icelandic FME asking for help. The two surveillance authorities were still in correspondence on the issue when further trouble arose for the Icelandic banks, which I turn to next.

Heightening Pressure

When a planned nationalization of one of the three banks, Glitnir, was announced in Reykjavik on Monday September 29th depositors were flocking to nearest branch and withdrawing their savings. When the news travelled abroad, many of the 300,000 Icesave depositors in the UK, also rushed online to withdraw their money from the Icesave accounts. Throughout the continent, central banks and governments were harmonizing their response to the crisis. The ECB and the Bank of England, for example, were providing massive liquidity to European banks, but despite a wide-ranging emergency plea, Iceland would not be allowed access to these funds. The same was also to become true in Washington. Iceland was flatly refused as neighbouring governments collectively opposed a bailout, referring it instead to the IMF. Being the first Western country in four decades to surrender to the IMF was seen as a humiliation and a defeat for the Icelandic postcolonial project (see Bergmann 2014b).

In the UK, worries over the poor state of the Icelandic banks had been growing for some time. Since May, unsuccessful negotiations had been under way to move the Icesave deposits to Landsbanki’s Heritable Bank and thus under the cover of the UK banking scheme. On Friday 3d October the FSA formally announced applying its legal measures against Landsbanki stipulated in the Financial Services and Markets Act 2000 (FSMA). The bank was already by Monday to install funds amounting 20 per cent of the Icesave deposits into the Bank of England, lower free access deposits to below 1 billion pounds by end of 2008 and cap total deposits at below 5 billion pounds (SIC 2010, Vol 6). The bank was also to bring its interest below best buy levels and halt all marketing of free access deposits. As Landsbanki did not at the time have funding available to comply this was in effect equal to killing of the bank.

In the evening Alistair Darling called his counterpart raising concerns that 600 million pounds were illegally being moved out of Kaupthing and back to Iceland. To this the Icelandic authorities had no answer. By close of market the same day The European Central Bank had placed a margin call of 400 million Euros on Landsbanki in Luxembourg, threatening to seize many of its assets. However, on Sunday evening the ESB revoked the call and by doing so releasing some of the tension (SIC 2010, Vol 6).

Thus, while Iceland was desperately trotting the globe shopping for money, the UK authorities and the ECB were not only refusing any funding but indeed pressing it for cash. The firm stand of the Bank of England, the ECB and the US Federal Reserve against Iceland also made the Scandinavian neighbours hesitant to help further (SIC 2010, Vol 6). To stem the bleeding of the Edge and Icesave accounts, both Kaupthing and Landsbanki were frantically selling off assets at rock bottom prices. With the rapidly increasing flow of negative reporting abroad, the run on Icesave in the UK grew stronger. On Saturday 4th October, depositors could no longer access their accounts online. On the website an explanatory note read that this was because of technical problems. Traffic had increased more than fivefold. Really, however, this was not least because the bank was already exhausted by the run; it could no longer honour the withdrawals. Out of the £4.7 billion the 300,000 or so depositors held, more than £300 million ran off the accounts on that day alone. Foreign reporters and government authorities responded by asking whether Iceland would provide the same protection to foreign depositors as it had already announced for domestic ones. Pressure rose when the government struggled to find a diplomatic answer (Jóhannesson, 2014).

Around dinnertime on Sunday 5th October British PM Gordon Brown called his Icelandic counterpart Geir Haarde, urging him to seek IMF assistance. They were old acquaintances, since both had served for years as finance ministers, meeting on several occasions. Brown also voiced concern that money amounting to more than one-and-a-half billion pounds was unlawfully being brought over to Reykjavik out of Kaupthing’s London subsidiary, Singer & Friedlander, which would not be tolerated. The amount had thus grown by billion pounds in only couple of days since the call from Darling (see SIC 2010, Vol 7).

This claim of illegal money transferring out of the UK, which was repeated by many UK officials over these dramatic days, later proved unfounded as was for example stated in report to the House of Commons Treasury committee (2009, April). The UK was in this regard already burned by Lehman Brothers, which prior to its default had sneaked back to the US eight billion dollars from the City of London, and would not allow the same thing to happen again. The call ended without a solution, with Brown all but begging Haarde to call in the IMF rescue team. The message from the UK side in frequent correspondence over the weekend was always the same: no bailout money would be available internationally for Iceland except through an IMF programme (SIC 2010, Vol. 6, Ch. 20: 100).

The UK authorities were threating to seize Icesave already by Monday. To halt the blow the FSA demanded 200 million pounds immediately to underpin Icesave and further 53 million to stabilize the Heritable Bank (SIC 2010, Vol. 7, Ch. 20: 145). All attempts to shift the Icesave accounts into British banking space had thus failed. Negotiations with the British FSA to allow Landsbanki to move the deposits to its London Heritable Bank and thus under the UK banking regime were stuck. The British were asking for more money alongside it than either Landsbanki or indeed the Icelandic state could possibly raise. The Icelandic Central Bank could only bailout one of the three big Icelandic banks. All of them seemed to need around 500 million Euros for only short-term rescue. When it came clear that Kaupthing would win the lottery of which to bail out, as it was deemed to have the best chance of surviving, the light was finally out on Landsbanki.

God Bless Iceland!

When the markets opened on Monday October 6th, the FME had stopped trading the banks’ stocks and the banks themselves froze all fund transactions. To counter the almost inevitable avalanche of withdrawals, the government issued a blanket protection for all deposits within the country. The UK and Netherlands were issuing top-up guarantees for deposits above the €20,887 stipulated in Directive 94/19/EC up to €40,000 in the Netherlands and, by Wednesday, up to £50,000 in the UK. Many European states were also issuing complete guarantees, including Ireland, Germany, Denmark and Austria. Iceland was, however, only guaranteeing domestic deposits but could not explicitly state what would happen in foreign branches, apart from a vague general pledge to the effect that the banks’ Depositors and Investors Guarantee Fund would be ‘supported’. That promise was always very ambiguous and, furthermore, it was always clear that it might anyway be difficult uphold, as deposits in foreign branches of Icelandic banks, most of which were on Icesave accounts, amounted to around £8.5 billion, about 80 per cent of the country’s GDP, whereas the fund held only about 1 per cent of that total amount, which, though, was comparable to other countries. The ambiguity of the statements coming out of Reykjavik was thus worrying neighbours, especially government officials in Whitehall (see Jóhannesson, 2014).

It was clear that Landsbanki would already be defaulting the following day. This was a stark reversal of the bank’s situation from just a few months before, when it seemed to be well funded with a comfortable €800 million liquidity and strong inflow of foreign deposits. Furthermore, redemption of loans was low until late 2009. And even though it was exhausted of foreign cash by the run in the UK, the bank still had enough money in Icelandic króna to survive this storm; the problem was that the króna was no longer tradable for foreign currency. This was thus a double crisis – a banking crisis and a currency crisis – starting already in March (see Bergmann, 2014).

Around noon Monday 6 the UK embassy in Reykjavik reported to London on events over the weekend. Interestingly the ambassador mentioned the Icelandic governments guaranty of domestic deposits but then indicates that the government had sent similar statement to London because of Kaupthing and Landsbankis operations in the UK (Jóhannesson, 2014). This was a misunderstanding but it seems clear that the UK government believed that such a promise had been given, that the Icelandic government would at least protect the minimum of EUR 20.887 (ibid). This proved to be a wrong interpretation of what Icelandic officials meant when stating that the Icelandic Depositors Guaranty Fund would be ‘supported’ (ibid), but given the fact that Iceland officials at the time were avoiding contact with the British and only providing them with as vague responses as possible (ibid) one can understand that there was wide room for such misunderstandings.

In the afternoon on Monday 6 October the Icesave bank was being closed in the UK by formal issue of the FSA. Around the same time PM Geir Haarde was announcing that the Icelandic state would not have the means to bail out the banks. By trying so it ran a risk of being sucked with them into an economic abyss. (Haarde, 2008). An emergency legislation was rushed through parliament, allowing the government to split the banks into a domestic only good bank surviving and bad bank taken into receivership. This method was according to advice of a financial specialist, Marc Dobler, sent from the Bank of England to Reykjavik (SIC 2010, Vol. 7, Ch. 20: 120). The legislation also altered the order of payments of claims out of the fallen banks by moving depositor’s claims to the front. This was a force majeure situation. The government simultaneously wanted to protect domestic depositors in Iceland and the state from claims from abroad. The action was part of the defensive wall being raised around ordinary households. Foreign creditors would simply have to accept losing most of what they had loaned to the Icelandic banks.

This was a time of chaos. UK authorities were desperately trying to get information out of Iceland. It didn’t help when Alistair Darling could get through to neither the Icelandic PM nor the Finance Minister, who he was asked to contact again the following morning. The UK government’s frustration was reported in correspondence throughout the evening by the UK ambassador with Sturla Sigurjónsson of the Icelandic Prime Ministry. He reported a message from London: if convincing explanations would not come out of Reykjavik, that would be negatively interpreted in London and might have serious effect on the bilateral relationship between the two countries. (SIC 2010, Vol. 7, Ch. 20: 147).

Before opening of business on Tuesday morning, a board for a new Landsbanki had been appointed. Meanwhile, in the UK, the FSA issued a moratorium on Landsbanki’s London based Heritable Bank.

With all funding opportunities closed, the situation was growing bleaker by the hour. As planned Alistair Darling called on Tuesday morning to discuss these and other grave matters with Finance Minister Árni Mathiesen. When he could not get a clear state guarantee out of his Icelandic counterpart, an assurance that UK depositors would be protected, at least up to €20,887 according to Directive 94/19/EC, he stated that this would be ‘extremely damaging to Iceland in the future’ and then ended the call saying, ‘the reputation of your country is going to be terrible’ (“Samtal Árna og Darlings,” 2008). Mathiesen could not but agree, but he understood from their conversation that he would still have some time to work things out.[1]

Invoking Anti-Terrorist Act

Seen from the UK and the Netherlands, the situation was simply that Icesave depositors were left without access to their accounts. The website was inaccessible and no trace of the bank was left in the UK or the Netherlands. No one answered the phone and there was not even an address to go to. Depositors were in an intolerable position – the bank had disappeared without a trace from the face of the earth. This caused a seriously strained relationship Reykjavik had with London and The Hague. The British and the Dutch governments decided to compensate their depositors, even beyond the €20,887 mark guaranteed by Directive 94/19/EC. For this they demanded payback with interest from the Icelandic government.

In Whitehall, preparations had been under way for dealing with the Icelandic crisis. Icelanders would not get away with simply cutting off their foreign debt, shutting the doors and leaving British citizens out in the cold. It did not help that UK officials had learned of the message from governor of Iceland’s Central Bank on TV few days earlier, in which he stated that foreigners could only expect between 5 to 15 per cent of their claims. The plan was to be kicked into action. The British claimed that giving preference to depositors in domestic banks over those in foreign branches was a breach of European regulations, which Iceland subscribed to through the EEA.

In the early morning of Wednesday 8th October 2008 Alistair Darling appeared on BBC Radio 4 claiming that the Icelandic government was reneging on its responsibility to UK depositors, and that this would not be tolerated. Referring to his conversation with Iceland’s finance minister Mathiesen the day before he said: ‘The Icelandic government, believe it or not, told me yesterday they have no intention of honouring their obligations here’ (Darling, 2008). In a joint press conference at 9:15 Darling and Gordon Brown announced a massive bailout of UK-based banks, to the tune of £500 billion. As a result of pumping the money into the banks, the British state acquired a majority stake in the Royal Bank of Scotland and steered the merger of HBOS and Lloyds TSB, in which the state had acquired third of the shares. There was, however, not a penny for Icelandic-owned banks in the UK. On the contrary, Brown claimed that Iceland’s authorities must assume responsibility for the failed banks and announced that the UK government had taken ‘legal action against the Icelandic authorities to recover the money lost to people who deposited in UK branches of its banks’ (quoted in Balakrishnan, 2008). Director of the British FSA, Hector Sants, is reported to have told the management of Kaupthing Singer and Friedlander in the UK: ‘Those funds are not for you’ (SIC 2010, Vol. 7, Ch. 20: 171).

Earlier in the morning, the UK FSA had called Kaupthing demanding £300 million instantly be moved from Reykjavik to Singer & Friedlander to meet the run on Edge accounts, which with the Icesave website down also was blazing, and then a further £2 billion over ten days. This was an impossible demand for Kaupthing to meet, and it instead called the Deutsche Bank, asking it to sell off Kaupthing’s operations in the UK. Deutsche’s brokers thought that could be done within 24 hours (Jónsson, 2009).

The legal actions Brown had mentioned in his press brief, however, went much further. At 10:10 in the morning, deposits in Landsbanki’s Heritable Bank were moved to the Dutch internet bank ING Direct for free when the ‘Landsbanki Freezing Order 2008’ took effect (The Landsbanki Freezing Order 2008, 2008). The action was based on the Anti-Terrorism, Crime and Security Act, which had been put in place after the terrorist attacks in the US on 11 September 2001. Not minding that around a hundred thousand people worked for Icelandic-held companies in Britain, the UK government invoked the Anti-Terrorism Act to freeze the assets of Landsbanki in the UK and for a while also all assets of the Icelandic state including the Icelandic government, the Icelandic Financial Surveillance Authority and the Icelandic Central Bank (SIC 2010, Vol. 6, Ch. 18: 40).

Later that day the FSA took control of the Heritable Bank and Landsbanki’s subsidiary in London. The Landsbanki Freezing Order was issued with an explanation reading:

The Icelandic authorities have announced that Landsbanki has been placed into receivership but has not given any indication as to how overseas creditors will be dealt with. The Icelandic Government has also announced a guarantee of all depositors in Icelandic branches. However, overseas depositors have not been covered by the guarantee. This exclusion on grounds of nationality is discriminatory and unlawful under the rules governing the European Economic Area. The UK government is taking action to ensure that Landsbanki assets are not transferred from the UK until the position of UK creditors becomes clearer. The UK authorities are seeking to work constructively with the Icelandic authorities to ensure speedy resolution.

Subsequently, Landsbanki and for a while also Iceland’s Central Bank and Ministry of Finance was listed on the Treasuries home page alongside other sanctioned terrorist regimes, including Al-Qaeda, the Taliban, Burma, Zimbabwe and North Korea.

While Kaupthing’s CEO, Sigurður Einarsson, was in his London office in the late morning discussing with Deutsche Bank over the phone the fastest way to liquidate its assets, he read a banner running on the TV screen saying that the FSA had already moved Kaupthing’s Edge accounts to ING Direct in the Netherlands. Their phone conversation quickly ended, as there was no longer anything to talk about. In the afternoon, the UK authorities issued a moratorium on Singer & Friedlander, showed its Icelandic CEO, Ármann Thorvaldsson, the door and sealed the offices (Thorvaldsson, 2009). This instantly prompted a flow of margin calls and a further run on the mother company. When the dark set in, Kaupthing Bank was itself taken into administration in Reykjavik. Thirty thousand shareholders lost all their investment. Interestingly, both the previously mentioned report to the House of Commons Treasury committee (2009, April) and also the British FSA later found out that no money had illegally been moved from Singer & Friedlander to Iceland (Júlíusson, 2009), which, however, had been one of the main justifications for the UK’s attack on Iceland.

On this same day, Thursday 9th October, Brown told BBC that the actions of the Icelandic government were effectively illegal and completely unacceptable. ‘They have failed not only the people of Iceland; they have failed people in Britain’ he said. Then he said his government was ‘freezing the assets of Icelandic companies in the United Kingdom where we can. We will take further action against the Icelandic authorities wherever that is necessary to recover money’ (quoted in “Brown condems,” 2008). Later that day, Brown told Sky News that Iceland, as a state, was bankrupt and that the ‘responsibility lies fairly and squarely with the Icelandic authorities, and they have a duty in my view to meet the obligations that they owe to citizens who have invested from Britain in Icelandic banks’ (“Brown Blasts Iceland Over Banks,” 2008). Iceland was being completely rebuffed. In fact, in the coming days Brown’s rhetoric against Iceland was only to harden.

With UK depositors holding a stake of £700 million in Icesave, including many charities’ funding, Brown stated that the Icelandic authorities were now responsible for the deposits. Even in the UK, many were stunned by Brown’s harsh response to the Icelandic crisis. Many claimed that by attacking Iceland, a foreign actor, Brown was attempting to divert attention from difficulties at home, perhaps much as Margaret Thatcher had done during the Falklands crisis (Murphy, 2008). Initially it did indeed work. On its front page the Daily Mail declared ‘Cold War’ (2008) on Iceland and the Daily Telegraph screamed across its front page: ‘Give us our money back’ (2008). And these were papers that did not even support Brown or his Labour Party.

With access to the estimated 7 billion pounds the Icelandic government and banks held in assets in the UK no longer being available, the wall finally came tumbling down. Invoking Anti-Terrorist legislation against a neighbouring state and fellow NATO and EEA member was virtually an act of war, as is indicated in the interviews conducted for this paper. This was an unprecedented move against a friendly state, which cost Iceland dearly, in both economic and political terms. Moody’s instantly downgraded Iceland by three full points, to A1. Money transactions to Iceland were stopped not only in the UK but as a result also widely in Europe, where many banks refused to trade with Iceland after it had been listed in the UK with terrorist actors. The payment and clearing system for foreign goods collapsed. In only two days, all trading in króna had ceased outside Iceland’s borders (SIC 2010, Vol. 7).

By Thursday 9 October 2008, almost the entire Icelandic financial system had collapsed in a dramatic chain of events, which later became known simply as The Crash. Ironically, this was a full week before Glitnir’s 15 October deadline – which had started the whole thing.

Explaining the UK Attack

In hindsight it seems clear that the UK authorities went in their actions much further than needed in protecting British interests. Invoking the Anti Terrorist Act was for example in stark contrast to responses elsewhere. Authorities in the Netherlands, for example, saw no reason to freeze assets and in Stockholm the Swedish Central Bank was still trading with Kaupthing’s Swedish branch. In this segment I attempt explaining some of the reasons behind the harsh response of the UK government against Iceland.

First thing to note is that this was a time of utter chaos, frustration and widespread political as well as economical upheaval. Perhaps part of the reason can be found in the fact that Iceland’s economic fragility turned the mirror on the UK and its own volatile financial situation. Economist Willem Buiter (2008) who had studied the state of the economy in both countries, saw the similarity and wrote that it was no great exaggeration to also describe the UK as a huge hedge fund.

From private off-the-record interviews I conducted for this paper in late 2013 and early 2014 with several leading UK officials, within for example the UK Treasury, Foreign Office and the Labour Party, who were at the heart of these events at the time, it seems clear that the UK government finally lost faith in not only the Icelandic banks but also the Icelandic government over the weekend from Friday 3d to Sunday 5th October, 2008. This conclusion is for example also supported in unpublished report Icelandic stakeholders commissioned a leading business investigation firm in London to conduct into the issue.[2] The report states that the UK government believed until October 3d 2008 that a ‘high level political deal’ was in place of fast-tracking Icesave deposits to British banking space. The alleged deal included stipulation of insurance premium to be paid by the Icelandic government, that the ‘Icelandic government [was] to transfer 200 million pounds to the UK’.

How the UK authorities came to believe this deal was in place is not clear as no such understanding is sheared amongst Icelandic officials at the forefront of these events at the time, who also were interviewed off the record for this paper in late 2013 and early 2014. Neither are there any public documents available to support such alleged ‘deal’ at ‘high political level’ as the report claims.

UK officials interviewed for this paper point out that this was a time of great uncertainty and misinformation. Long lasting still ongoing tension at the time between the British Foreign Office (FCO) and the Treasury had weakened British institutions. Under Gordon Browns premiership it is reported that the Treasury was leading all actions against Iceland and that the FCO was hardly involved. Still, the little information that was available on Icelandic politics within the UK government was kept at the FCO. It is furthermore reported in the interviews I conducted that there was a serious communication malfunction between the Treasury, the FSA and the Bank of England. This was unfortunate as reliable intelligence on the Icelandic banks was rather within FSA and the Bank of England than in the Treasury.

In addition to not understanding Iceland, the Treasury was overworked by challenges of the international financial crisis blazing at the time. It is furthermore reported that as relatively young and small ministry in the UK the Treasury was suffering from high staff turnover and thus lack of institutional memory. All of this combined meant that when dealing with little Iceland the Treasury neither had the means nor knowledge to properly contemplate the highly complex situation.

My interviewees concur in saying that when trouble arose Iceland was thus not in focus in the Treasury, in fact it was rather viewed as troubling black hole preventing the UK from dealing with the big picture. Unlike the Foreign Service the Treasury had no room to contemplate political implications cross borders, in dealing with Iceland this was just a financial issue like all others. ‘This was just nuts and bolts finance’ said one of this papers interviewees. While desk officers were of course analysing Icelandic banks like all others, higher-level officials were ignorant about the country.

One interviewee for this paper, senior official in the British Foreign Service said that this was in effect a failure of diplomacy. He said that on both sides there existed surprising lack of understanding between the two governments, that the Icelanders did not know British governance and the UK side was almost utterly ignorant about Iceland. He pointed out that even though Gordon Brown and Geir Haarde were on good terms and for example met at Number 10 after Brown took office, that friendship did not amount to much at time of crisis. ‘To think so was foolish’, he said.

Plan A and Plan B

British officials interviewed for this paper pointed out that repeated references in FSA letters to Landsbanki to its legal authority to interfere with the banks operation in the UK, discussed earlier in this paper, was nothing short of blatant threat of seizing the bank. This warning seems, however, not to have been taken equally seriously in Iceland. According to British officials interviewed for this paper a low level and at first rather vague plan to deal with Iceland was slowly starting to emerge since May 2008, developing in gradual steps until the very end when the UK government finally struck on October 8th 2008 with implementing of the Anti Terrorist Act. The plan consisted of two options. Plan A revolved around getting Icelandic authorities on board with moving Icesave to the UK, which was to include proper insurance premium funds coming with it. If however, that would not work out, plan B was quite simply unilaterally seizing the bank.

As mentioned before, until Friday October 3d, Treasury officials believed a deal was in place with Icelandic authorities. Over the weekend however the UK side lost faith in the Icelanders, resulting in Plan B being kicked into action. The above mentioned investigative report prepared for Icelandic stakeholders also indicates that the UK side feared that the government of Iceland was losing control over to Central Bank governor Davíð Oddson, the country’s previous long standing PM and that he was planning to ‘veto the scheme’ – that is, the alleged deal on moving Icesave against 200 million pound insurance premium. The report also noted an expectation existing in the UK that the nationalized Icelandic banks would be ordered to reclaim their funds from abroad following such an Oddson veto. Furthermore, hints of Russian rescue money flowing to Iceland caused further concerns of Iceland going rogue.

When coming to the conclusion of applying plan B, UK officials interviewed for this paper claim that when dealing with Iceland, Brown and Darling wanted to been seen as being tough on rouge bankers. They pointed out that Iceland was viewed to be small enough to be made an example off; that it might serve as stark warning to others. Thus, when the big bank bailout was announced on Wednesday October 8th 2008, being tough on Iceland set the right political tone domestically, i.e. being tough on bad bankers while also preventing the banking system from collapse. Thus, this was also a balancing act. Applying the Anti-terrorism Act against Iceland was thus purposely used by the UK government to send a strong message and in doing so preventing others from straying off from the right path.

UK officials interviewed for this paper agree that the UK government had no idea what implication their action would have on the Icelandic banking system, that they were not thinking about Iceland as such in their actions, that this was quite simply only about British politics in time of crisis and that they did for example not contemplate Kaupthing collapsing as a result.

This view of events is somewhat supported when examining conversation between Icelandic Finance Minister Mathisen and Lord Paul Myners, the British Financial Services Secretary, on 8th October 2008. Myners said that it had worried UK authorities not being able to get reliable information out of Iceland on whether British depositors would be compensated or not. Lord Myners said that the UK government had thus decided to take action in protecting British financial interests against Iceland (SIC 2010, Vol. 7, Ch. 20: 151). When discussing the issue in the House of Lords on 28th October 2008 Myners cited the same reasons for applying the Anti-terrorism, Crime and Security Act, that is; lack of sufficient commitment from Iceland regarding deposits in the UK but also adding that the actions had been necessary because of volatility on the UK financial market. He said it had been necessary to act vigorously when Iceland seemed to be taking actions hurting British interests (SIC 2010, Vol. 7, Ch. 20: 154).

Quite clearly, we can conclude that these actions were a co-ordinated attack that had been in the making for days, if not weeks. Indeed, it was a bomb, which was to blow up the defensive wall that the Icelandic government was trying to build around domestic households.

When PM Haarde called in the morning on Thursday 9th October to complain about this brutal treatment, Brown did not even answer. Haarde was instead referred to Darling, who in their phone conversation justified the actions of the British authorities by referring to his talk with Icelandic Finance Minister Mathiesen two days earlier. Darling said that Mathisen had not been able to provide guaranty for the Icesave deposits and that he had indicated that obligations of the FME might not be honoured. Records of their 7th October conversation however do not support Darlings recollection from their talk (See SIC 2010, Vol. 7, Ch. 20: 152). Interestingly, when interviewed for this paper a senior UK Foreign Office official pointed out that Mathiesen had made a mistake when agreeing to talk on the phone with Darling that day, by doing so he had given Darling the excuse he needed to attack Iceland. The British official said that the phone call had made it easier for the UK to apply the legislation they had already for some time been preparing to use if the need presented itself.

From correspondence between the UK embassy in Iceland and the Treasury in the UK, now partly made available by the Freedom of Information Act 2000, the UK authorities seem to have felt quite confident of success in their dealings with Iceland. On late October 11th the UK ambassador reported to London that Treasury officials were travelling back from Iceland and that a deal on Icesave was within reach. UK officials discussed imminent ‘quick wins’ in the dispute against Iceland and contemplated ‘lifeline’ to be handed to Iceland after securing their victory (See in Jóhannesson, 2014).

The Icelandic government only made weak attempts to protesting against these actions taken by the UK. On 13th February 2009 the UK Treasury finally provided explanations in a letter signed by Clive Maxwell, claiming that the actions were not taken on grounds of terrorist operations. The letter quoted instead protocol in the law saying that the Treasury can act against those whose actions are construed as being to the detriment of the United Kingdom’s economy. The letter maintained that the British Treasury had believed it to be likely that the Icelandic government was discriminating in favour of Icelandic depositors and against UK and other foreign creditors. The letter quoted the 7th October phone call between finance ministers Mathiesen and Darling, claiming that the Icelandic authorities had failed to issue credible protection to foreign depositors. The letter also stated that the Icelandic government had provided contradictory information and said that the Icelandic actions were threating financial stability in the UK and that there was real risk of contamination (SIC 2010, Vol. 7, Ch. 20: 155). This is somewhat different to the explanation Finance Minister Darling told PM Haarde in their phone call on 9th October 2008.

Forced Agreement

Though ambiguity remained over many legal aspects of this highly complex situation, the UK and Dutch governments were pressuring Iceland to accept full responsibility for the Icesave accounts. While also pressuring Iceland to turn to the IMF, these governments were, with the help of the EU apparatus, lobbying neighbouring capitals to refuse it any loans except through an IMF programme (See in Independent Evaluation Office of the International Monetary Fund, 2014). Iceland’s government, however, was still afraid of the stigma of being the first Western state in four decades to surrender to the IMF (See for example, Mathiensen & Jósepsson, 2010)

Iceland gradually caved under the collective pressure and sought help from the fund. To Iceland’s surprise, the IMF board refused help unless, Iceland was made to understand, first clearing up the Icesave dispute with the British and the Dutch. Initially at the IMF yearly meeting in Washington already on October 11, Finance minister Mathiesen signed a Memorandum of Understanding with the Dutch where he agreed to an arbitrary court ruling on the issue. Only in its wake, on 22d October, was Landsbanki removed from the list of terrorist regimes on the UK Chancellor’s website. This agreement was however abandoned by the Icelandic government upon Mathiesen’s return in Reykjavik and in November it was replaced with a much more broadly based deal, what was called the Brussels Guidelines, which included EU involvement. The deal stipulated that Iceland would indeed accept responsibility, but that its European partners would help shouldering the cost. Holding out for not much more than a month, the government thus threw in the towel and under impossible pressure, accepted to guarantee deposits up to the minimum €20,887 stipulated by EU Directive 94/19/EC.

The EEA connection did not amount to much. IMF assistance was only made available after Iceland gave into the Dutch and the British. The government’s apparent weakness in responding to the UK attack added to the public’s frustration, especially when it had become clear that no money had illegally been moved out of the UK.

The initial forced Icesave agreements (The Memorandum of Understanding and the Brussels Guidelines) angered the public, which in wake of the Crash had taken to the streets in ever-greater numbers. After a series of protests, which later became known as the Pots and Pans Revolution (búsáhaldabyltinging), the grand coalition of the Independence Party (IP) and the Social Democratic Alliance (SDA) was ousted from power in late January 2009, paving the way for a new left-wing government – the first purely left-wing coalition in the history of the republic.

The severity of the currency crisis, which followed the banking collapse, can for example be seen in the fact that Iceland was the only country that had to revert to such extreme measures as implementing capital controls. The economy seemed paralysed. On Friday 10 October, the first of many popular protests started.

While the crisis was tightening its grip leading up to The Crash, Iceland’s neighbours had refused help unless it was through an IMF programme. After the collapse of the banks, the IMF gradually emerged as Iceland’s only viable option as it was still being isolated internationally. The British and Dutch governments had been successfully lobbying both the ECB and other European states not to aid Iceland independently, while at the same time pressuring Iceland to accept responsibility for the Icesave deposits. Iceland’s government, on the contrary, insisted that according to Directive 94/19/EC it was only obligated to ensure that a Depositors Guarantee Fund was in place and not explicitly responsible for foreign branch deposits (Blöndal & Stefánsson, 2008). Referring to a report written for the French Central Bank in 2000, Iceland argued that the Directive did not explicitly dictate that the state had to pick up the balance in the event of a systemic collapse (Banque de France, 2000).

This was, however, a difficult argument to get through in the crisis-ridden climate at the time. In order to prevent a further run on their own banks and to regain enough credibility to keep them afloat, the British, during these same days, led a coalition of G20 and EU states promoting collective international action emphasizing almost blanket depositors protection (see, for example, Pilkington, 2008). Allowing Iceland to leave depositors in foreign branches without such protection was seen as countering these efforts and indeed undermining the entire global financial system. In Whitehall, many feared that the Icelandic crisis was spreading to the UK, which also had approached the brink of widespread banking collapse. As a result, Iceland was being turned into an international villain. Iceland was trapped.

Though Iceland was still stubbornly hesitating, a joint economic programme was informally being negotiated that would include $2.1 billion from the IMF and a further $3 billion from the Central Banks of Denmark, Finland, Norway and Sweden in addition to a separate loan from Poland. Iceland’s resilience was however diminishing by the day. The pressure to accept responsibility for the Icesave deposits grew. According to some reports, Iceland was even threatened with being expelled from the European Economic Area (EEA), its economic lifeline to the outside world (Hálfdanardóttir, 2008). With dwindling foreign reserves and at risk of a serious shortage of, for example, medicine, food and other necessities from abroad, Iceland finally threw in the towel and applied to enter the IMF emergency program on 25 October.

IMF Blockade

Based on informal query the government expected that the IMF board would accept Iceland’s application on 3 November (Sveinsson, 2013). In the meantime, however, the British and Dutch governments, which previously had been pressuring Iceland to go to the IMF, were now lobbying behind the scenes against Iceland being allowed into the program unless first accepting responsibility for the Icesave accounts (Duncan, 2008). The NRC Handelsblad in the Netherlands reported that the blockage was being orchestrated by Dutch Finance Minister Wouter Bos and his British colleague Alistair Darling (Banning & Gerritsen, 2008). Later, the chief IMF representative in Iceland admitted to a block of not only the British and Dutch governments but also the Nordic states (Rozwadowski, 2013).

When Iceland would not concede, the IMF board postponed its decision and made clear that the plea would be blocked until accepting of liability for Icesave. During this time, a senior advisor in the IMF’s external relations department publicly acknowledged that the delay was directly due to unresolved disputes with the Netherlands and the UK (Transcript of Press Briefing by David Hawley, 2008). As Iceland was not a member of the EU and thus not subject to the European Court of Justice, and as the EFTA Court had no jurisdiction in the UK and the Netherlands, there seemed at the time to be no available legal body to rule on the dispute – apart from the previously mentioned initial arbitrary court that Finance Minister Mathiesen had felt forced to agree to on October 11 but the Icelandic government later abandoned on the ground that it was skewed in favour of the UK and the Netherlands through the EU’s involvement.

Iceland was thus caught in a tight spot. It needed money to prevent further deterioration of the already devastated economy but that meant agreeing to liabilities it did not want to accept. According to the Brussels Guidelines brokered by the French EU Presidency the government of Iceland agreed to cover the deposits of depositors in the Icesave accounts in accordance with EEA law. Iceland was to repay the Icesave debt over ten years, starting three years after signing, with 6.7 per cent interest on the loan. The agreement also entailed that the EU would continue to participate in finding arrangements that would allow Iceland to restore its financial system and economy. This was a precondition Iceland set for paying out according to the agreement. A stabilization package of financial assistance from the IMF was an explicit part of the agreement, which was to be discussed at the IMF Executive Board meeting on Wednesday 19 November (Agreed Guidelines, 2008).

Though these early agreements on the Icesave deposits were meant to end the quarrel, the dispute was only just starting. Ambiguity still remained. To keep up the pressure, and even to increase it, the Dutch Foreign Minister, Maxime Werhagen, threatened to veto Iceland’s EU bid in July 2009 (The Hague Threatens Iceland, 2009). The Icelandic government justified the agreements by claiming that it had had no choice. Either it bit the bullet and accepted responsibility or the country would remain frozen out, thus without access to vital imports such as medicine and food. The Icelandic government explained that no one supported us; not even our Nordic neighbours were willing to listen to Iceland’s legal arguments. Without agreement, Iceland would no longer have been considered a modern state, internationally recognized as equal to others, but would rather have been relegated to being an isolated outpost surviving on local agriculture and fisheries alone. The signing was, however, a serious blow to the country’s political identity, as the postcolonial national identity insisted on not giving in to foreign pressure. It thus caused great strain domestically (Bergmann, 2014b).

After Iceland’s concession to the British and the Dutch over Icesave, the general public took to the streets in even greater numbers than before, now not only protesting against our government’s mismanagement of the economy but also against apparent foreign oppression. Frustration grew as businesses closed and more and more people were laid off while inflation rose to 20 per cent. The protest was now spreading around the country.

Icesave II and III

The new left-wing government parachuted in on the canopy of the Pots-and-Pans revolution contested some of the premises of the Brussels Guidelines, which they claimed was unlawfully imposed by foreign forces. Under the leadership of Finance Minister Sigfússon, chairman of the Left Green Movement, the new government abandoned the multinational approach and instead sent their representatives to London and The Hague to renegotiate terms. This result, which in effect was merely a loan agreement with the foreign ministers of the Netherlands and the UK, where Iceland accepted to cover up to €4.5 billion, instantly became one of the most unpopular agreements in the history of the country. Only after it’s signing however was the freezing order on Landsbanki and related Icelandic assets lifted.

Similar delaying tactics within the IMF on reviews, as when entering the program initially, was furthermore confirmed in a report by the Independent Evaluation Office of the IMF into its response to the financial crisis. The report spoke of ‘the active involvement of (at least some) Nordic countries served to delay the first review by several months because […] pressure […] by their European partners not to provide financing assurances in an attempt to influence the outcome of the ongoing discussion on the extent of deposit guarantees for Icesave.’ (Independent Evaluation Office of the International Monetary Fund, 2014)

Parliament reluctantly accepted the agreement, but only after adding to it new preconditions, referring to Iceland’s ability to pay. These the UK and the Dutch refused. A new negotiation committee was thus formed, which was able to lower the interest rate a little further. After a fierce debate, the amended agreement was accepted in Parliament on the last day of December 2009. The new government was now also accused of caving in to foreign pressure and surrendering Icelandic interests to external forces.

The saga took a dramatic turn on 5 January 2010, when the President of Iceland, Ólafur Ragnar Grímsson, denied signing the law necessary to ratify the new agreement after receiving a petition of 60,000 Icelanders asking him to reject the deal. (He had signed the revoked earlier one). This was an exceptional move.

In early 2010, Icelanders once again found themselves in unknown waters. A quarter of the electorate had signed a petition to be put to the President asking him to decline signing the bill, which was thus as a result of the non-signing subsequently put referendum were 90 per cent of voters refused ratifying it. The country was in a mood of defiance. Many felt betrayed by the UK government when it had invoked the Anti-terrorist Act – an action that ultimately drove our last bank into the ground. Icelanders therefore found the idea that they should foot the whole bill alone difficult to swallow. There was also a legal twist. Directive 94/19/EC upon which the British and Dutch had based their claim was rather unclear. It stipulated only that states are obliged to set up special deposit guarantee schemes. It did not speak of a state guarantee. Many Icelanders were thus frustrated by the fact that the British and the Dutch had refused the request for an impartial court to rule on the issue.

The general perception in Iceland was thus that the government had again been bullied by an overwhelming foreign power into signing an unjust agreement. It is generally accepted that the government and Parliament only accepted the initial deals to achieve other ends, rather than because they felt under obligation to pay. It was simply a necessary evil to gain access to the IMF. And then there was the cost. €4.5 billon might have seemed a small figure by UK standards but this was almost half Iceland’s GDP. Divided by Iceland’s small population, the bill amounted to more than €12,000 per head, or just under €50,000 per household. If Landsbanki’s assets deteriorated any further, this would place a devastating burden on an already debt-ridden population.

In addition to the wide-ranging general feeling of frustration, the appearance of leniency towards the British and Dutch spurred a new wave of protest in mid-2010, which heightened when Parliament resumed in the early autumn, to find thousands of protesters surrounding the building, once again.

After twice going back on signed agreements (in addition to abandoning the two initial deals), the government found it difficult to go knocking on doors in London and The Hague asking to renegotiate the deal once again. Headed by a hired American negotiator, the new team was nevertheless in the end able to bring the interest rate down to 3 per cent. This time, a large majority emerged in Parliament when the IP joined ranks with the government in backing the new deal. The Progressive Party (PP) though still opposed any agreement. Yet, to the surprise of most, President Grímsson also refused the third agreement. In a second referendum, on 9 April 2011, the new agreement was refused by a two-thirds majority, illustrating a clear division between Parliament and the public. Now, there was no longer anything to negotiate. The case was sent to the EFTA Court, where the EU was backing the claim of the UK and the Netherlands and the EFTA Surveillance Authority against Iceland. Finally, on 28 January 2013, the court ruled in favour of Iceland, which was vindicated of wrongdoing in its handling of the Icesave deposits (Judgment of the Court, 2013). The court refused the EU’s and the UK and the Dutch governments’ claims of a state guarantee, such as Iceland had been forced to accept in the earlier Icesave agreements. Later UK and the Netherlands filed a much more limited claim before court in Reykjavik, still pending judgment at time of writing.


Internationally the Icesave dispute reveals interesting contestation and political production (and re-production) of constitution of international legality. Development of international legality, as understood by Rajcovic et al (2016), has in this paper been traced throughout the course of this particular crisis. Domestically the issue was dictating politics in the post-crisis period in Iceland. To the surprise of many Icelanders, after the Crash had left Iceland in financial ruin, the Dutch and the British still enjoyed the full backing in the Icesave debacle of our neighbours in the European community. The UK and Dutch authorities were able to use both the EU and the IMF to pressure Iceland into accepting responsibilities that Iceland’s authorities never believed were theirs to shoulder.

 From interviews with UK officials conducted for this paper is seems clear that the UK side believed that a high level political deal was in place with the Icelandic government of fast tracking Icesave into the UK banking space and that the deal included insurance premium injection from Iceland of 200 million pounds. Interestingly, though, Icelandic officials claim not to have any knowledge of such a deal. It is furthermore evident that the UK government lost faith in Icelandic authorities during the weekend of 3d to 5th October 2008, finally kicking into action plan B of attacking Iceland by use of the Anti-terrorist Act, which had for a while been in the making in Westminster. When doing so it served the UK government well to take a tough stand on Iceland, while simultaneously bailing out banks domestically – being tough on Iceland became a balancing act, serving the purpose of sending tough message to others when announcing the massive bank bailout.

The Icesave case illustrates that in time of crisis international muscle power still prevails. In time of need small states have difficulties when defending off larger states sharp attacks. In a European context, being formally a non-EU member made it easier for the UK and the Netherlands to deploy the EU apparatus to pressure Iceland than they would against a fellow member state. The illusion of a shelter amongst the family of Nordic states was furthermore also shattered during Iceland’s Crash, which was therefore not only economic but also political and indeed psychological. Iceland had been frozen out in terms of diplomatic relations. Suffering the deepest crisis in its post-war history, the country was already drained of foreign currency when the IMF finally opened its doors in November 2008, after Iceland had, under coercion, finally agreed to guarantee the Icesave deposits. By use of delaying tactics of reviews within the IMF the UK was, with the help of some of the Nordics, able to maintain the pressure on Iceland. However, after the immediate crisis was over, it was through the EFTA Court, a European institution, that Iceland, as a small state, was finally able to escape the pressure applied by the British and Dutch governments.





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* Acknowledgements: This research was conducted by examining generally available data and through semi-structured off-the-record background interviews with several officials in the UK and Iceland. The interviews are referenced where appropriate in the text but due to anonymity they are not individually listed in the bibliography. The research was financially suported by the Social Science Instute of the University of Iceland, through a project analysing foreing impact on the Icelandic banking collapse. Parts of the paper are furthermore based on my book Iceland and the International Fiancial Crisis: Boom, Bust and Recovery (2014). Basingstoke and New York: Palgrave Macmillan.


[1] Authors interview with Mathiesen in Desember 2013.

[2] I was allowed only reading the unpublished report in Reykjavik on October 21st 2014

Immigrants’ Experiences of Happiness and Well-being in Northern Iceland


Akureyri is home to almost 800 immigrants for a total of 18,000 inhabitants. Research on the immigrant population in Iceland typically focuses on problems, discrimination, prejudice and difficulties; immigration issues in Iceland have been looked at through the lens of unemployment[2], difficult working conditions[3] and negative portraits of foreigners in the media[4]. However, in 2012, in a study conducted on the immigrant population of this town, 82% of 200 respondents displayed high life satisfaction[5]. Drawing on in-depth interviews realised with immigrants in Akureyri, we examine the experiences of well-being of migrants who have come to settle in his town.

Our analysis reveals that well-being is higher among immigrants with strong social capital and with some connections to local networks. Individuals often resort to individual rationale to explain their circumstances, their choices and their subsequent well-being. We begin the discussion by very briefly reviewing the literature on well-being and by introducing the context in which the study was realised. In the following section, we examine the relationship between feelings of well-being and the urban environment; then we explore the belief that opportunities are plentiful in this northern town, and finally look at the relationship between the social support of immigrants and their well-being.

Literature on immigration and well-being

The booming economy of the beginning of the 21st century and the subsequent demand for labour, especially in the construction and service sectors, resulted in a rapid increase in the number of foreign nationals coming and settling in[6]. Although the economic crisis of 2008 decreased the political and public interest for immigration issues[7], this significant growth of newcomers has raised interest among social scientists. Being the largest minority group in Iceland, the Polish have received a fair bit of attention in social studies, although social scientists have also looked at other communities such as the Filipino[8] and the Thai[9]. Immigration scholars argue that most immigration to Iceland in the past ten years is labor-related, hence providing a body of literature focusing on employment[10] and the financial crisis[11]. Immigration studies often oppose two groups who either welcome or disapprove of migration[12], and many reports highlight the feelings of discrimination and misunderstanding encountered by the newcomers[13]. The increase in the number of immigrants settling in Iceland, the financial crisis of 2008 and the following rise in unemployment resulted in a growth of negative attitudes from the host culture[14], and surveys on discrimination and prejudice have been more numerous in recent years[15]. However, there is still a lack of knowledge about the status of immigrants and minority groups[16], and if little is known about the impact of discrimination and prejudice on immigrant’s daily lives, even less is known about their wellbeing. Although some effort has been made in the past decade in the field of happiness studies, anthropologists have been particularly silent on the subject of well-being and happiness[17]. Iceland is no exception, despite being every year one of the top countries on the OECD life satisfaction index and other similar inventories. The lists ranking the happiest nations in the world very often lack analysis, and the real experience of well-being and happiness gets lost in the rankings[18]. There is very little social studies and ethnography on well-being in the Nordic countries, and practically none in Iceland[19].

Elsewhere, a few social scientists have devoted research to understand the complexities of emotions and subjective well-being although not many have looked at migration contexts. European research has shown that if immigrants seem to have higher levels of happiness than “stayers”, people who display higher levels of happiness are also more likely to migrate[20]. Investigations on the relationship between immigration and well-being typically focuses on measures of well-being such as health, mental or psychological well-being[21] and economic well-being[22]. Happiness experiences and emotions have not been investigated much in immigration contexts, although social sciences could learn much from personal narratives on those topics.[23]

Context, participants and methodology

Located in the north of the country, Akureyri is the second largest town in Iceland. The population has been on a steady increase since the beginning of the XXth century[24], and the foreign population has also grown from 369 in 2004 to 771 in 2015[25]. Representing almost 5% of the population, Akureyri´s immigrants originate primarily from Poland, Denmark, Syria, Germany and Thailand. Akureyri offers a relatively varied labour market consisting of skilled and unskilled jobs in various sectors, including the fishing industry, the research and education sector, the health sector and the tourism and service sectors.

This study uses a narrative methodology. The authors realized interviews with immigrants living in Akureyri and thereafter analyzed them by using discourse analysis, as research has shown that narrative texts are stocked with empirical evidence[26]. Research also shows that qualitative studies are more appropriate to understand social conditions, contexts and emotions[27] in anthropological studies. To gain a better understanding of the experiences of well-being in the foreign community, we conducted thirty semi-structured in-depth interviews with immigrants living in Akureyri. We used snowball sampling to recruit participants of various countries of origin, background, occupation and age group. We required each participant to consider himself an immigrant, to live permanently in Akureyri and to agree to participate in the study. Eighteen women and twelve men were interviewed, mostly originating from Europe; twelve people came from Eastern Europe and fifteen from Western Europe. Two-thirds of the participants were married or in a relationship. Most participants were highly educated and 21 held university degrees. Half of the participants had been in Iceland five years or longer and all of them with the exception of three came entirely voluntarily; the latter group followed their parents as teenagers. The interviews took place in whichever language the participant was most comfortable–English and Icelandic–and a third of the interviews were done in Polish by native-speakers. The interviews were recorded and accurately transcribed, and the interviews in Polish were also translated. The information collected in the interviews was classified in categories and interpreted; we used the discourse analysis method. The participants were assured that their contribution would remain anonymous, and were free not to answer any of the questions.

The emphasis of this project has been placed on people’s self-perception of happiness. We followed Neil Thin when he says that scholars should explore “how people develop a sense that their lives are good”[28]. We refer to “happiness” or “well-being” as our respondents understand them and look at what elements are important to them to contribute to “a good life”. If “happiness is imagined, generated and expressed”[29] differently by different people, depending on personal, social and cultural contexts, we were able to draw and identify from the interviews three main factors that seem to influence greatly the migrants’ vision of happiness: the physical and social environment, the possibility for personal achievement and the feeling of reciprocity.

“Akureyri sé besta staður á Íslandi”: When the physical environment influences social tranquility

If urban green spaces affect health positively[30], studies on the physical environment also reveal that access to nature and the proximity to natural surroundings impact positively the mental wellbeing of individuals[31]. The interviews show nothing but praise about the environment and the city itself:

“It´s close to the nature, you feel like in a luxury society, going to the swimming pool and being almost alone or going to the hospital with no problems, going to the forest and being alone walking.” (Excerpt from interview 9 – Male, Western Europe)

According to most, Akureyri is a nice and comfortable place to live. This attitude towards the place becomes obvious when even the winter darkness is seen in a positive light: “I’ve already fell in love with the darkness” (Excerpt from interview 13, Female, Western Europe), and when asked about the weather, one participant responded: “I actually like it, I like the storms.” (Excerpt from interview 10, Male, Western Europe).

Beauty, peace, ease and calm are all attributes associated with Akureyri: “I like Akureyri and its calm atmosphere” (Excerpt from interview 28, Female, Western Europe). No risks, no violence, no stress often associated with their home countries or home towns, the participants talk about it like being the perfect little hub of the polar circle. Nearly all participants refer to the town itself as being the “right” size, rather small yet with everything they need. The feeling of being in a small town, calm and close to nature also enhances the feeling of security[32]. In small towns, “the close-knit community and the feelings of being acquainted with most people in the surrounding community may contribute to a greater sense of living in an area that is secure and trustful”[33]. One participant told us: “It’s great because people know you and it’s safe and people are watching out for you.” (Excerpt from interview 2 – Male, Western Europe).

Feelings of personal and family safety are important, and every parent participating in the interviews makes much of the safety in town and the accompanying feeling of freedom experienced by their children.

“I like it a lot, it’s a great place for my boys. I don’t know if you have kids, but it’s grand and easy, it’s very safe you know, they just wander when they come from school and do their thing. Sort of like my memories of when I was younger. [Everything] is open, […], my boys can wander to school, it’s a very safe environment. It’s a very carefree existence.” (Excerpt from interview 10 – Male, Western Europe)

“There’s a lot of safety for my child. I don’t know, I don’t have to worry about the next day. Mostly, it is safety for my child, the rest I don’t care. […] I think that’s what keeping me here.” (Excerpt from interview 3 – Male, Eastern Europe)

Thus the physical space discourages feelings of anxiety and seems to play an essential role in the immigrants’ ability to feel relaxed; the risks and worries associated with towns and cities in the participants’ home countries disappears in the midst of the peaceful atmosphere of Akureyri:

“It’s a much more beautiful country, cleaner and not as noisy and not as…dangerous. I remember when we were playing we were not supposed to go in alleys that are dark or something, you don’t really have to fear about something like that here. When the kids are playing until eight o’clock at night and it’s already dark you don’t have to worry.” (Excerpt from interview 4 – Female, Western Europe)

The safety, simplicity and ease created by the settings leaks out onto all spheres of existence: work, administration, security and business. “The easiness of Icelandic life lies in its lack of formality.” (Excerpt from interview 31 – Male, Western Europe). We interviewed a couple who had specifically moved to Iceland to escape the stress following the financial crisis in their home country; although they had a house, good jobs and no financial problems, they “needed peace”. The stress-free factor seems to be particularly important in work situations:

“Sometimes […] it’s coffee break, everybody is going to the coffee break, but I’m still sitting in front of the computer finishing something, and they are laughing but that’s me. The Icelanders are just more… there’s not so much stress. […] I can feel I’m much more relaxed here in Iceland. When I go to my hometown for a visit, you can feel the stress.” (Excerpt from interview 12, Female, Western Europe)

“What I like about [work] is the atmosphere. It is totally different than in [my home country]. You see when I was working [there] there was always a pressure. Here people seem to be more relaxed […] Here, I was late couple of times and nobody said a word. I was also surprised because at the very beginning my boss told me that I work “too fast” [laughing]. Well now I know that I don’t have to be in a rush or put too much effort in.” (Excerpt from interview 21, Female, Eastern Europe)

A few people, coming to work in Iceland temporarily, never went back to their home countries and decided to settle in Iceland; their migration became permanent when their original intention was only to move temporarily. Those migrants to Iceland frame their arrivals almost as an apparent random turn of events. A sense of “escape” is more accidental than sought after; the participants are mostly looking for work and a different experience for themselves and their family, and it is merely a coincidence that it happens in a small relaxed town.

The possibilities for achievement

More than half of the participants mentioned work as their main reason for moving to Iceland, and a common global assumption is that people migrate hoping for a brighter economic future[34]. Meckl & Ólafsson’s study of 2013[35] revealed that income seemed to have little to do with happiness amongst the immigrant population of Akureyri, as have many studies looking at the relationship between money and happiness[36]. If the sentence “I have everything I need” was heard a few times during the interviews, the participants barely make mention of income, but it is hard to assert whether it is because it is not a determinant factor in their well-being or if people feel uncomfortable when discussing finances. If “more money does not necessarily buy more happiness”[37], the feeling of fulfilment at work, on the other hand, seem to be an important factor in the well-being of the participants. On top of having a job for economic and material purposes, the participants expect work to be a purposeful experience.

Most participants were not entirely satisfied with their professional situation, however coping with a little pain might be the price they accept to pay for reaching greater goals: “Sometimes when you’re trying to achieve something you have to go through discomfort.” (Excerpt from interview 2, Male, Western Europe). This participant clearly stressed that while working a job he disliked (the discomfort), he would receive remuneration thereby making it possible to buy a house (the greater goal). The interviews reveal a direct link between feeling good and the belief that there are opportunities available; many participants believe that opportunities open up for them in Iceland, which they never thought possible in their own country:

“You can do things here. In Iceland one of the advantages is that it is small. People can hear about stuff quickly. If this is something really good and people really like it, then people hear it straight away and you will get a lot of possibilities.” (Excerpt from Interview 1, Male, Eastern Europe)

“I wouldn’t have a job like this anywhere else.” (Excerpt from interview 10, Male, Western Europe)

“I think in Iceland everybody gets a chance. In [my home country] you would never get a job in hotel administration or something like that unless you have gone to school for that. Here they give you a chance, you haven’t learned it but maybe you can learn it on the job. […] If you really want this, you can put your mind to it and it’s possible.” (Excerpt from interview 6, Female, Eastern Europe)

In the experience of the Filipino migrants, taking advantage of opportunities, viewed from a different perspective, entails sacrifice, and it is particularly visible in occurrences relative to the women, who moved to Iceland to provide for children and families left behind in the Philippines[38]. One participant told us:

“There’s much pressure in my family to educate […] Everyone sends a lot of money to the Philippines so my other relatives can go to school. They probably sent a few millions already so they could go to university.” (Excerpt from interview 20, Male, Asia)

Education seems to be highly important in the participant’s family; therefore, the sacrifice involved is also seen as an opportunity to improve the whole family’s situation. Despite the negative emotional consequences of moving and leaving family behind, they are counter-balanced by the feelings of necessity and doing good (helping relatives to educate and have a better future). The notion of sacrifice generates good feelings at an individual level – whether you work hard at a job you dislike or you leave your children behind, you do it for greater opportunities in the future. Most participants follow an effort-reward model in which temporary suffering is accepted as long as there is the prospect of greater happiness later on.

Social psychologists and scientists have observed the role of goals and aspirations in personal wellbeing[39]. The self-determination theory proposes that well-being increases in individuals’ lives when dealing with intrinsic goals, “those related to personal growth, emotional intimacy and community involvement” giving instant gratification, but decreases when engaged with extrinsic goals because it involves the approval and recognition of others, “e.g financial success, appealing appearance and social recognition”[40]. In the mind of the participants, it seems that the drive is what matters rather than the goal itself:

“There are some people who want to fight, do better, live better, be different, be a better version of themselves.” (Excerpt from interview 6, Female, Eastern Europe)

“I make small steps for myself. Now I want to do that, and now I want to get this job, and I want to study here, and get a job with what I study, and I want to do more and more… It’s good to have those little steps.” (Excerpt from interview 15, Female, Eastern Europe)

This participant decided to have the best life possible here. She learned Icelandic in a year and went back to school to study and get a job in her area of expertise. The emotional outcomes of self-improving and having a purpose positively affected the participant; she experiences pride and feels a real sense of personal achievement, but she already has in mind for herself more “steps” to climb. For many participants, the drive is as important as the goal himself, and “perhaps the good life is not a state to be obtained, as Aristotle’s suggests, it is the aspiration and act of becoming, the pursuit, and the journey that gives meaning and fulfilment.” [41]

Reciprocity and shared values as a strategy for integration

In 1925, Marcel Mauss described the importance of receiving and giving back in order to establish basic human contacts.[42] Exploring the concept of reciprocity through gifts, his research, which has been used and updated by many social scientists, also makes sense in our context. Throughout the interviews, we identified several approaches for establishing reciprocity through shared values.

The most obvious seemed to be the acknowledgment of the immigrants of the importance of the Icelandic language for the native population. Some participants mentioned that even though they were far away from being fluent in Icelandic, locals were happy to note that they were trying, and that’s all that mattered: “I also saw how Icelandic people were happy when I said something in Icelandic. A single word.” (Excerpt from interview 1, Male, Eastern Europe)

Not being able to speak Icelandic in response to Icelandic people can be perceived as a failure:

“It’s like going into someone’s house, knocking on someone’s door and just speaking to them in Swahili, and sitting down on their couch, just speaking to them in a different language. It’s rude. Again, if you’re a tourist you spend money, so that’s fair enough. If you come to a country and you don’t integrate, it’s rude, and I do feel a bit rude sometimes, especially because I am working with them. […] You should learn. If you live in a place you should learn, and I should learn.” (Excerpt from interview 2, Male, Western Europe)

According to the survey by Meckl & Ólafsson 2013, one third of the foreign population is assumed to speak Icelandic well or very well, while two thirds of the foreign population have not achieved this common value. Therefore, stories about situations where newcomers were confronted with their lack of knowledge in the local language are common.

However, speaking Icelandic does not seem to “correlate with […] general satisfaction with living in Akureyri”[43]. The reason for this might be that the lack of knowledge in Icelandic does not mean that reciprocity is not possible or that social contacts are void. For example, the religious communities of Akureyri, comprising both locals and migrants, seem to be a solid way to create contacts and gain support; one participant who had resided in Iceland for a short time came to know many people through Church: “Yes, it’s probably going to the Church, I met a lot of people there. […] They will suggest you the right things to do and you can trust them.” (Excerpt from interview 13, Female, Western Europe). There is a social element to individual well-being, and the strength of ties within the family, the neighbourhood and the religious community has a direct impact on feelings of happiness and belonging.

Bringing values that matter in Icelandic society, like hard-work and diligence, is another way to facilitate the integration process:

“And the thing with Icelandic people, if they see someone who is hard-working, they will become your friend. They can’t stand lazy people. I’m obviously generalizing now, because it’s many people that I know, it’s a working nation. […] I think it’s the attitude that’s important. If you come somewhere, if you have in mind that you are a guest your attitude will be right, but if you come somewhere and you expect people to serve you, then it’s not the right attitude. And I knew that straight away, I’m a guest here.”   (Excerpt from Interview 1, Male, Eastern Europe)

Work is an essential part of the Icelandic way of life and one of the key values in the society[44]. Therefore, being employed and working hard as a migrant is another way to feel valued and accepted.

Family ties are strong and the family viewed as “the cornerstone of Icelandic society”[45]; it is also a determinant factor in how positively you will be perceived as an immigrant. One participant recognised that contacts were friendlier once she had become a mother:

“[People are] asking you how it is, if you have support and family speaking with you, if the grandparents of the child come and visit you. They are nice when they are seeing a child.” (Excerpt from interview 5, Female, Eastern Europe)

Sharing moral values seems of greater consequence than any other integration factors; if you contribute in reflecting principles valued by the local society (language, independence, diligence and the importance of family, for example), you meet more easily the requirements of reciprocity, essential to the integration process and the feeling of well-being. Of course immigrants are not always receiving the kind of recognition they would wish for, or have trouble to create and keep contacts within the local community. A few participants blame their personal attitude for not engaging enough in society, like not speaking the language or not joining a social club popular among Icelanders, like a gym or a choir, for example. A few others blame the cultural differences:

“We are coming from other countries, other cultures, other lifestyles, we have another sense of humor, we are different. […] They are very friendly of course, very kind, polite, but they are serious. […] They are very closed”. (Excerpt from Interview 8, Male, Western Europe).

However, the negative experiences of being a migrant in Akureyri seem temporary or conditional; if the participant spoke Icelandic, if he engaged in social activities in town, if his lifestyle was more similar to the local one, he would be better off:

“I’ve had loads of opportunities, I missed loads of opportunities as well. Being able to speak Icelandic opens you to Icelandic opportunities. […] The longer I stay here the more important I see it is. […] And it is worthwhile and useful. Yeah, I need to get on it.” (Excerpt from Interview 2, Male, Western Europe).

This comment shows again, that migrants are willing to allow temporary suffering as long as they foresee a possibility for ending this suffering; it makes the negative experience worthwhile or even necessary as long as it transforms into a more positive experience later on:

“As long as it is part of a greater goal and it’s not going to be like that forever, it’s fine. I’m not miserable. I’m not super ecstatic. But I have plans and goals. […] It’s not going to be forever, so we’ve put up with it for now.” (Excerpt from Interview 2, Male, Western Europe).

In migrants discourses, the difficulties they encounter rather seem like obstacles that can be overcome or transformed into opportunities. Despite the difficulties and their consequences on the participants’ well-being, either the positive experiences counter-balance the negative ones, or the prospect of future happiness is at the fore in the migrants’ minds, making the overall experience of migrating to Akureyri worthwhile.


This paper focused on the experiences of wellbeing of migrants in Akureyri in Northern Iceland, where most migrants interviewed displayed high satisfaction and made mention of positive experiences in their discussion with the researchers. More attention would be required to understand the way migrant’s chose to portray their lives; does the sample of participants reflect a positiveness specific to European highly-skilled migrants? Do the migrants apply a rationale to their experiences that conceal their less favourable ones?  Does their relationship with the researchers impair their ability to talk more openly about their negative experiences?

To look at wellbeing and happiness, it is necessary to know what is important for individuals and communities. Although personal attitude is key to happiness, a safe and positive environment, strong social relationships, having goals, sharing values and feeling on equal grounds with locals are essential to the well-being of the foreign population. Identifying how reciprocity can be achieved from both sides seems a crucial element to contribute to individual happiness of migrants in Akureyri. The findings of this research unveil the responsibility of the community to provide a stronger support system to newcomers; to encourage migrants and give them the appropriate resources to learn Icelandic, to offer a support system to enhance social contacts and to ensure that everyone can benefit from going to work or being together with their family.

The debates which have dominated immigration issues have been far from addressing questions regarding well-being and happiness. Focusing on the wellbeing of the immigrants might help to shift the perception of immigrants in the public opinion – from being connected to problems to a positive connotation of possibilities and enrichment.


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Graham, Carol (2011). The Pursuit of Happiness: An Economy of Well-Being. Washington DC: Brookings Institution Press, 164 pp.

Guðjónsdóttir, Guðbjört (2010). The experiences of female immigrant hotel workers in the Icelandic labor market. Unpublished MA – thesis at the University of Iceland.

Hylland-Eriksen, Thomas (2007). “Trust and reciprocity in Transnational flows” in Lien, M.E & Melhuus M. (Eds.), Holding Worlds Together: Ethnographies of Knowing and Belonging, Berghan Books, pp. 1-16.

King, Russell (2012). Theories and Typologies of Migration: An Overview and a Primer. Willy Brandt Series of Working Papers, Malmö University. Retrieved from https://www.mah.se/upload/Forskningscentrum/MIM/WB/WB%203.12.pdf

Lee, A. & Maheswaran R. (2011). “The health benefits of urban green spaces: A review of the evidence” in Journal of Public Health, 33 (2), pp. 212-222.

Mauss, Marcel (1973). “Essai sur le don : Forme et raison de l’échange dans les sociétés archaïques” In Sociologie et Anthropologie, PUF, Collection Quadrige, pp. 149-279.

Meckl, Markus & Ólafsson, Kjartan (2013). Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri. Þjóðarspegillinn XIV: Rannsóknir í félagsvísindum – Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands.

Ólafs, Helga & Zielińska, Małgorzata (2010). “I started to feel worse when I understood more” Polish immigrants and the Icelandic media. Þjóðarspegillinn XI: Rannsóknir í félagsvísindum XI- Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands.

Ólafsson, Jón Gunnar (2008). Ten little Lithuanians and ́Other ́stories: ́Othering ́the foreign national in the Icelandic mainstream discourse. MA Thesis. Reykjavík: University of Iceland, Faculty of Political Science.

Pétursdóttir, Guðrún (2013). Manifestation of hidden discrimination and everyday prejudice towards immigrants in Iceland. InterCultural Ísland. Retrieved from http://www.ici.is/assets/Everyday_discrimination_in_Iceland.pdf

Romero E., Gómez-Fraguela J.A. & Villar P. (2012). “Life Aspirations, Personality Traits and Subjective Well-being in a Spanish Sample” in European Journal of Personality, 26: 45-55.

Sigurðsson, Geir (1998), Vinnudýrkun, meinlæti og vítahringur neyslunnar : íslenskt tilbrigði við stef eftir Max Weber in Skírnir 172 (haust): s. 339-356

Skaptadóttir, Unnur Dís (2010a). “Integration and transnational practices of Filipinos in Iceland” @-migrinter, 5, 36-45.

Skaptadóttir, Unnur Dís (2010b). “Alþjóðlegir fólksflutningar á tímum efnahagslegs samdráttar” [International migration in times of economic recession], in Gunnar Þór Jóhannesson & Helga Björnsdóttir (Eds.), Rannsóknir í Félagvísindum XI: Félags- og mannvísindadeild, pp. 314–322. Reykjavík: Félagsvísindastofnun Háskóla Íslands.

Statistics Iceland, Population by origin and citizenship. Retrieved from http://statice.is/Statistics/Population/Citizenship-and-country-of-birth in March 2015.

Thin, Neil (2008). “Why Anthropology Can Ill Afford to Ignore Well-Being”, in Gordon Mathews and Carolina Izquierdo (Eds.), Pursuits of Happiness: Well-Being in Anthropological Perspective, Bergham Books, pp. 23-44.

Thin, Neil (2005). Happiness and the sad topics of Anthropology. University of Bath: Wellbeing in Developing Countries working paper no. 10. Retrieved from http://www.welldev.org.uk/research/workingpaperpdf/wed10.pdf

Wojtynska Anna, Skaptadóttir Unnur Dís & Ólafs Helga (2011). The participation of immigrants in civil society and labour market in the economic recession. Reykjavík: University of Iceland, Faculty of Social and Human Sciences.

Wojtyńska, Anna & Zielińska, Małgorzata (2010). “Polish migrants in Iceland facing the financial crisis”, in Gunnar Þór Jóhannesson & Helga Björnsdóttir (Eds.), Rannsóknir í Félagvísindum XI: Félags- og mannvísindadeild, pp. 1-11. Reykjavík: Félagsvísindastofnun Háskóla Íslands.


[1] Funded by KEA grant. A shorter version of this article has been published in Icelandic under the title: Barillé, S. & Meckl, M. “Nýir íbúar Norðursins: Hamingja og vellíðan meðal innflytjenda á Akureyri”, Ritið tímarit hugvísindastofnunar, 2/2016, p. 137–150.

[2] Carin Läärä Johanna Ann-Louise, “Social integration of unemployed immigrants. A comparison of integration programs in Jyväskylä and Reykjavík”, MA thesis. Reykjavík: University of Iceland, Faculty of Education Studies, 2012.

Einarsdóttir Kristín Ása, “Young unemployed migrants in Iceland. Opportunities on the labour market and situations after the economic collapse with regard to work, social and financial aspects”, MA Thesis. Reykjavík: University of Iceland, Faculty of Sociology, 2011.

[3] Guðjónsdóttir Guðbjört, “The experiences of female immigrant hotel workers in the Icelandic labor market”, MA Thesis. Reykjavík: University of Iceland, Faculty of Sociology, 2010.

Sigurgeirsdóttir Álfrún and Skaptadóttir Unnur Dís “Polish construction workers in Iceland. Rights and perceptions of inequalities at building sites”, Þjóðarspegillinn XII -Rannsóknir í félagsvísindum – Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2011.

[4] Ólafs Helga & Zielińska Małgorzata, I started to feel worse when I understood more” Polish immigrants and the Icelandic media.” Þjóðarspegillinn XI: Rannsóknir í félagsvísindum XI- Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2010.

[5] Kjartan Ólafsson & Markus Meckl, “Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri”. Þjóðarspegillinn XIV: Rannsóknir í félagsvísindum – Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2013.

[6] Wojtynska, Anna, Skaptadóttir, Unnur Dís & Ólafs, Helga. The participation of immigrants in civil society and labour market in the economic recession. Reykjavík: University of Iceland, Faculty of Social and Human Sciences, 2011.

[7] ibid.

[8] Skaptadóttir, Unnur Dís. “Women and Men on the Move: From the Philippines to Iceland”, In S.Thidemann Faber and H. Pristed Nielsen (eds.) Remapping Gender Place and Mobility. Global Confluences and Local Particularities in Nordic Peripheries. Aldershot: Ashgate, 2015.

[9] Bissat, Johanna, Effects of Policy Changes on Thai Migration to Iceland, International Migration, 51 (2): 46-59.

[10]Einarsdóttir, Kristín Ása. Young unemployed migrants in Iceland. Opportunities on the labour market and situations after the economic collapse with regard to work, social and financial aspects. MA Thesis. Reykjavík: University of Iceland, Faculty of Sociology, 2011.

Guðjónsdóttir, Guðbjört. The experiences of female immigrant hotel workers in the Icelandic labor market, MA Thesis. Reykjavík: University of Iceland, Faculty of Sociology, 2010.

[11] Wojtynska, Anna, Skaptadóttir, Unnur Dís & Ólafs, Helga. The participation of immigrants in civil society and labour market in the economic recession. Reykjavík: University of Iceland, Faculty of Social and Human Sciences, 2011.

Wojtyńska, Anna & Zielińska, Małgorzata. “Polish migrants in Iceland facing the financial crisis”, in Gunnar Þór Jóhannesson & Helga Björnsdóttir (Eds.), Rannsóknir í Félagvísindum XI: Félags- og mannvísindadeild, pp. 1-11. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2010.

[12] King, Russell. Theories and Typologies of Migration: An Overview and a Primer, Willy Brandt Series of Working Papers, Malmö University. Retrieved from https://www.mah.se/upload/ Forskningscentrum/MIM/WB/WB%203.12.pdf, 2012.

[13] Ólafs, Helga & Zielińska, Małgorzata. “I started to feel worse when I understood more” Polish immigrants and the Icelandic media. Þjóðarspegillinn XI: Rannsóknir í félagsvísindum XI- Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2010.

[14] Skaptadóttir, Unnur Dís. “Alþjóðlegir fólksflutningar á tímum efnahagslegs samdráttar” [International migration in times of economic recession], in Gunnar Þór Jóhannesson & Helga Björnsdóttir (Eds.), Rannsóknir í Félagvísindum XI: Félags- og mannvísindadeild, pp. 314–322. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2010.

[15] Pétursdóttir, Guðrún. Manifestation of hidden discrimination and everyday prejudice towards immigrants in Iceland. InterCultural Ísland. Retrieved from http://www.ici.is/assets/ Everyday_discrimination_in_Iceland.pdf, 2013.

Arnardóttir, Elsa & Haraldsson, Rúnar Helgi. Origin and multiple discrimination. Multicultural and Information Centre Iceland. Retrieved from http://www.mcc.is/media/frettir/ Progress-skyrsla-mcc–2.pdf, 2014.

[16] Ólafs, Helga & Zielińska, Małgorzata. “I started to feel worse when I understood more” Polish immigrants and the Icelandic media. Þjóðarspegillinn XI: Rannsóknir í félagsvísindum XI- Félags- og mannvísindadeild. Reykjavík: Félagsvísindastofnun Háskóla Íslands, 2010.

[17] Thin, Neil. “Why Anthropology Can Ill Afford to Ignore Well-Being”, in Gordon Mathews and Carolina Izquierdo (Eds.), Pursuits of Happiness: Well-Being in Anthropological Perspective, Bergham Books, pp. 23-44, 2008.

Thin, Neil. Happiness and the sad topics of Anthropology. University of Bath: Wellbeing in Developing Countries working paper no. 10. Retrieved from http://www.welldev.org.uk/research/ workingpaperpdf/wed10.pdf, 2005.

[18] Fischer, Edward, The Good Life: Aspiration, Dignity, and the Anthropology of Wellbeing. Stanford University Press, 304 pp., 2014.

[19] One exception is the work of Stefán Ólafssón, see for example “Well-being in the Nordic Countries. An International Comparison”. Icelandic Review of Politics and Administration 9 (2): 345-372, 2013.

[20] Bartram, David. “Happiness and ‘Economic Migration’: A Comparison of Eastern European Migrants and Stayers”, Migration Studies1(2), pp. 156-175, 2013.

[21] Stillman, Steven, Gibson, John, McKenzie, David, Rohorua, Halahingano. “Miserable Migrants? Natural Experiment Evidence on International Migration and Objective and Subjective Well-Being”, World Development, 65: 79-93.

Salant, Talya & Lauderdale, Diane. “Measuring culture: a critical review of acculturation and health in Asian immigrant populations”, Social Science & Medicine, 57 (1): 71-90, 2003.

[22] Massey, Douglas. “The Social and Economic Origins of Immigration”, The Annals of the American Academy of Political and Social Science, Vol. 510, World Population: Approaching the Year 2000, pp. 60-72, 1990.

Semyonov, Moshe & Gorodzeisky, Anastasia. “Labor Migration, Remittances and Economic Well-being of Households in the Philippines”, Population Research and Policy Review, 27: 619, 2008.

[23] Thin, Neil. “Counting and recounting happiness and culture: On happiness surveys and prudential ethnobiography”. International Journal of Wellbeing, 2 (4), 313-332, 2012.

[24] https://web.archive.org/web/20091015064857/http://www.iceland.org/media/us/iceland_in_figs_06-07.pdf

[25] www.hagstofa.is

[26] Roberto Franzosi (1998). “Narrative Analysis—Or Why (and How) Sociologists Should Be Interested In Narrative”, Annual Review of Sociology, 24: 517-554.

[27] Anselm Strauss & Juliet Corbin, Basics of Qualitative Research, Grounded theory procedures and techniques, Newbury Park, California, Sage Publications, 1990, 272 pp.

[28] Thin Neil, “Counting and recounting happiness and culture: On happiness surveys and prudential ethnobiography”, International Journal of Wellbeing, 2(4), 2012, bls. 313-332, hér bls. 313.

[29] Thin Neil, “Counting and recounting happiness and culture: On happiness surveys and prudential ethnobiography”, bls. 313.

[30] Lee A. & Maheswaran R., “The health benefits of urban green spaces: A review of the evidence” in Journal of Public Health, 33 (2), 2009, pp. 212-222.

[31] Cooper, R., Boyko, C. & Codinhoto R., “The effect of the physical environment on mental wellbeing” in Cooper C.L, Field G., Goswami U., Jenkins R. & Sahakian B.J (ritstj.), Mental Capital and Wellbeing, Wiley Blackwell, 2009, pp. 967-1006.

[32] Ibid.

[33] Eriksson, U. , Hochwälder, J. & Sellström, E., “Perceptions of community trust and safety : Consequences for children’s well-being in rural and urban contexts” in Acta Paediatrica, vol. 100: 10, 2011, pp. 1373-1378.

[34] King Russell, Theories and Typologies of Migration: An Overview and a Primer. Willy Brandt Series of Working Papers, Malmö University, 2012. Retrieved from https://www.mah.se/upload/Forskningscentrum/MIM/WB/WB%203.12.pdf

[35] Meckl Markus & Ólafsson Kjartan. Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri.Kjartan Ólafsson & Markus Meckl, “Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri”.

[36] Graham Carol, The Pursuit of Happiness: An Economy of Well-Being, Washington DC: Brookings Institution Press, 2011, 164 pp.

[37] Graham Carol, The Pursuit of Happiness: An Economy of Well-Being, bls. 36.

[38] Skaptadóttir Unnur Dís, “Integration and transnational practices of Filipinos in Iceland” @-migrinter, 5, 2010, bls. 36-45.

[39] Romero E., Gómez-Fraguela J.A. & Villar P., “Life Aspirations, Personality Traits and Subjective Well-being in a Spanish Sample” in European Journal of Personality, 2012, 26: 45-55.

[40] Romero E., Gómez-Fraguela J.A. & Villar P., “Life Aspirations, Personality Traits and Subjective Well-being in a Spanish Sample”, bls.45.

[41] Fischer Edward, The Good life: Values, Markets and Well-being. Working Papers Series #14, Open Anthropology Cooperative Press. Retrieved from http://openanthcoop.net/press/2012/09/20/the-good-life-values-markets-and-wellbeing, 2012,bls.6.

[42] Mauss Marcel “Essai sur le don: Forme et raison de l’échange dans les sociétés archaïques” In Sociologie et Anthropologie, PUF, Collection Quadrige, 1973 (original text 1923-1924) pp. 149-279.

[43] Meckl Markus & Ólafsson Kjartan. Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri,Kjartan Ólafsson & Markus Meckl, “Foreigners at the end of the fjord: Inhabitants of foreign origin in Akureyri”, bls: 10.

[44] Sigurðsson Geir, “Vinnudýrkun, meinlæti og vítahringur neyslunnar : íslenskt tilbrigði við stef eftir Max Weber” in Skírnir 172 (haust), 1998, bls. 339-356.

[45] Eydal Guðný & Stefán Ólafsson, “Family Policy in Iceland: An Overview,” in Illona Ostner and C. Schmitt (ritstj.), Family Policies in the Context of Family Change: The Nordic Countries in Comparative Perspective.  Wiesbaden, Germany: Verlag fur Sozialwissenscaften, 2008, pp.109-127.

Twelve Years an Editor – Almost. Nordic-Mediterranean Perspectives on Iceland’s International Image


Since the year 2015 I have been working as editor in chief of Nordicum-Mediterraneum: Icelandic E-Journal of Nordic and Mediterranean Studies, published by the University of Akureyri (<http://nome.unak.is>). As such, I have received, read, reviewed and released a number of contributions by foreign and, in particular, by Italian scholars, dealing with Iceland under a broad variety of scientific perspectives. Also, especially during and immediately after Iceland’s 2008 financial meltdown, I was contacted and interviewed by a number of media outlets, primarily Italian. Thanks to these experiences, I can contribute to today’s discussion with an eminently personal yet qualitatively rich account of Iceland’s image among Italian and foreign academic circles. Above all, I believe the materials accumulated in the long life of Nordicum-Mediterraneum to be a truly interesting source of insight in the academics’ interest points, if not even the educated commonplaces, about Iceland.

Albeit in charge of the journal since its inception, I am not its real father, who is instead a scholar that has been working for many years at the University of Iceland in Reykjavík, Maurizio Tani. Eleven years ago, one year short of the title’s twelve, he approached me with the idea of a scholarly journal devoted to the many and diverse historical exchanges between the North and the South of Europe and, in particular, between Iceland and Italy. Nothing of the sort existed on the academic scene. Needless to say, his suggestion was taken aboard. Then, thanks to the small yet vital financial support of the University of Akureyri, plus the crucial help qua webmaster of Mr. Fabrizio Veneziano of Schiller International University in Paris and of Ms. Sigrún Magnúsdóttir qua Akureyri-based editorial assistant, the journal was officially born.

Foreign contributions about Iceland: Numbers and titles 

A true pioneer in open-access scholarly publishing in Iceland, the journal aimed primarily at serving as a forum and an archive for scholars interested in Nordic and Mediterranean mutual connections. Progressively, pressured by its growing readership, the journal expanded its scope to Nordic and Mediterranean matters at large, rather than remaining confined to the exchanges between the North and the South of Europe. At the same time, the journal continued to publish a variety of other contributions as well, ranging from reviews of recent literature to interviews and personal memoirs. The break-up of the publications listed below does not include the special issues 11(2-3), due this year and already in the pipes, editorially speaking, and reads as follows:

Regular issues: 11 (2006-2016)

Special issues: 12 (2006-2016 i.e. up to 10(3)/2016)

Of which:

Conference proceedings: 11 (2008-2016)

Other subjects: 1 (2006)

New articles: 42

Reflections on Iceland’s economic crisis: 13

Conference proceedings: 102

Conference-related notes: 11

Review essays: 5

Book reviews: 121

Interviews: 6

Memoirs: 6

Translations: 5

Republished books: 2

Degree theses: 1

Other contributions (short notes, reports, surveys, non-peer-reviewed articles, etc.): 19

Total publication: 333

Of all these published materials, 45 contributions can be said to deal with Iceland’s image in the eyes of foreign scholars, whether directly or indirectly, e.g. as reported in books reviewed for the journal (in the case of book reviews and review essays, I attribute each entry to either the reviewer’s nationality or the book author’s nationality, depending on who emphasises Iceland more). Longer pieces (e.g. articles, conference papers) amount to 21, while shorter ones (e.g. book reviews) to 24. Most of them are in legal studies (12), linguistics and/or literature (7) and history (5). Then we have contributions in philosophy (4), economics (4), geography (4), politics (3), psychology (2), art history (1) and personal memoirs (3). The countries of relative observation can be listed as follows:

  • Argentina: 1
  • Faroe Islands: 1
  • Finland: 1
  • Germany: 3
  • Ireland: 2
  • Italy: 25
  • The People’s Republic of China: 2
  • Romania: 1
  • Russia: 2
  • Scotland: 6
  • Spain: 1

True to the original spirit of the journal, publications by Italian scholars on Icelandic or Italian-Icelandic matters stand out as far more numerous than the others. This geographical predominance and the limited overall as well as specific number of published contributions make a quantitative analysis unlikely to provide valuable information. Their qualitative value as academic exploration of Iceland’s heritage and historical experiences persists, however.

The typology, depth and length of these 45 contributions varies enormously. I list them below in chronological order, specifying their category, in accordance with the journal’s internal system of classification. In the pages following the list below, I refer to the underlined authors and the relevant year of publication in the journal; when Icelandic-foreign collaborative projects are included, I underline and count for the country list above only the foreign specialists involved:



Antonio Casado da Rocha, “Narrative Ethics and the Ecology of Culture: Notes on New Italian-Icelandic Sagas”

Note on conference proceedings

Maurizio Tani, “Italo Balbo, Iceland and a Short Story by Halldór Laxness. Notes on the Conference ‘La trasvolata Italia-Islanda del 1933’ (Reykjavík, 7 June 2003)”

Interviews, memoirs and other contributions

Francesco Milazzo, “Teaching Roman Law in Iceland”



Maria Savi Lopez (1848-1940), “Akureyri”, Nei paesi del Nord, Torino: Paravia, 1893

Italo Balbo (1896-1940), “Nella terra dei Vichinghi”, La centuria alata, Milano: Mondadori, 1934



Emanuela Finocchietti & Luca Zarrilli, “Paesaggio naturale e politiche di sviluppo territoriale in Islanda”

Conference proceedings

Manuela S. Campanini, “Iceland as a Landscape Investigation Pattern”

Book reviews

By Antonio Calcagno: Paolo Borioni, Cesare Damiano & Tiziano TreuIl modello sociale scandnavo. Tra diritti e flessibilità (Roma: Nuova Iniziativa Editoriale, 2006)


Interviews, memoirs and other contributions

Federico Actite, Ancient Rome and Icelandic Culture – A Brief Overview



Diego Ferioli, “On the Oral-Formulaic Theory and its Application in the Poetic Edda: The Cases of Alvíssmál and Hávamál”

Manuela S. Campanini, “Imagine a Collective Landscape”

Viola Miglio, “Old Norse and Old English Language Contact: Scandinavian Legal Terminology in Anglo-Saxon Laws”

Reflections on the economic crisis

Giorgio Baruchello, “Eight Noble Opinions and the Economic Crisis: Four Literary-philosophical Sketches à la Eduardo Galeano”

Maria Pia Paganelli, “Learning from Bjartur About Today’s Icelandic Economic Crisis”

Interviews, memoirs and other contributions

Antonio Costanzo, “Fyrirlestur um bókina Hávamál. La voce di Odino”

Marinella Lorinczi, “Dracula in Iceland”



Adriana Di Stefano, “Northern Steps of EU Enlargement: The Impact of ‘Cohesion’ Policies on Iceland’s Accession Process”

Book reviews

By Rachael Lorna Johnstone: H. Beale et al., Cases, Materials and Texts on Contract Law, 2nd ed. (Oxford: Hart Publishing, 2010); and T. K. Graziano, Comparative Contract Law: Cases, Materials and Exercises (Basingstoke: Palgrave MacMillan, 2009)

By Rachael Lorna Johnstone, Natalia Loukacheva (ed.), Polar Law Textbook (Copenhagen: Nordic Council of Ministers, 2010)


Fabio Quartino, La Costituzione Islandese: storia ed evoluzione



Garrett Barden, “Responses to the contributors”



Birgir Guðmundsson & Markus Meckl, “’Karlson’ – A Stasi ‘Kontakt Person’. An episode of Iceland’s Cold War legacy”

Book reviews

By Andrea Hjálmsdóttir: Aðalheiður Ámundadóttir & Rachael Lorna Johnstone, Mannréttindi í þrengingum: Efnahagsleg og félagsleg réttindi í kreppunni (Akureyri-Reykjavík: Háskólinn á Akureyri og Mannréttindaskrifstofa Íslands, 2011)

By Anita Einarsdóttir & Tiantian Zhang: Herman Salton, Arctic Host, Icy Visit: China and Falun Gong Face Off in Iceland (Saarbrücken: LAP Lambert Academic Publishing, 2010)

Interviews, memoirs and other contributions

Jorge Mejía, “Some impressions after a quick visit to Iceland”



Hjálti Ómar Ágústsson & Rachael Lorna Johnstone, “Practising what they Preach: Did the IMF and Iceland Exercise Good Governance in their Relations 2008-2011?”

Irina Zhilina, “The Security Aspects in the Arctic: the Potential Role of NATO”

Review essay

By Carlo Penco: Juha Manninen & Friedrich Stadtler (eds.), The Vienna Circle and the Nordic Countries. Networks and Transformations of Logical Empiricism (Vienna: Vienna Circle Institute Yearbook vol.14, Springer, 2010)

Book reviews

By Gísli Aðalsteinsson: Maurizio Tani, La chiesa di Akureyri: Guida storico-artistica alla parrocchiale luterana della «capitale del nord» (Grafarvogur: Snorri Sturluson, 2010)

By Guðmundur Heiðar Frímansson: Brian Lucey, Charles Larkin & Constantin Gurdgiev (eds.), What if Ireland defaults? (Dublin: Orpen Press, 2012)

By Herman Salton, “‘Arctic Host, Icy Visit’: A Response” (cf. Tiantian Zhang)

By Rachael Lorna Johnstone: Jesús Ballesteros, Encarnación Fernández Ruiz-Gálvez & Pedro Talavera (eds.), Globalization and Human Rights: Challenges and Answers from a European Perspective (Ius Gentium: Comparative Perspectives of Law and Justice, Vol. 13, Leiden: Springer, 2012)

By Rachael Lorna Johnstone: T. Kue Young (senior ed.), Rajiv Rawat, Winifred Dallmann, Susan Chatwood & Peter Bjerregaard (eds.), Circumpolar Health Atlas (Toronto: University of Toronto Press, 2012)

By Tero Mustonen, C. Raudvere & J.P. Schjödt (eds.), More Than Mythology – Narratives, Ritual Practices and Regional Distribution in Pre-Christian Scandinavian Religions (Lund: Nordic Academic Press, 2012)


Luana Giampiccolo, “Leiðarvísir, an Old Norse itinerarium: a proposal for a new partial translation and some notes about the place-names”



Matteo Tarsi, “On Loanwords of Latin Origin in Contemporary Icelandic”

Book reviews

By Federica Scarpa: Natalia Loukacheva (ed.), Polar Law Textbook II (Copenhagen: Nordic Council of Ministers, 2013)

By Giorgio Baruchello: Þorlákur Axel Jónsson, Dagur Austan. Ævintýramaðurinn Vernharður Eggertsson (Akureyri: Völuspá, 2009)

Interviews, memoirs and other contributions

Birgir Guðmundsson & Markus Meckl, “Regaining Iceland for the Catholic Church in the mid-19th Century”


Conference proceeding

Giorgio Baruchello, “The Picture—Small and Big: Iceland and the Crises”


Conference proceeding

Thomas Hören, “IMMI and Whistleblowing in Iceland – the new regulatory framework”

Book reviews

By Giorgio Baruchello: Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)

By Giorgio Baruchello: Gaetano Roberto Buccola, Forme del centro. Percorsi analitici dal “Viaggio al centro della Terra” al nucleo dell’uomo (Palermo: Nuova Ipsa, 2013)

By Rachael Lorna Johnstone: Kári á Rógvi, West-Nordic Constitutional Judicial Review: A Comparative Study of Scandinavian Judicial Review and Judicial Reasoning (Copenhagen: Djøf Publishing, 2013)

Interviews, memoirs and other contributions

Roberto Buccola, “The Unconscious and the Island: Fragments of Research on the Self”


Conference proceeding

Giorgio Baruchello, “Enemies of Interculturalism: The Economic Crisis in Light of Xenophobia, Liberal Cruelties and Human Rights“


Foreign contributions about Iceland: Recurring themes

What sort of recurring themes can be found in this collection of diverse scholarly and scientific texts? I have identified four.

  1. Iceland as “the land of the Vikings”

This is the title given by the aviator Italo Balbo (2006) to the chapter on Iceland in his 1933 memoirs, who also recalls how the Vikings discovered America before Columbus himself. Spanish-Portuguese philosopher Casado da Rocha (2006) mentions too the Vikings’ “stories of warriors and wise men, poets and politicians of the golden age of settlement and commonwealth.” The marauding hordes, their adventures and their legacy are very much a focus-point for many commentators. They are a reason for distinctiveness, if not distinction. For instance, law professor Milazzo’s (2006) account of his teaching experience emphasises how Iceland is not as much part of the legal tradition based on Roman Law as most other European countries. Legal scholar Johnstone too, in her 2011 review essay on comparative law, mentions the enduring island-centric character of mainstream legal education in Iceland. This is not to say that classical culture did not reach or influence Iceland’s cultural development. Quite the opposite, Actite’s 2009 text offers a concise account of the deep, extensive and sometimes surprising impact of the Latin tradition on this island: “For instance, the Latin phrase Rustycus es, Corydon gave origin to the Icelandic words rusti [farmer] and dóni [rude people]”. Tarsi (2014) offers an even longer account. Even some elements of the later Catholic Christianitas endure, as noticed by Cardinal Mejía (2012) and Tani (2013). Still, the land of the Vikings is distinct and original, which is shown by the interest of foreign scholars, and Italian ones in particular, in the history, development and influence of Old Norse or ancient Icelandic, and its literary accomplishments in the Edda and the Sagas, e.g. Ferioli (2010), Miglio (2010), Costanzo (2010), Lorinczi (2010), Tani (2006), Barden (2011), Mustonen (2013), Giampiccolo (2013),

  1. Iceland as a Nordic State

Former Italian governmental ministers Damiano and Treu, together with the historian Borioni (2008), lump Iceland together with the other Scandinavian countries, as though Iceland had as strong a social-democratic tradition as Sweden, Denmark or Norway. However, Iceland does not have it. It was never a welfare State, in the sense and to the extent these other countries have historically exemplified. The right-wing Independence Party has marked its history much more than the various incarnations of democratic socialism in Iceland (cf. also Meckl’s 2012 article on Iceland’s Cold-War history and Baruchello’s 2014 book review), as also reflected by the largely unnoticed repression of Falun Gong demonstrators in Iceland in 2002 (cf. Tiantian Zhang, 2012 & 2013). Difference does not mean intransigence, however. Thus, Hören (2015) and Johnstone (2013a) reveal significant changes in a more Nordic direction led by the historically weaker left-wing forces of the country, in freedom of the press and in human rights provisions respectively. Perhaps, the most obvious manifestation of the “un-Nordicness” of Iceland was the neoliberal boom-and-bust hot-money cycle that led to the notorious kreppa of 2008, about which a number of contributions have been published, i.e. Baruchello (2010), Paganelli (2010), Johnstone (2013), Lucey, Larkin & Gurdgiev (2013), Johnstone (2013a & b), Baruchello (2014 & 2015b). Penco (2013) adds another layer of “un-Nordicness” by noticing how Iceland’s philosophical tradition owes more to Anglophone and Dutch academic traditions and establishments than to Scandinavian ones. Still, there exist clear connections with Scandinavian political experience, notably the Danish roots of Iceland’s constitution (cf. Quartino, 2011). In fact, in addition to its linguistic-literary roots and heritage, the legal tradition of Iceland seems to be, at large, the most Nordic feature of Iceland’s culture, at least according to Kári á Rógvi (2015). Baruchello (2015) adds another line of continuity, i.e. the cartelisation of strategic industries during the 1930s.

  1. Iceland as an Arctic State

Less controversial is this third commonplace notion. Iceland is located in the North Atlantic, after all, which is cold, dangerous to navigate upon, remote. This is the tone of the account by Savi-Lopez (2006), who pioneered the study and dissemination of Icelandic literature in Italy in the first half of the 20th century. As to later accounts, it would appear that being located in the North Atlantic is strategic. It is so for NATO (cf. Zhilina, 2013), for the EU (cf. Di Stefano, 2011), but above all for the Arctic nations and the governance of the region, as emphasised by Loukacheva (2011), Johnstone (2013c) and Scarpa (2014). Indeed, Meckl’s 2014 studies on the Catholic Arctic mission of the 19th century show the Catholic Church being the first international institution to conceive of the Arctic as a geographically, politically and culturally strategic region of the World. The number of submissions and publications pertaining to this third notion have been growingly steadily over the years, reflecting Iceland’s own growing institutional and intellectual self-characterisation as an Arctic State, not least as manifested by the developments within the University of Akureyri, which is part of the University of the Arctic consortium and hosts a most successful Master’s programme in Polar Law.

  1. Iceland as a dimension of the spirit

Iceland’s unique landscape, the result of equally unique and rather extreme geographic, geological and climatic conditions, lead to awe and deep existential reflection. Scientific observations are the beginning of more profound considerations about the relationship between humanity and the natural environment, the struggle for survival that we have fought throughout our journey on this planet, and the most disturbing question of all: why do we keep fighting? More or less explicitly, this is the tone of the contributions by literary scholar Finocchietti (2008) as well as geographers Zarrilli (2008) and Campanini (2008 & 2010). The same applies to those of Jungian psychologist Buccola (2015a & b). Numerically, we are not talking of a large number of contributions. However, and here the qualitative character of the present account comes to the forefront, the number of authors that have been interested in Iceland because of its mystique is conspicuous. Methodologically unlikely to reflect upon and disclose the motives for their own research, scholars and scientists have often discussed them with me qua editor and a southern European expatriate in the far north. The fascination with Iceland’s lunar vistas and its seemingly prohibitive inhospitality, combined with the sense of authenticity that such conditions inspire, are a frequent reason for Mediterranean minds to develop an interest in Nordic matters, even if these may have little to do with the island’s vistas, inhospitality or authenticity.

Concluding remarks

The literature by foreign experts published over the years in Nordicum-Mediterraneum pertains to many different disciplines. Prominent are literary, linguistic and legal studies. These disciplinary areas of emphasis are the result of many factors, not least the network of scholars and researchers who have found the journal a suitable venue for their work and that of experts willing to review the books that we receive from publishers. It is difficult, if not impossible, to gauge with certainty how representative they are of the stereotypes of, and commonplace conceptions about, Iceland. Nonetheless, I believe that they do offer considerable food for thought, which is an adequate and relevant aim for the present contribution.

Little Fish, Big Pond: Icelandic Interests and Influence in Arctic Governance


On pretty much any measure of international comparison, Iceland is a little fish. Nevertheless, its geographical location next to the Big Pond that is the Arctic Ocean has put in a position of influence in a region of growing international importance.

In this paper, I will explore Iceland’s influence in the Arctic region based on international relations considerations such as its political alliances; and based on international law: Iceland’s rights and responsibilities.

The paper presents the Arctic Council and Iceland’s role within it before turning to issues that are governed outside of the Arctic Council system, in particular, Arctic fisheries and maritime boundaries. The paper explains Iceland’s approach to Arctic cooperation in light of its published policy documents and explore the tools available to Iceland to defend its interests.

Iceland as a ‘Small State’

Small States seek shelter: usually on a regional basis.[1] They make alliances to advance their objectives and protect themselves from the lions. On hard security issues, Iceland finds this in the folds of NATO. The Arctic Council does not address hard security issues at all – and despite some heated press coverage, Russia is not posing a military threat in the Arctic, to Iceland or anyone else. But Iceland also needs economic and environmental security which it has fostered through Nordic cooperation, EFTA, the EEA and, of increasing importance, the Arctic Council.

International relations provides a number of objective criteria on which to measure a State as ‘small’: population, territory, GDP and military.[2] States may be small by one measure but not by another – for example, having a very large territory but a tiny military; or having a small population but a high GDP.

In a global context, Iceland is very small. Its surface area amounts to less than 0.07% of the Earth’s land; its population less than 0.005% of the World’s; its GDP is under 0.02%. And Iceland has no military as such.

But States are also big or small in a given geopolitical context: the Kingdom of Denmark is a small State in global affairs but not in the Nordic Council. Being ‘small’ or even ‘very small’ is a relative matter rather than an absolute. Therefore although Iceland is a very small State at the international level, within the Arctic Council system, it exerts an influence that belies its small territory, population and economy.

Iceland’s Relative Size in the Arctic Council

‘The Arctic’ has a number of different definitions for different purposes, even within the Arctic Council system itself. For example, the area covered by the sustainable development working group is based on human interests; the protection of the marine environment working group is only concerned with the seas; conservation of arctic flora and fauna is determined by ecosystems. In all cases, Iceland is included in its entirety even if almost all of it sits below the Arctic Circle. By contrast, for the purposes of the Polar Code, agreed through the global International Maritime Organisation (IMO), Iceland is entirely to the South of the protected area: this is based on considerations of the marine conditions – temperature and ice-cover especially.

The Arctic Council consists of the eight States with territory that stretches above the Arctic Circle: Canada, the Kingdom of Denmark, Finland, Iceland, Norway, Russia, Sweden and the United States of America. In addition, there are six permanent participants: these are organisations of indigenous peoples from around the Arctic. Each is transnational in character. Five permanent participants represent peoples that inhabit more than one State: the Aleut International Association, the Arctic Athabaskan Council, Gwich’in Council International, Inuit Circumpolar Council and Saami Council.  The sixth is the Russian Association of Indigenous Peoples of the North and represents over 40 small-numbered indigenous peoples in Northern Russia.

When thinking about small State theory, how ‘small’ is Iceland in the Arctic Council?

Iceland is still very small when territory is considered: it is dwarfed by the Russian and Canadian Arctics. However, when looking at population, Iceland is not far from the average with a population of approximately 330,000 (see Figure 1).

Arctic populations
Figure 1: Arctic populations

However, these figures are based on assuming that the whole of Iceland is ‘Arctic’. This is indeed the position of the Icelandic government and important to securing its legitimate participation in Arctic governance. Foreign Minister Össur Skaphérðinsson stated in his introduction to the Icelandic Arctic Policy statement in 2009 that: “Iceland is the only state that is wholly within the Arctic area, as it is generally understand international affairs or at the Arctic Council.”[3]

The current draft policy, Iceland’s Interests in the Arctic, goes even further and suggests that Iceland is somehow more Arctic than its neighbours – in which the vast majority of the population and the territory (but for the Kingdom of Denmark) lies well south of the 66th parallel.


Iceland is unique when we compare it to other nations that are geographically part of the Arctic. Most other countries, aside from Greenland, are predominantly South of the Arctic according to these definitions and their populations live mostly outside of the Arctic.[4]

If we then stop to consider the observers at the Arctic Council, the Iceland once more disappears – over half the World’s population is now represented in some form at the Arctic Council.

Further, it is not just the observer States and intergovernmental fora that make Iceland look little: WWF, observer at the Arctic Council, has a membership in excess of 5 million people. These are not just people who happen by birth to be affiliated to a particular State; these are people who care enough about WWF’s priorities, including its Global Arctic campaign, to pay an annual subscription.

The History of the Arctic Council

So how can Iceland exert its influence at the Arctic Council? And why was it in favour of the great expansion of observers in 2013? To understand this, we need to explore the Arctic Council’s origins and the way it functions today.

In the 1970s and 1980s, the only international interest in the Arctic was how long it would take to fire an intercontinental missile across it. A diligent doctoral student in the 1980s (now a very well-known professor of law of the sea) was told by his supervisor that he was wasting his time writing about the Northern Sea Route!

Iceland invited Gorbachev and Reagan to meet for disarmament talks in Reykjavík in 1986 and although no agreements as such were agreed, it was sufficient – no pun intended – to break the ice.

It was Gorbachev who then came along with the olive branch: the speech at Murmansk in 1987 in which he identified six areas that he saw as ripe for cooperation:

  • A nuclear weapons-free zone in Northern Europe;
  • Reductions and restrictions on naval activity in Northern Europe;
  • Cooperative development of hydrocarbon resources in the Arctic;
  • Scientific cooperation;
  • “Cooperation of the northern countries in environmental protection”; and developing “jointly an integrated comprehensive plan for protecting the natural environment of the North”; and
  • Opening of the Northern Sea Route to international vessels.[5]

Finland seized on this overture and initiated the Rovaniemi Process which in turn led to the Arctic Environmental Protection Strategy (AEPS) in 1991.[6] Pointedly, this initiative was established at a meeting of 8 ministers for the environment, not foreign ministers. The four original working groups, later joined by Sustainable Development and, under the Arctic Council, Arctic Contaminants Action Program (ACAP), are all environmentally oriented.

The transition to the Arctic Council in 1996 was effected through the Ottawa Declaration.[7] This change indicated a much broader range of interests: this was no longer solely a forum for managing shared environmental threats and clean-up activities – it was now, in theory at least, able to address any shared concerns with the explicit exception of military security. According to the Ottawa Declaration, the Arctic Council is established to “provide a means for promoting cooperation, coordination and interaction among the Arctic States, with the involvement of Arctic indigenous communities and other Arctic inhabitants on common Arctic issues, in particular issues of sustainable development and environmental protection in the Arctic.”[8]

But in 1996, the Arctic Council was still a fairly marginal institution and outside concern with the Arctic did not extend much beyond preservation of polar bears. Even in Iceland, there was little awareness of the Arctic as a geopolitical region as such or Iceland’s place within it. Iceland looked South to Europe and West to North American for trade but it did not really look North.

Between 1996 and 2000, the number of permanent participants rose from two to six and in the early 2000s, there was a slow but gradual increase in the number of observers. Iceland took the rotating chairmanship from 2002-2004; this also happened to be the time when international interest in the Arctic took off. By around 2005, the Arctic was gathering more and more attention in international relations, international law, development, economics and environmental scholarship and activism. The battle lines were being drawn between those that wanted it closed off as an international natural park; and those that wanted to exploit its apparently abundant resources (forgetting, perhaps, that Russia had been exploiting Arctic resources since at least the times of Stalin).

From about 2010 onwards, five rising Asian States, Italy and the European Union were seeking a formal place at the Arctic table: observership at the Arctic Council. This was awarded for the six States in 2013 and effectively for the EU at the same time but followed three years of intense lobbying efforts and heated discussions.[9]


The Operation of the Arctic Council and Iceland’s Influence within it

How can Iceland, then, maintain its influence in the shadow of these giants? To understand this, we need to examine how the Arctic Council operates.

The Arctic States are the members of the Arctic Council and the associations of indigenous peoples are permanent participants. This is a unique format for an international body. The Arctic States and permanent participants sit together at Arctic Circle meetings and have equal rights to contribute to the agenda and debate.[10] Decisions are made by consensus between the member States and in practice, usually the consensus of the permanent participants as well.[11]

The Arctic Council operates at a number of levels (see Figure 2). At the top is the biennial ministerial meeting, the location of which coincides with the chairmanship (which changes every two years on a rotating basis). The Senior Arctic Officials (SAOs) are the member States’ ambassadors who meet alongside the permanent participants and observers twice yearly. A number of subsidiary bodies exist, principally the six working groups which are essentially scientific bodies that can present findings to the SAOs and ministerial meeting but whose policy recommendations must be endorsed by the Arctic States. The working groups are standing bodies but there are also time–limited Task Forces which address specific issues and now the Expert Group on Black Carbon.

The Arctic Council
Figure 2: The Arctic Council

Observers at the Arctic Council[12] have much less influence than the members or permanent participants; in short, their role is to ‘observe’ and not to talk. To become and remain an observer, an entity must: bow to Arctic States’ sovereignty; recognize and commit to uphold international law, in particular, the law of the sea in the Arctic; respect the rights of indigenous peoples; demonstrate commitment, including financial commitment, to the work of the permanent participants; and show its capacity to contribute to Arctic interests, including scientific research.[13]

Observers’ have limited rights at Arctic Council meetings and are expected to contribute principally through the working groups.[14] Unlike the member States and the permanent participants, observers may not propose items for the agenda or raise points during Arctic Council meetings (ministerial or SAO meetings) although they are permitted to submit written statements.[15] Even at the subsidiary bodies, the observers are sat apart at the ‘children’s table’, behind the main table and they may speak only after the States and permanent participants have had their say and even then at the discretion of the chair.[16] Observers are also reviewed every four years but can be excluded at any time as their observer status only lasts as long as consensus exists amongst the ministers. In other words, it would require only one member State to exclude an observer.[17] This means that observers cannot exert the influence they have in other international fora within the Arctic Council. To maintain their observerships, they must placate all the Arctic States and most of the permanent participants, most of the time. Iceland might be little but in the Arctic Council it wields a great deal more influence than China.

The Arctic Council punches well above its weight for what is structurally no more than a roundtable for discussion with no law-making powers or compliance mechanisms. Nevertheless, there are two very significant limitations on what it can do. The first is financial: it has no regular funding and seeks contributions on an issue-by-issue basis.[18] This requires States – including observer States – being willing to front cash. Secondly, the consensus model means that it requires only one State to object to anything to take it off the table – whether that be the wording in a recommendation or the initiation of a project in the first place. Iceland can veto anything.

The Arctic Council has also successfully insulated itself from international tensions and disputes that have dampened East-West relations over the past few years such as the crises in the Crimea and Syria. While Iceland ties itself in knots internally over the Russian sanction regime, this is entirely curtained off at the Arctic Council meetings. When tensions have occasionally arisen between Canada and Russia, Iceland can sit back and enjoy the show; it is not forced to take a position. Also, Iceland, having no indigenous peoples of its own, can play the honest broker and be a neutral mediator between the permanent participants and States.

Alliances in the Arctic Council are fluid; there is no obvious ‘Nordic block’ as often occurs at the United Nations and Iceland will defend its own interests on an issue by issue basis. The consensus approach – or the ‘veto’ approach if you prefer – means that fixed alliances are not necessary; no State can be forced into a position that it finds unacceptable.

Beyond the Arctic Council

From Iceland’s perspective, as a very small State, the Arctic Council is a very attractive forum in which to advance its interests. Its official policy, to prioritise the Arctic Council as the key forum, mirrors that of Sweden and Finland, because it is here that the States have the most meaningful influence.[19] A very small State has limited bargaining power in bilateral negotiations with much larger countries; but it also has minimal influence in global fora in which it is outweighed – and outspent – by major powers. Even worse is a forum in which Iceland is not represented at all.

The same consensus-based system that allows Iceland to protect its interests in the Arctic Council allows the other seven States to do the same – and allows them each to keep certain things of the agenda to be dealt with elsewhere. The so-called ‘Arctic Five’ have squeezed out Iceland over two issues: Arctic High Seas fisheries; and the delimitation of the outer continental shelf.

The Arctic Five

Iceland has a small Arctic coastline but it is does not itself border the Arctic Ocean per se. Its exclusive economic zone (EEZ) is met by the Norwegian and Greenlandic EEZ’s in the North. Therefore although Iceland is an ‘Arctic Coastal State’ is it is not an ‘Arctic Ocean littoral State’ – i.e. it does not have a coastline or EEZ that borders the Arctic Ocean.

The Arctic Five – Canada, Denmark, Norway, Russia and the USA – meet occasionally outside of the Arctic Council framework, pushing to one side not only the other three Nordic State partners but the permanent participants as well. The basic justification for this is that the Arctic Ocean is a ‘semi-enclosed sea’ – a debatable claim geographically but one that gives those five States a special responsibility under the Convention on the Law of the Sea to manage the area.[20]

This group met in Oslo in 2007, Ilulissat, Greenland in 2008 and Chelsea, Québec in 2010 to discuss the legal framework for the Arctic Ocean. The Ilulissat meeting culminated in a declaration which was a broad reaffirmation of State sovereignty in the Arctic, an endorsement of the law of the sea as the governing framework for the Arctic Ocean and a message to non-Arctic States that a treaty based on the Antarctic model of environmental protection and internationalization would not be accepted in the North.[21]

Iceland registered its objections and emphasized the importance of the Arctic Council as the principal forum; but the Arctic Council cannot have a monopoly on any topic and nothing can prevent States from meeting and negotiating outside of the Arctic Council system.

The Outer Continental Shelf in the Arctic

The sexy issue in the Arctic today is the grand carve-up of the outer continental shelf. Iceland does not have a stake in this game because it does not have an Arctic coastline. In any case, while it might resemble a colonial land-grab with dramatic flag-planting and grand declarations of sovereignty, the system to resolve and allocate rights over the ocean floor is long settled.[22] It is admittedly slow and laborious but in short: Canada, Russia and Denmark or Greenland will sooner or later sit down and resolve their overlapping map submissions through bilateral negotiations. There is no hurry to do this as all the resources of any near-term commercial interest are far from the contested zones.

In respect of Iceland’s continental shelf, the Dragon Area to the North by Jan Mayen is long settled as a joint development zone with Norway. Iceland has three potential areas of outer continental shelf that are being mapped and of these, the Rockall area to the South is contested as four States (the Kingdom of Denmark (Faroe Islands), Iceland, Ireland and the United Kingdom) jostle for exclusive rights; but this is not an Arctic issue (see Figure 3).[23]

Iceland's maritime zones - The thick black line circling Iceland indicates the boundary of Iceland’s EEZ. The red line to the South indicate Iceland’s maximum potential outer continental shelf around Rockall; the purple, green and yellow lines indicate the submissions of the Kingdom of Denmark (Faroe Islands), the United Kingdom and Ireland respectively.
Figure 3: Iceland’s maritime zones – The thick black line circling Iceland indicates the boundary of Iceland’s EEZ. The red line to the South indicate Iceland’s maximum potential outer continental shelf around Rockall; the purple, green and yellow lines indicate the submissions of the Kingdom of Denmark (Faroe Islands), the United Kingdom and Ireland respectively.

Arctic Fisheries

Fisheries are more interesting but not an immediate concern. Iceland has exclusive rights over fish stocks within its EEZ but it has to manage shared and straggling stocks and highly migratory species in cooperation with neighbouring States (see Figure 3).[24] For the most part, this goes reasonably well though there is an ongoing sore point over the mackerel which has been gradually shifting Northward and Westward and competing with the cod stocks.

There are very good reasons to keep this out of the Arctic Council framework. The European Union is a key player in this dispute and the last thing any of the Arctic States want to do is give the European Union equal standing at the Arctic Council.

More speculative is the future governance of fisheries in the Arctic High Seas (see Figure 4). [25]

The EEZs and High Seas in the Arctic Ocean
The EEZs and High Seas in the Arctic Ocean

Currently, there are no fishing in the Central Arctic Ocean (the High Seas marked dark blue in Figure 4) as it is too far, and mostly ice-covered, to offer commercially exciting fisheries. Existing fisheries are all safely within the 200 nautical mile EEZ of the coasts. They are managed by the Coastal States and various regional fisheries management organisations (RFMOs). The North East Atlantic Fisheries Commission (NEAFC) NEAFC covers a small corner of the High Seas, but otherwise, the Central Arctic Ocean is an international commons.

The Arctic Five have taken the lead – again under protest from Iceland. High Seas are beyond the jurisdiction of any State and under the UN Convention on the Law of the Sea and the Fish Stocks Agreement, to prevent a ‘free-for-all’ and a tragedy of the commons, States with a ‘real interest’ should work together.[26] The difficulty in the Central Arctic Ocean is that there are currently no fisheries and hence it is very difficult to determine who has a ‘real interest’ in the legal sense.

Where the High Seas are concerned, Iceland’s position is that it has just as much interest in the area as the five littoral States; the Arctic Five disagree and began negotiations amongst themselves. This concluded with a moratorium in July 2015 – a temporary ban on Arctic High Seas fishing until such time as scientific studies had evaluated the available stocks and their resiliency.[27]

A moratorium agreed with the Arctic Five cannot bind other States which is why they invited five other entities to a discussion in Washington DC in December 2015 about future governance of living marine resources in the Central Arctic Ocean. The five littoral States attended, alongside five invited participants: The European Union, China, Japan, South Korea and Iceland: the ‘A5+5’.

Russia had expressed scepticism as to the need to include any other States at this point but nonetheless attended the December talks.[28] This indicates the Arctic Five’s recognition that these are all entities with a ‘real interest’ as they are those most likely to have the potential for fisheries in the Central Arctic Ocean. It is also indicative of a view amongst the Arctic Five that no other State or entity has a ‘real interest’ – at least at this time.

Being left on the second tier alongside distant Asian States might be humbling for Iceland but an ‘Arctic Six’ is simply not going to happen. Iceland does have legal interests in the Central Arctic Ocean: but in law, these are no different to those of the EU or China. This is not an urgent matter as there is no immediate economic potential but Iceland nonetheless can be expected to protest any exclusion and to defend the role of the Arctic Council to prevent precedents being set for Arctic governance without its involvement.


Arctic Shipping

The last hot topic in the Arctic that is outside of the Arctic Council system is shipping. Freedom of navigation is a fundamental principle of law of the sea that applies right up to States’ baselines. It is a global right that is managed at global fora, in particular, the International Maritime Organization that developed the Polar Code. Iceland has no special legal or commercial interests in the Arctic shipping. .[29] Iceland’s EEZ has no ice-covered waters so it has no extended authority to protect its marine environment beyond that which applies generally under the Convention on the Law of the Sea.[30] But that will not prevent it examining commercial opportunities should commercial shipping develop.

Iceland’s Arctic Policy

The priorities I have identified are reflected in the development of Iceland’s Arctic policies. Increasing governmental attention to the Arctic can be traced at least to the Icelandic chairmanship of the Arctic Council but this section will look only at the official policy formulations from 2009 onwards.

Former Minister of Foreign Affairs, Össur Skarphéðinsson set the ball rolling in 2009 with the report, Iceland in the Arctic.[31] He followed this up by making the Arctic a key theme of his 2010 report to the Alþingi and then sent them a draft to develop into a formal policy (stefna) which the Parliament then took up and agreed with few changes in 2011.[32]

In May 2015, the new government issued a draft for consultation: Iceland’s Interests in the Arctic: Opportunities and Risks, though this has yet to be finalized and the projected date has been repeatedly put back.[33] The current Minister of Foreign Affairs, Gunnar Bragi Sveinsson, put the Arctic once more at centre stage in his 2016 annual report to Parliament.[34]

In all of these, we see an emphasis on multilateral approaches, the importance of the Arctic Council and the assertion of Iceland as an ‘Arctic coastal State’ that is a challenge to the legitimacy of the Arctic Five.

In Skarphéðinsson’s extensive first report, Iceland in the Arctic, international cooperation is the first priority with particular attention on the Arctic Council. However, the Barents-Euro Arctic Council and the West-Nordic region are also mentioned as important fora. In his 2010 report to Parliament on international affairs, the first region to be addressed is the High North and of the ten Arctic priorities, the first is:

to secure Iceland’s position as a coastal state and a key stakeholder in shaping the future development of the High North. Iceland should be considered a full-fledged coastal state on a par with such countries as the USA, Denmark (for Greenland), Canada, Norway and Russia.[35]


This repeats an earlier rebuke to the Arctic Five for their exclusion of Iceland but it is also noteworthy that for all Iceland’s talk of the importance of the Arctic Council, it is not unduly concerned about the exclusion of Finland, Sweden or the indigenous representatives from the Arctic Five talks.[36]

Defence of the Arctic Council comes later (Arctic priority 4) but all the priorities point to Iceland’s need for multilateral Arctic governance and the importance of securing of Iceland’s role within it.[37]

Until such time as the current government agrees a new policy, the official Icelandic Arctic policy remains the 2011 Parliamentary Resolution.[38] It largely follows Össur’s 2010 report though one interesting change is that the Alþingi changed the order, placing the Arctic Council first. However, it also highlights Iceland’s special status as a ‘Coastal State within the Arctic Region’ in priority two.[39]

One surprising aspect of the draft of the latest Arctic policy is that it follows much of the previous approaches but makes very little direct reference, perhaps reflecting a desire of the governing coalition parties to present the Arctic as their project.[40] It was these two coalition parties who held the reins when the Arctic first hit the radar of Icelandic politics and who actively pursued increased cooperation and investment in Arctic relations and research. The draft highlights once more Iceland’s Arctic credentials, now suggesting that Iceland is somehow more Arctic than the other States (in which most of the land and population are far South of the Arctic).[41]

International cooperation is still the top priority, especially through Arctic Council.[42] However, other fora are mentioned and special relations with Greenland and the Faroe Islands are promoted.[43]

The opportunities (tækifæri) identified are very much business-focused: new fisheries, hydrocarbons and shipping; climate change is not presented as wholly negative.[44] This is reminiscent of Berit Kristoffersen’s concept of ‘opportunistic adaptation.’[45]

Indigenous peoples are overlooked in the report almost entirely; mentioned only once in the introduction, their rights and interests are ignored throughout, even in areas where proposed Icelandic activities can have serious impacts.

Most recently, in March 2016, the current Minister for Foreign Affairs, Gunnar Bragi Sveinsson, delivered his annual report to Parliament. The Arctic is once more the first region to be assessed. The 2011 Parliament resolution remains the key policy and there is no mention of development of the new strategy document (i.e. Iceland’s Interests in the Arctic).[46]

Sveinsson seeks an increase in Iceland’s contributions to the Arctic Council’s activities, especially at the level of working groups, task forces and expert groups and points to the need to begin preparations for the Icelandic chairmanship that begins in 2019.[47] The Arctic Council’s operations are explained in a fair degree of detail to Parliament (given the habitual nature of such reports) some detail (given the nature of such reports) in the following pages.[48]

West-Nordic cooperation is also given special attention, indicating an interest in promoting further cooperation with the Faroe Islands and Greenland.[49]  This is a region or sub-region that is not given a great deal of attention in international relations but has the potential to grow in importance. In this context, Iceland is the ‘big State’ and the only one of the three countries to have decolonised from the Kingdom of Denmark (so far). However, the West Nordic Council is significantly limited in its activities in the absence of considerable investment: not easy to come by in three very small and cash-strapped countries.

The Arctic High Seas fisheries issue is not addressed directly in the report and no reference is made to the A5+5 December 2015 meeting in Washington DC. (This may have been a matter of the timing of the drafting of the report or it may indicate that the current foreign ministry no longer wishes to continue to fight this battle.) Nevertheless, within the section on Arctic cooperation, Sveinsson obliquely refers to the dependence on marine resources of the Icelandic economy and the importance for Iceland of ‘actively participating in international cooperation concerning ocean affairs’.[50]

Making Sense of Iceland’s Priorities

The official Icelandic approach does not diverge widely from what might be expected from a very small fish beside a very big ocean. Multilateral cooperation is key and the Arctic Council is the preferred forum as it secures Iceland’s influence. Nevertheless, although Iceland objects to the Arctic Five, it would quite happily accept an Arctic Six – as long as it is in it.  Iceland objects to its own exclusion and does not necessarily take a particularly principled stand in defence of broader multilateral cooperation.

However, Iceland has been open to the expansion of observers at the Arctic Council; some of these courted Iceland generously during the application period. Iceland needs its international partners beyond Arctic States but if Iceland can channel them through the Arctic Council, it prevents them from overpowering it.

Iceland continues to assert its interest and demand involvement in fisheries management. Iceland must be practical here and take part in the A5+5 – even if it would prefer an A6+4. The shelf is not so pressing and will be resolved in time. Iceland sees some commercial opportunities in shipping –but this is a very long game and will be managed through the IMO.

The current government’s approach to the Arctic is rather more commercially oriented that its predecessor as it looks to climate change as an opportunity (as well as a risk factor) and seeks to profit from the resources that the receding ice ostensibly presents. Nevertheless, those resources remain very expensive to access and develop irrespective of the state of the ice.

[1] See, eg, Alyson Bailes, Baldur Þórhallsson, and Rachael Lorna Johnstone, “Scotland as an Independent Small State: Where Would It Seek Shelter?,” Stjórnmál og Stjórnsýsla 9, no. 1 (2013).

[2] Ibid, 3.

[3] Össur Skarphéðinsson, Ísland á norðurslóðum, Inngangur, 2009 (translation by present author).

[4] Ministerial Committee on Arctic Affairs, Hagsmunir Íslands á norðurslóðum: tækifæri og viðsjár (draft), March 2015.

[5] Mikhail Gorbachev, Speech at Murmansk, 1st Oct.1987, available at <https://www.google.is/search?q=murmansk+speech&rlz=1C1LENP_enIS499IS499&oq=murmansk+speech&aqs=chrome..69i57j0l3.1838j0j9&sourceid=chrome&ie=UTF-8> (accessed 4 April 2016).

[6] Arctic Environmental Protection Strategy (AEPS), Declaration of the Ministerial Meeting in Alta, Norway, 13 June 1997, available at <http://library.arcticportal.org/1271/> (accessed 4 April 2016).

[7] Ottawa Declaration on the Establishment of the Arctic Council, 19 September 1996, available at < http://library.arcticportal.org/1270/> (accessed 4 April 2016).

[8] Ibid, para. 1a.

[9] Arctic Council, Kiruna Declaration, 15 May 2013, 6, available at <https://oaarchive.arctic-council.org/handle/11374/93> (accessed 4 April 2016).

[10] Arctic Council, Rules of Procedure, as adopted by the Arctic Council at the First Arctic Council Ministerial Meeting, Iqaluit, Canada, revised by the Arctic Council at the Eighth Arctic Council Ministerial Meeting, Kiruna, Sweden, available at <https://oaarchive.arctic-council.org/handle/11374/940> para 19 (accessed 4 April 2016).

[11] Douglas C Nord, The Arctic Council: Governance within the Far North (Routledge 2016) 38 & 70.

[12] United States of America, Department of State, ‘Arctic Council Structure’ <http://www.state.gov/e/oes/ocns/opa/arc/ac/structure/> (accessed 4 April 2016).

[13] Rules of Procedure, supra note 10, Annex 2.

[14] Ibid, Rule 38

[15] Ibid, Rules 12, 19 & 38.

[16] Arctic Council, Observer Manual for Subsidiary Bodies, as adopted by the Arctic Council at the Eighth Ministerial Meeting, Kiruna, Sweden, revised by the Arctic Council Meeting of the SAOs at Anchorage, Alaska, United States of America, October 2015, available at <https://oaarchive.arctic-council.org/handle/11374/939> para 7.3 (accessed 4 April 2016).

[17] Rules of Procedure, supra note 10, Rule 37 and Annex 2, Rule 5.

[18] See, e.g., Nord, supra note 11, 35 & 72-74.

[19] Parliament of Iceland, Þingsályktun um stefnu Íslands í málefnum norðurslóða (2011) 139th legislative session, 28 March 2011.

[20] United Nations Convention on the Law of the Sea 1982, 10 December 1982, 1833 UNTS 397 (UNCLOS), Part IX.

[21] Ilulissat Declaration, Foreign Ministers of Canada, Denmark, Norway, Russia, and the United States of America, The Ilulissat Declaration, 29 May 2008, available at <http://www.arcticgovernance.org/the-ilulissat-declaration.4872424.html> (accessed 4 April 2016).

[22] UNCLOS, supra note 20, Part VI and Annex II.

[23] Icelandic Ministry of Foreign Affairs, ‘Viðræðum fram haldið um Hatton Rockall-málið’ 24 November 2004, available at <https://www.utanrikisraduneyti.is/frettir/nr/2472> (accessed 4 April 2016).

[24] UNCLOS, supra note 20, Part V.

[25] Ron Macnab, Olav Loken and Arvind Anand, ‘The Law of the Sea and Marine Scientific Research in the Arctic Ocean’ Meridian Newsletter (2007-2008) 3, Figure 2 <http://www.polarcom.gc.ca/uploads/Publications/Meridian%20Newsletter/MeridianFall2007.pdf> (accessed 6 April 2016).

[26] UNCLOS, supra note 20, Part V; United Nations Agreement for the Implementation of the Provisions of the United Nations Convention on the Law of the Sea of 10 December 1982 relating to the Conservation and Management of Straddling Fish Stocks and Highly Migratory Fish Stocks, 4 August 1995, 2167 UNTS 88, article 8(3).

[27] United States Library of Congress, Global Legal Monitor, ‘Canada; Denmark; Norway; Russia; United States: Fishing Declaration Covering Central Arctic’ 21 July 2015, available at <http://www.loc.gov/law/foreign-news/article/canada-denmark-norway-russia-united-states-fishing-declaration-covering-central-arctic/> (accessed 4 April 2016).

[28] United States Department of State, ‘Meeting on High Seas Fisheries in the Central Arctic Ocean: Chairman’s Statement’ 3 December 2015, available at <http://www.state.gov/e/oes/rls/pr/250352.htm> (accessed 4 April 2016).

[29] IMO, ‘Shipping in Polar Waters’ available at < http://www.imo.org/en/MediaCentre/HotTopics/polar/Pages/default.aspx> (accessed 4 April 2016).

[30] UNCLOS, supra note 20, article 234.

[31] Skarphéðinsson, supra note 3.

[32] Skýrsla Össurar Skarphéðinssonar utanríkisráðherra um utanríkis- og alþjóðamál, May 2010; Parliament of Iceland, supra note 19.

[33] Ministerial Committee on Arctic Affairs 2015, supra note 4.

[34] Skýrsla Gunnars Braga Sveinssonar utanríkisráðherra um utanríkis- og alþjóðamál, May 2016.

[35] Skarphépinsson 2010, supra note 32, 15-16.

[36] Ibid, 12

[37] Ibid, 16.

[38] Parliament of Iceland, supra note 19.

[39] Ibid, 1.

[40] Ministerial Committee on Arctic Affairs, supra note 4.

[41] See quotation above, supra note 4.

[42] Ministerial Committee on Arctic Affairs, supra note 4, 6-8.

[43] Ibid, 8.

[44] Ibid, Chapters 2 & 3.

[45] Berit Kristoffersen, ‘Opportunistic Adaptation: New Discourses on Oil, Equity, and Environmental Security’ in The Adaptive Challenge of Climate Change, Karen O’Brien and Elin Selboe (Eds) (Cambridge University Press 2015).

[46] Sveinsson 2016, supra note 34, Chapter 2.

[47] Ibid, 12.

[48] Ibid, 13-14.

[49] Ibid, 14.

[50] Ibid, 12.

The EU’s Open Arms and Small States

Recent events notwithstanding, all things considered, the European Union has proved to be a brilliant success along several dimensions. This is why there are still several countries waiting outside the gates aspiring to membership while only the British are considering exit as if to confirm French President Charles de Gaulle´s initial doubts about British membership. And this is why US President Barack Obama encourages British voters openly to say No to Brexit in the upcoming referendum in June 2016, warning them that Brexit may weaken the “special relationship” between the Britain and the United States.

Peace, prosperity, and open arms

Recent troubles notwithstanding, I see three main reasons why the EU deserves to be regarded as a brilliant success: Peace, prosperity, and open arms.

First, the EU has helped keep the peace in Europe since 1945, the longest continuous period of peace and harmony in Europe since time immemorial except for some skirmishes – some major ones, it is true – in former communist countries in the Balkans. Chancellor Helmut Kohl, one of the chief architects of German reunification as well as of European unification, put the matter well when he declared that Germany wanted to share her sovereignty and her fate with her European neighbors lest her neighbors never again need to fear German belligerency.

Second, the EU has promoted prosperity on the continent by engineering a major economic and social transformation with an unwavering emphasis on human rights. European cities from Helsinki to Lisbon – and, yes, also from Athens to Dublin – have been transformed before our eyes, and the same applies to the European countryside. The EU´s strong emphasis on human rights has involved, among many other things, the abolition of the death penalty throughout the union membership. The Americans have begun to take notice: the number of death sentences and executions in the United States has dropped significantly since the mid-1990s.

Third, with open arms, the EU has welcomed formerly autocratic countries back into the European fold – first, Greece, Portugal, and Spain on the southern fringes of Europe, and then the former communist countries in East and Central Europe – enlarging Europe, making it whole. Thus far, only Iceland, Norway, and Switzerland have opted to stay outside the union. Switzerland is a chapter unto itself, having joined the United Nations as late as 2002. Norway is also a special case in that its voters have twice turned down membership in national referenda against the will of the country’s main political parties and interest organizations, a remarkably inward-looking attitude on the part of Norwegians. I will discuss Iceland toward the end of the article.

To continue with the EU’s open arms, Catalonia is eager to join – or rather, remain in – the EU, as is Scotland, after achieving independence. About a half of the Catalan population wants independence from Spain because many of them feel treated like a minority within Spain without full respect and full rights. The government in Madrid threatens to keep an independent Catalonia outside the EU, a threat that contradicts the EU´s open-arms policy and is, therefore, likely to prove empty. The Scottish situation is different. There, also, about a half of the voters want independence, primarily because they want Scotland to be more like Scandinavia, thus setting England free to become even more like the United States. Scotland joined the United Kingdom in 1707 primarily to gain access to a much larger market. Today, as a member of the EU, Scotland enjoys such access and, therefore, does not any longer need to be part of the UK for reasons of trade even if most of Scotland´s trade is still with England. The threat from Westminster that Scotland will lose its EU membership if it leaves the UK sounds hollow because, again, it is incompatible with the EU´s open-arms policy. The threat from Westminster appears also a bit comical in view of the fact that the Conservative government is just about to hold a referendum that may take the UK out of the EU, a result that would almost surely encourage demands for immediate Scottish independence to enable Scotland to remain in the EU.

In both Catalonia and Scotland, the prospect of continued EU membership holds the key to independence. Without membership, many of those who advocate independence would have doubts as they would fear weakened trade relations as President Obama has warned British voters. As members, however, Catalonia and Scotland, would have continued access to Spanish and British markets through the EU, assuming the UK decides against leaving the EU.

Union of small European states

With time, the character of the EU has changed as it has developed into a union of small European states. If Catalonia achieves independence and joins the EU, it will become the typical EU member in terms of population size. Of the 29 members, there will be 15 countries larger than Catalonia and 13 smaller countries. This shows how unreasonable it is to maintain that Catalonia or Scotland are too small to stand on their own feet as EU members. Denmark and Finland are the size of Scotland and smaller than Catalonia. Denmark has been an EU member since 1972 as well as a de facto subscriber to the euro and Finland has been a member of the EU as well as of the Economic and Monetary Union (EMU) since 1994. If Denmark and Finland were able to do so well by their EU membership, there can be no reasonable doubt about the ability of Catalonia and Scotland to do likewise.

With more small members on the horizon, there is reason also to believe that the common interests of small countries will weigh more heavily in EU policy making and institutions in the future. Clearly, Europe has its political disagreements separating left from right, north from south, east from west, and so on, as does the US and other countries. Even so, Europe´s advanced social model, harking back to Chancellor Otto von Bismarck who can be said to have introduced the first rudiments of the German welfare state in the 1880s, faces no serious challenge within Europe. This makes Europe quite different from the US where the more limited and less ambitious welfare state legislation launched by Democratic Presidents Franklin D. Roosevelt, John F. Kennedy, and Lyndon B. Johnson is under attack by its Republican opponents in Congress, a situation that seems unthinkable in Europe.

The strong parallel emphasis on efficiency and fairness is, as I see it, the key to the economic and social advances accomplished thus far by the EU. This helps to explain the continued attractiveness of EU membership to all but the most eccentric and inward-looking countries in Europe. Further, the minority of voters against EU membership within individual countries includes European advocates of the US Republican extremism that now, with the 2016 US presidential election approaching, seems to threaten the cohesion if not the existence of the Republican Party.

Three comparisons

The weaknesses that have emerged in modern America – lack of trust, imploding politics, stagnant wages, and increased inequality – mirror the strengths of the European model. In his seminal book Bowling Alone, Robert Putnam charted the collapse of trust in American society, a gradual process the way Putman describes it.

Let me suggest three related phenomena to highlight some of the current differences between the US and Europe.

  • American workers spend 1,800 hours per year at work compared with 1,400 hours in Denmark and Germany, 1,500 in France, 1,600 in Sweden and Switzerland, and 1,700 in UK (source: The Conference Board. 2015. The Conference Board Total Economy Database). Why? One plausible explanation for these differences is that US workers need to put in long hours to compensate for the lack of social security that Europeans can take for granted (Gylfason, 2007). Unlike Americans, Europeans have seen their economic wellbeing rise through higher incomes as well as less work.
  • In 1960, the average American was 3 cm taller than the average German. Today, the average German is 3 cm taller than the average American as documented in a series of works by John Komlos and his associates (see, e.g., Komlos and Baur (2004) and Komlos and Lauderdale (2007)). Why this reversal? A likely reason seems to be that tens of millions of US citizens have been left behind, in poverty and without adequate social insurance, unable even to attain normal physical stature, thereby dragging down – or, more precisely, slowing down the natural advance of – the average height of the adult population in the US (Gylfason, 2007). If this interpretation is correct, it constitutes a devastating case against inequality of incomes and wealth on economic grounds quite apart from the ethical issues at stake.
  • New research by Nobel-Prize winning Scottish economist Angus Deaton and Anne Case, both at Princeton University, shows that middle-aged non-Hispanic white Americans have faced declining life expectancies since 1999 due to a sharp rise in life-style related diseases and suicides (Case and Deaton, 2015). Declining life expectancies are unheard of in modern times except in Russia after collapse of communism and in Africa due to public health disasters, especially the HIV/AIDS epidemic. The lives thus lost in the US are almost as many as those lost to the HIV/AIDS epidemic since 1981 (0.5 million vs. 0.65 million).

Expansion fatigue

There is no denying that the EU presently faces serious difficulties, some of its own doing, some not, including the recent torrent of Syrian refugees into the EU. While the EU cannot be blamed for the influx of refugees, the extent to which the EU bears itself some of the blame for some of its other current problems is debatable. The EU has looked the other way while anti-democratic tendencies have intensified in Hungary and, more recently, also in Poland. The EU could have reacted by, for example, imposing economic sanctions by withdrawing financial support from Hungary but chose not to do so. Likewise, the EU seems not to have done much to try to rein in rampant corruption in Bulgaria and Romania. The economic troubles of Greece can be said to follow in part from the EU´s flawed fiscal and financial architecture, a problem well understood from the inception of the euro but one which the EU has yet to address satisfactorily. This list could be extended. In view of these issues, it is understandable that some older EU members are inclined to think that now is a good time to slow down the geographic expansion of the EU by sharpening the focus on deepening European integration while putting widening on hold for the time being. Even so, EU would benefit from the admission of new members such as deeply democratic Catalonia and Scotland. If they declare independence, the EU will almost surely welcome both of them with open arms. This would lend an even stronger voice to advocates of the EU as a union of small European states eager to advance economic efficiency and social justice side by side.

Back to Greece. Much has been made recently of Greece´s inability to overcome her financial predicament by devaluing her currency. The argument is that macroeconomic adjustment by other means within the confines of the euro is bound to be more costly than devaluation of the drachma would have been. This may well be true as far as it goes. Even so, several euro countries have managed a significant adjustment in recent years, including Ireland, Portugal, and Latvia where, in 2014, unemployment was in the range between 11% and 14% of the labor force compared with 26% in Greece. In 2007, all four countries had unemployment rates between 5% and 8%. The experience of Ireland, Portugal, and Latvia shows that adjustment by other means – fiscal restraint, wage cuts, and more, sometimes referred to as an internal devaluation – with the euro in place is possible even if it can be quite painful. None of these countries seriously considered leaving the euro zone, nor did Greece. Comparisons of the euro with the Gold Standard are misplaced because the European Central Bank can devalue the euro if it wants to; in fact, the ECB did so recently.

Iceland and the EU

Iceland became a founding member of NATO in 1949. The decision to join was not based on detailed benefit-cost analysis. Details did not matter. Rather, the Icelandic parliament decided that NATO is a club where Iceland inextricably belongs. In other words, Iceland´s parliament decided to share Iceland´s fate with that of other members of the alliance, including most of Iceland’s closest friends and allies. No referendum was held. Profiteering from Icelandic NATO membership came later. The defense agreement between Iceland and the US is considered to have generated incomes equivalent to about 2% of GDP per year from the 1950s until 2006 when the US government unilaterally closed the NATO base in Iceland against the will of the Icelandic government.

Similarly, the Icelandic parliament´s decision to apply for EU membership in 2009 was not based on an explicit benefit-cost analysis. The principle is the same as before: those in favor of membership view the EU as a club where Iceland belongs if only because all of our closest allies except Norway are members. Further, in fact, I believe Iceland should join the EU even if it could be demonstrated that the costs of membership outweigh the benefits, but then, of course, it is impossible to assess the monetary value of political benefits.

From the early 1990s until the crash of 2008 opinion polls showed that Icelandic voters were consistently albeit marginally in favor of EU membership whereas political parties, subservient to the oligarchs they had created by granting them virtually free access to Iceland’s valuable fish resources, and interest organizations stood shoulder-to-shoulder against membership. Here the situation was diametrically opposite to that of Norway. Up against the wall after the crash, Iceland filed an application for membership in 2009. The application could be understood as a way of saying to the rest of Europe: Please excuse us for having permitted our banks to separate you from so much of your cash, but from now on we shall abide by the discipline required by EU membership. With the political parties held primarily responsible for pushing Iceland off the cliff in 2008 through their crony privatization of the banks during 1998-2003 back in power in 2013, an attempt was made to withdraw the application in 2012 as if to say: We did not mean to say we are sorry, we were just kidding. This is, however, a controversial interpretation. While many Icelanders apparently sensed a collective guilt about having voted for politicians who through the corrupt privatization of the banks paved the way into the abyss in 2008, others had no such feelings of guilt, blaming the crash on the bankers or the politicians or even on foreign conspirators. Anyhow, the attempt in 2012 to withdraw the EU membership application failed. Specifically, parliament put in the membership application in 2009 whereas the foreign minister, not parliament, attempted to pull out unilaterally in 2012, a pullout considered invalid by the EU because an individual minister cannot undo a formal decision by parliament. Hence, Iceland’s application remains on ice, like the Swiss one from 1992, waiting to be reactivated by a new parliament which will then put the negotiated membership agreement before a national referendum as promised by parliament and as required by the new constitution that was approved by 2/3 of the voters in 2012 and awaits ratification by parliament.

Recent developments in Greece, Ireland, and Spain make Icelandic accession to EU membership a harder case to sell. This helps to explain why public opinion has swung against membership since 2008 even if developments in Baltic and Balkan countries suggest a different conclusion. Estonia, Latvia, and Lithuania joined the EU in 2004 and by now all three use the euro. Croatia became the EU´s 28th member in 2013, ten years after filing its membership application. Undeterred by events in Greece, Albania became an official candidate for accession to the EU in 2014. Bosnia and Herzegovina applied for membership in 2016.

Another reason for the change in public sentiment in Iceland is that some Icelandic politicians tried to deflect their own responsibility for Iceland´s home-made crash by absurdly blaming it on foreigners and whipping up immigrant-unfriendly chauvinism in Icelandic politics for the first time in history. In terms of economic damage relative to national economic output as well as in terms of fiscal costs, Iceland´s crash was among the greatest ever recorded (Laeven and Valencia, 2012). For example, the damage inflicted on foreign creditors and shareholders was greater than anywhere else relative to the size of the Icelandic economy.

What would be the main benefits and costs of EU membership? The economic benefits are clear even if European Economic Area membership from 1994 has delivered many of them already. Yet, several significant benefits are still missing.

  • Many Icelanders see the adoption of the euro as a key benefit in view of Iceland poor record of monetary management which has allowed the Icelandic króna to lose 95.95% of its value vis-à-vis the Danish krone since 1939. Quite apart from the general philosophy behind the EMU, small countries can benefit from outsourcing the least successful parts of their national policy-making just as they should resist outsourcing their most successful procedures.
  • The Common Agricultural Policy is far less expensive for Europe´s consumers and tax payers than is domestic farm protection in Iceland as has always been the case. Thus, while producer support in the EU decreased from 39% of gross farm receipts in 1986 to 18% in 2014, it decreased from 76% to 48% in Iceland during the same period (OECD, 2015).
  • In view of Iceland´s checkered history of oligopolies and lack of competition in a number of areas, including agriculture, banking, fisheries, and trade, the EU´s Competition Policy and associated monitoring and surveillance could offer significant benefits to Iceland.
  • The Common Fisheries Policy constitutes a problem for Iceland, however, that needs to be solved. Iceland needs to understand and respect that the EU was built on the fundamental premise of the original European Coal and Steel Community stipulating joint management of Europe’s natural resources. At the same time, the EU needs to understand Iceland´s significant dependence on her fisheries – a dependence that concerns the national economy of Iceland as a whole and not just local fishing communities as in the rest of Europe. The EU´s toleration of inefficient fisheries policies, tacitly justified by viewing fisheries as a fairly unimportant regional concern, cannot be accepted in Iceland where fishing remains a macroeconomic concern. Even so, Iceland needs a major overhaul of its fisheries management regime which the Supreme Court of Iceland ruled discriminatory and hence unconstitutional in 1998, a verdict confirmed by the United Nations Human Rights Committee in 2007 (Gylfason, 2009a). In the national referendum on a new post-crash constitution for Iceland, 83% of the voters declared support for a provision stipulating national ownership of natural resources, including full charge for the right to fish in Icelandic waters in keeping with the user-pays principle of environmental policy now openly advocated by the World Bank and the IMF as the best way to deal with climate change (Lagarde and Yong Kim, 2015). Whereas Norwegian tax payers have been able to claim about 80% of Norway´s oil rent from the outset, 90% of the fisheries rent in Iceland still accrues to the vessel owners, Iceland’s answer to Russia´s oligarchs (Thorláksson, 2015).



Small can be beautiful. On average, small countries tend to have higher per capita incomes than large ones because various benefits of small size, including cohesion and homogeneity, seem to outweigh the diseconomies of small scope and scale and small pools of talent (Alesina and Spolaore, 2003; Gylfason, 2009b). The EU can expect to benefit from welcoming more small states as members. National boundaries matter less and less when cross-border trade is free. This is why the independence aspirations of Catalonia, Scotland, the Faroe Islands, and others need not be viewed with alarm. Along European lines, ill-designed national boundaries outside Europe would be easier to redraw if trade were free as in Europe, supported by social efficiency, freedom, fairness, and respect for human rights.




Alesina, Alberto, and Enrico Spolaore (2003), The Size of Nations, MIT Press, Cambridge, Massachusetts.

Case, Anne, and Angus Deaton (2015), “Rising Morbidity and Mortality in Midlife Among White Non-Hispanic Americans in the 21st Century,” PNAS, National Academy of Science.

Deaton, Angus (2013), The Great Escape: Health, Wealth, and the Origins of Inequality, Princeton University Press, Princeton and Oxford.

Gylfason, Thorvaldur (2007), “Why Europe Works Less and Grows Taller,” Challenge, January-February, 21-39.

Gylfason, Thorvaldur (2009a), “Hvað segja lögin: Sameignarauðlindir eru mannréttindi” (What Does the Law say? Common Property Resources as Human Rights) in Ragnarsbók (Festschrift for Ragnar Aðalsteinsson), Icelandic Literary Society, Reykjavík, 497-522.

Gylfason, Thorvaldur (2009b), “Is Iceland too small?,” VoxEU.org, 19 August.

Komlos, John, and Marieluise Baur (2004), “From the Tallest to (One of) the Fattest: The Enigmatic Fate of the American Population in the 20th Century,” Economics and Human Biology, Vol. 2, No. 1, March, 57-74.

Komlos, John, and Benjamin E. Lauderdale (2007), “The Mysterious Stagnation and Relative Decline of American Heights after c. 1960, Annals of Human Biology, Vol. 43, No. 2, March-April, 206-15.

Lagarde, Christine, and Jim Yong Kim (2015). “The Path to Carbon Pricing,” Project Syndicate, 19 October.

Laeven, Luc, and Fabián Valencia (2013), “Systemic Banking Crises Data Base,” IMF Economic Review, Vol. 61, 225–270.

OECD (2016), Agricultural Policy Monitoring and Evaluation 2015, OECD, Paris.

Putnam, Robert (2000), Bowling Alone, Simon and Schuster, New York.

Thorláksson, Indridi H. (2015), “Veiðigjöld 2015. Annar hluti” (Fishing Fees 2015. Part Two).


Kristjan Ahronson, Into the Ocean. Vikings, Irish, and Environmental Change in Iceland and the North (Toronto: Toronto University Press, 2015)

In the dialectic between established “certainties” and fundamental ambiguities that characterise north Atlantic islands, Kristjan Ahronson develops the argumentation on the relationships between Scots, Irish, and Norsemen of the early medieval period. The interaction of humans and their environments, as well as peoples’ migrations and the cultural diffusion in the north Atlantic, are the main areas of investigation of a book that is intended to be designed not only for a specialized audience. Popperian theory of science and interdisciplinarity represent the conceptual framework in which the author develops his method or, even better, his crossing of methodologies that are jointly employed to reach a multidimensional pictures of the subjects under inquiry.

Continue reading Kristjan Ahronson, Into the Ocean. Vikings, Irish, and Environmental Change in Iceland and the North (Toronto: Toronto University Press, 2015)

An interview with Kristján Jóhannsson


KJ. 38 years! Yes, 38 years. It was such a magnificent time in my life. Even if there were always challenges to overcome, sometimes truly tragic ones. Indeed, they started since the very beginning, in 1976, when my family and I arrived in Milan, and spent the very first night in a hotel by the train station. It was another world. For me, a farm boy from Akureyri, it was a bit frightening. I was with my first wife, two children, my daughter, then very little, and my son, who must have been 6 years old. I could hardly speak a word in Italian back then [the present interview was held in Italian in Akureyri on Saturday, 25 January 2015, and then translated into English]. I knew that my teacher there could speak English, though.  The following morning we went to catch a bus, the blue kind [for long-distance routes], in order to go to Turin, since my teacher was supposed to be there, at the local music school [It. conservatorio], not in Milan. However, not even that was a straightforward matter…


My teacher, Giuseppe Valdengo, a baritone known as “Toscanini’s baritone” for he was Toscanini’s favourite, and an accomplished violinist and pianist—indeed a great musician despite being somewhat eccentric—was no longer in Turin! As I said, he was eccentric, amusing, but only to a certain point. He took things lightheartedly and liked making fun of circumstances as well as people, often ending up with offending those around him. Well, just about the time of my arrival, he had gravely offended the director of the music school in Turin, so that he had to leave Turin and go elsewhere, which was not a problem for him, given that he found immediately a new position at the music school of Aosta, in the French-speaking part of northern Italy. For us, on the contrary, it was quite a problem: we had to change our plans on the spot and go to Aosta instead. Valdengo was kind enough to help us find an apartment in Saint Vincent, near Aosta, not far from the well-known casino. We found him there, cheerful, pleased, and I had my first class with him the following morning. I was introduced to the director of the music school in Aosta and that is how I commenced my first year of studies in Italy. I followed an intensive programme that should have helped me catch two pigeons with one stone, namely to learn the Italian musical repertoire and, at the same time, the Italian language.




NM. Were you following a regular study course, then?


KJ. Yes and no. I was at a regular music school, but every three months I would take an examination and move up one grade. After one year, if I kept going at that pace, I would be at the second-from-last year of the school curriculum. It was an ambitious plan and a very interesting experience, also because the school was very vibrant and demanding, much more so than here in Iceland, where there is far too little to do and life is far too easy, back then as well as today. Believe me, I do think that, without adequate pressure placed upon the students, real world-class talents cannot emerge.




NM. Do you think that there are still significant differences between the musical education available in the Italian schools and the one that you can get in the Icelandic schools?


KJ. Yes, it is still the case. In Italy you can tell a student that something is wrong and that he must do something about it, put more work into it. If you do it in Iceland, then you, the teacher, are in trouble! It makes an enormous difference.




NM. But why Italy? When you decided to go abroad to pursue your studies as an opera singer, you could have chosen other countries, closer to Iceland, either geographically or culturally, if not both.


KJ. Certainly, Sweden was very much talked about as a suitable option. Nonetheless, choosing Italy was such an important decision in my career. And I have a person to thank for that. You see, I had studied classical singing here in Akureyri with maestro Vincenzo Maria Demetz, who, among other things, had taught me some Italian—very little, in fact, just a few words! Unfortunately, we spoke together mostly in English and in German, since he came from Val Gardena, in the Alps of [German-speaking] Alto Adige. He had a rather particular opinion of me, in truth an amazing insight. He said to me: “You are more southern Italian than the southern Italians [maestro Demetz used the tongue-in-cheek derogatory term “terrone]: your physique, your temperament, your type of voice; you must not go to Germany or Scandinavia, you must go to Italy! There you will be able to let yourself go and, verily, sing. In Germany, in a way, they might get you to sing Lieder. That way, you could acquire a certain refinement, which would be good for a strong and loud voice like yours. But that is not really the place for you. Go to Italy!” Maestro Demetz was correct on all accounts, for I was not a lyrical tenor, I was not light, I was without agility; I had to get straight into Donizetti, Verdi and Puccini. Then, but only then, I could work on some additional aspects of my voice. He had seen all this back then, already, which is fantastic, for he was right! 




NM. Moving to Italy, studying so hard: it must have been not only an exciting time, but also a hard one. What sort of sacrifices did it involve?


KJ. Big sacrifices. I was young, 26 years old, but I was already married. Besides, I had a fairly clearly defined life in Iceland: I had my own small enterprise, which I managed, I had two children, a house… Yet, I said it right there to maestro Demetz: if I go there, I’m going to make it; I won’t to be fooling around, wasting my time. I knew that, at my age, I had to be ready to go on stage in two or three years. Also because, back then, there were no scholarships, no grants, no student loans, like today. When I decided to go, I sold my house, I loaned out my small enterprise for two and a half years, in order to see how things would have worked out, and for that time we lived off the little revenue coming from my small enterprise in Iceland. After two years and a half I felt like I was dying. Moreover, after just one year, it was pretty clear that my wife couldn’t cope: she and Italy didn’t get along with each other. Not to mention the Italians: she thought they were all mad!




NM. As an Italian expatriate, who left his native country for the quieter north, I may be able to understand her!


KJ. Yes, exactly: the quiet north! Well, eventually, she needed to come back to Iceland. And so the troubles started. I began having a little fun around and, in the end, our marriage went down the drain. Also, I felt that she wasn’t really backing me. As regards singing, we didn’t have the same perception of things. She thought that we were going to have some fun for one or two years and then we would move back to Iceland, where I would have kept singing, certainly better than I did before. I wanted more. After six months in Italy, it was clear that things were going well for me at the music school and, at least for a year, my work with Valdengo produced tangible results. I was already giving concerts around, taking part in semi-staged operas. It was the beginning of my professional life. I mean, after just six months, I had my debuts in La Traviata and La Bohème. The voice was good, in all the ways that matter: it responded well, I wasn’t fatigued, and the high notes were good, solid and bright. After a year, I thought it sensible for my wife to go back home, for she was stopping me, rather than supporting me. Still, it was hard.




NM. And your children?


KJ. Our elder boy stayed in Italy with me, studying in the schools there. He grew up in Italy and thinks of himself as Italian. Later on, he went to the University of Bologna. Our daughter, instead, followed her mother back home and grew up in Akureyri. They remain close to each other to this day. My wife and I tried to be reasonable and avoid their mutual separation, as well as being separated from either parent. Besides, my daughter came to Italy when there were school holidays in Iceland. As a child, she would sometimes travel on her own. She was a strong little girl back then; she is a strong woman today—my dear Barbara. It was hard, but that much my wife and I could understand: that we didn’t understand each other any more. I was determined. I was strong-willed: I wanted to be on stage and be good at what I was doing. Furthermore, after a year, right in the middle of all this family chaos and unpleasantness, I felt I couldn’t progress much more with Valdengo. He was too lighthearted, too cheeky, he wasn’t taking things seriously enough for my taste. Thus, after a year, when I kept being told that everything was going well, I could sense, almost by instinct, that I was still lacking much to be a real opera singer.




NM. What couldn’t Valdengo give you as a teacher?


KJ. He was an excellent listener and very helpful. Nonetheless, as I travelled around Italy and attended concerts, also at La Scala in Milan, I heard and understood that there were certain additional elements of my musical education that I had to acquire or improve considerably more. Above all, I had to become an artist. The voice is one thing, but to sing as an artist is another. To interpret the music well, to master the Italian language, to absorb the Italian culture and make it mine: I couldn’t do it there, in Aosta, with Valdengo. So I told him that I was going to study under a tenor in another place. He became furious with jealousy! Just think of this: after Christmas that year, I took part in, and won, the Maria Callas Award: I had a scholarship, an Italian scholarship, and a contract to sing in five performances of Madama Butterfly at the Spoleto Music Festival as Pinkerton. Valdengo was so mad with rage and jealousy that he wrote a letter to the ministry in Rome, complaining that they were a bunch of idiots, that they had awarded the prize to a hopeless case, who sang like a dog, and so on and on… He destroyed me. The scholarship was revoked and I lost my performances in Spoleto. He destroyed me out of jealousy. In the process, he also destroyed the friendship that he had with Demetz, who took upon himself the full responsibility of sending me to Valdengo in the first place. It was horrible. And yet, what could be a catastrophe turned out to be a lucky break. I went to Piacenza, at the Nicolini music school, where I got my BA, studying with Poggi. Also, I studied acting with Eugenia Ratti, a world-class singer that had performed all over the world, including La Scala and the Met, and that taught acting there. It was precisely what I needed: how to move on stage, how to interpret different roles, how to master and use the Italian language effectively, how to make the Italian culture my own and, above all, how to approach the different composers, understand them. I travelled to Tuscany, to Emilia Romagna, to “meet” with Puccini, Verdi, even Bellini down in Sicily. 




NM. Did you make many friends during your studies and your travels around Italy, people that helped you to absorb the Italian culture, or did you work primarily at the music school?


KJ. Under this perspective, I trusted and benefited from the music school, most of all. Also, in my profession, it is hard to make real friends. You are too much on your own. There is too much competition for that to be likely to unfold. Besides, you cannot rely on friends, even if you can make them. Still, there are exceptions, and I met at the Maria Callas Award a lovely man that has become a life-long friend, Maurizio Barbacini. But before I talk about him, let me say that, in those years when I was based in Piacenza, life went on rather well. I was singing frequently, there, in Bologna, Parma, at a number of opera societies, in Turin. My name was getting around. Life was nice. I met also a dear Hispanic-American woman, Doria Cavanna, whom I married in May 1983. Sadly, she died the 31 December of the same year. Another tragedy in my life. She was an amazing artist. Much more developed than me as an artist. I learnt so much from her. I tried to absorb all the suggestions that I could get from her, especially when she was on stage. She wasn’t only a singer, by the way. She had been an actress. She had made movies in America. She was a great woman and a great artist. Despite our time together being so short, it was a very healthy and important period of my life. Her death was a terrible blow. Yet, they say that suffering helps an artist to mature and evolve. There can be no joy without sadness; nor sadness without joy. An artist must understand both realms of experience. I paid a terrible price for that understanding, but, over that period, I did open up to acting and to theatre as art forms.




NM. As time went on, given what you are describing, it seems clear to me that you integrated well within Italian society and the local way of life. However, how much of that Icelandic farm boy that had travelled from Akureyri to Milan, Aosta and Piacenza was left within you? Was there anything that you deem quintessentially Icelandic that helped you face and overcome the challenges that you met?


KJ. Absolutely so! I grew up in a big family, seven children, I was second-from-last; I had to fight every time to get anything I wanted, nobody ever gave me anything for free; in this sense, I was tough and autonomous; whenever I liked to do or achieve anything, I knew that I had to fight, on my own, in order to get it. Therefore, even after the shocking way in which my relationship with Valdengo had concluded, the sort of thing that would annihilate a person’s self-confidence, I thought that I would succeed anyway; in fact I wanted it even more than I did before. He told me to go to hell? I will show him that I am a real devil. He told me that I wouldn’t make it? I will show him; I will make it! Nothing could discourage me. And this is very Icelandic: personal autonomy, self-sufficiency. I knew that I had to fight and I did it. Then, you know, in the end, that Maurizio Barbacini of whom I told you briefly before, he helped me too. Consider this: I was penniless, I had been repudiated by my former teacher, I was divorced; in fact, I had left everything to my wife: I thought it was right to do so—and I wanted to be a gentleman. I needed only my toothbrush and I wanted my freedom. Besides, I felt guilty, so, in the end, it seemed right that way. And this is how I actually left Akureyri behind me.




NM. You didn’t leave it for good, though. You kept in touch with Iceland, didn’t you?


KJ. Yes, every once in a while I came to Iceland, almost every year, singing in Reykjavik as well as Akureyri and, of course, to see my daughter. My son was with me, in Italy. My daughter was here, in Iceland, her family was here. In 1982, to tell you the truth, I doubted that I could go on, and started thinking about coming back to Iceland. Yet, here in Iceland, I had made friends, powerful friends, people with money, politicians. I wrote to one of them, I described in the letter my situation; I told them that I was penniless and that my predicament was really desperate; I told him that I had to tour around Germany for some auditions there, and that I was ready to do anything. I got some help in return. Not much, but enough to rekindle hope. You see, in 1981… 


Actually, going a little further back, in 1979-1980, I graduated with Poggi, and they asked me to take part in a concert in Mantua. There is a beautiful little theatre there, and it is there that I got lucky: at the piano was Ettore Campogalliani, a great musician, who for 25 years had been working at La Scala, a real giant in the world of music! He was there, at that concert, playing the piano for some of his students, who would later become some of the most important singers in the world. I sang for him both big arias from Tosca and was very successful. I also sang other arias, from La Bohème and other operas by Puccini, receiving great applause—the little theatre truly seemed to be crumbling down upon me with excitation! So I had an opportunity to talk to him. He was a real gentleman and a man of great culture, not only an accomplished musician, but a published author of many books as well. He was also a poet, and he taught at the university in Venice. Over dinner, I spoke to him candidly and explained to him that he could give me what I needed most. Almost everywhere else, included here in Iceland, the music scene was provincial. I say this despite having been born and raised in the theatre here in Akureyri. My house was near the theatre. My father worked there and so did my mother. At the age of two or three I was already in the theatre of my hometown. That was already a great advantage. I had already understood many things there then, but in Milan, at Campogalliani’s prestigious theatre, I could advance so much more!


I needed more culture. That was the point. He said to me: “I really liked you today. In Milan, at least fifty of the best singers in the world have come to me: Luciano Pavarotti, Mirella Freni, Katia Ricciarelli, Gianni Poggi, Carlo Bergonzi…” I couldn’t list them all! Renata Scotto and so many others! “However,” he said, “I normally require an audition, hence you will have to come to Milan and sing for me…  No! I’m joking! You proved your worth today: we can start our classes tomorrow, if you like.” So I went to him, and there was also Antonio Tonini, who was a good friend of his, and after two or three months with him he told me that, in Ancona, maestro Zino was going to stage Il Trittico by Puccini and that they needed a tenor, as usual! That’s how I got the job! Back then I knew well Rigoletto, La Bohème, La Traviata and I was preparing Lucia di Lammermoor. “Leave Lucia and study as Rinuccio in Gianni Schicchi“—that’s what he said. After a month, Tonini came to listen to me and told Campogalliani: “Let’s have him for Il Tabarro as well. He should do both, for there is no better singer—and we can save some money too!” This combination of roles is very rare, given that Il Tabarro is complex, deep and dramatic, while Gianni Schicchi is lyrical, even light, since Rinuccio’s role is very high [in the vocal register]. In May we go to the Marche for the rehearsals—and it was so beautiful! I had an enormous success in both roles.   I was the newcomer, though, hence I was not getting paid much: I was the last name on the list! Still, it was enough to survive. All these events happening in a rather short span of time. In Ancona, moreover, I met an Englishman, who was the director of the English National Opera. After listening to me, he decided to offer me the role of Pinkerton in Madama Butterfly at their theatre in London…




NM. From one thing to the next…


KJ. Yes. Life seems to move that way. This is also how I met, out of sheer chance, the great maestro Menotti. It was at a concert in Parma. We started talking together. He told me that he was disappointed not to have me singing for him, as Pinkerton, in Spoleto. Then, I had to explain to him what had happened, how an angry person had tried to destroy me, my reputation, my career. He replied: “Don’t worry. In 1983 you come to Spoleto and sing in a new edition of the Madama Butterfly. It will be an over-the-top one, I warn you now!”—Ken Russell, a real genius, was going to direct it… Menotti and I became friends that way. He was then the super-intendant of the theaters in Rome, where I spent eventually 20 years as a regular performer, singing in all the big roles: Tosca, Il Trovatore, La Gioconda, Manon Lescaut.




NM. 20 years, during which you inaugurated with Il Trovatore the newly built opera theatre in Genoa, in 1992, as the city celebrated the 500th anniversary of Christopher Columbus’ first voyage to the Americas.


KJ. Exactly. The theatre Carlo Felice in Genoa. It was 500 years since the “discovery” of the Americas and 50 years since the destruction of the old opera house, which the Brits had bombed during World War II. I remember it very well.




NM. Yes, that is true, only the wing to the east had survived the aerial bombings and is still visible today. The rest is new—so new that it had sparked some controversy…


KJ. What a theatre! And what an occasion! Singing in one of the best roles Opera can give you. It was a remarkable experience. I recall the actual theatre, which is sort of inside-out, for it is meant to give you the idea of singing in a medieval square, like those you see in the old part of the city, which is just nearby. When I saw it, I said to myself: “It is true what they say about the Italians [that they are all crazy!]”. I found it very strange, but, at the same time, very interesting. It was something daring and novel. A stroke of genius, I would say.




NM. Verdi’s Simon Boccanegra is said to be the best opera ever staged in that theatre, for it is possible to create the illusion of being in medieval Genoa, given the subject of the opera and the look of the theatre.


KJ. It’s true. Singing in a medieval square! By the way, I sang also La Gioconda and Rigoletto in that theatre. Somehow, 1992 was the year of my “explosion” as an international tenor. I started singing regularly in Britain as well, which lasted over a period of ten years.




NM. And what was your relationship with Iceland at that point of your career?


KJ. I was far away, very much. The sense of separation ran deep. Also, I was being mocked back home, they said that I had gone to Italy to become the new Caruso… Some rascal, I mean… But I took it mostly as a bit of fun. 




NM. You had also Icelanders that supported you, though.


KJ. Yes, certainly. Valur Hafþórsson, the head of KEA, had sponsored me. So did the Town of Akureyri. Not huge sums of money, but enough to make life easier. Above all, I knew that I had not been deserted. They were beside me. They supported me. Nevertheless, I felt distant. I was the first young Icelander to go to Italy in 25 years. After the war, in the 1950s, a few went to Italy to study, without great results. Then, nobody else. Even today, far too few Icelanders go to study in Italy. I cannot understand why. Italy is the cradle of civilization, the cradle of culture, the cradle of Opera. Why are they going elsewhere? Why London or the US? It’s all second-hand there!




NM. Do you think that in Italy there are still the best opportunities for opera singers? The best schools?


KJ. Yes, I do. Absolutely. I am certain of that. Also, think of this fact: while we are sitting and conversing here, today, there are literally thousands of concerts and operas being performed worldwide. More than 70% of them are either Italian or in Italian. Then, what’s the point of studying elsewhere? The main reason why I don’t do German Lieder is that I cannot speak German very well. A singer must have a high level of competence in the languages he wishes to sing in. Now, if more than 70% of the classical singing going on in the world is in Italian, then it is simply logical that anyone interested in opera singing should acquire a high level of competence in the Italian language. You cannot get that in London, Vienna, New York. You can only get that in Italy!


Also, let me add a few words on Maurizio Barbacini, whom I met at that Callas competition of which I was talking to you before. He sang back then and also played the piano very well—a gifted musician. I had him joining me in Iceland for some concerts, conducting the national symphony orchestra. We issued a record together too. Now he is often in New York and Vienna. A great pianist and a man of great musical culture, especially Italian opera. I would consult with him very often in those days, even if his career was not yet blossoming, for I trusted his judgment. He always had great insight in musical matters. Well, I was waiting before commencing at La Scala, which had hired me, but, as you know, theaters have often many-years plans to run through, meaning that, like with the Met, I sang for them in 1986 and then walked on stage in 1990! Well, I met with Barbacini. We conversed, had some fun, did some music together. And then he said to me: “Why do you take on these roles, which everybody else can take too?” He was referring to high lyrical roles in Rigoletto, La Bohème, Tosca, possibly the toughest one among them, La Traviata, some Bellini, like La Sonnambula and I Puritani—I had always very solid high notes, which are de rigueur for that kind of repertoire. He continued: “There must be at least three or four other tenors out there that sing these roles as beautifully as you do. But I know you, your vocal capacity, your temperament, your strength, both of will and of body: you must sing those parts that nobody else, in this day and age, sings really well. Those parts for which you cannot find really good tenors, apart from Luciano [Pavarotti]. He’s the only one.” It was an excellent idea. Also, I had noticed my own mental and physical development over those years, which was calling for something new in my career. Someone once told me that no idiot has even sung well!




NM. An interesting motto…


KJ. One must think about the roles he chooses, the possibilities available in the repertoire and in the theaters, selecting the place and the moment with some wisdom. It is not enough to just go on working, relentlessly. Thus, it was the mid 1980s, I started studying for Verdi’s Un ballo in maschera, which I knew would have been performed in Iceland, with me in it, the following year. Then I started studying Giordano’s Andrea Chénier, for which I had received an informal offer from Florence, with Bruno Bartoletti conducting it. Meanwhile I had sung Tosca in Florence with Zubin Mehta, and it was very successful, at least as much as my Trovatore in Genoa. In between I sang the Gioconda and, in Turin, Il Trovatore. So, I had the Tosca in Florence and Il Trovatore in Turin: I was going back and forth between the two—what a mess! But I was young, lustful and strong! Up to 80 concerts a year! Barbacini was right: with these operas, my strong voice, my will and my wisdom, I must say—I had always 20% of my voice in my pocket, so to speak, for 80% of my strong voice was more than enough, while other colleagues in the same roles would have to push 100% all the time—it could be done. Theatre directors were happy with a singer like me. They long for stability, reliability; they don’t want to worry about whether the lead tenor will make it or not. I had this surplus of vocal strength that they could rely upon. Therefore they were happy to offer roles to a madman like me: “You sing better when you are sick than when you are in good health”, one of them told me once! My friend Barbacini was right: I knew more roles, I was known as reliable, there was now one of these roles available in Vienna, then another in New York, and then yet another in Florence…




NM. You expanded your repertoire and established your career.


KJ. Precisely. And I was always cautious in deciding my next move. I didn’t rush forward. I thought things through, paying attention to the health of my voice, never pushing too hard. I must concur with the adagio: no idiot has ever sung well! You may have a golden voice, but without wisdom you cannot go anywhere!




NM. Let’s get back to Iceland…


KJ. Yes, well, in the late 1980s there was Sigurður Björnsson, conductor of the national orchestra, which was a bit boring, to be frank. They took themselves far too seriously. They didn’t care for Opera. They cared for pure music, especially contemporary, which is good, but to a point. One should never forget what Karajan used to say about orchestras: the best ones play regularly in operas, meaning Vienna and Berlin, for the players must listen to the singers, pay attention to what is going on, following the artists on stage. Sigurður wanted to change this and he did change it, fighting and making use of me in this direction. It was a big bet—on a real racing horse, though! We staged many operas, also semi-staged ones, and there was no year in the two following decades when I didn’t sing something in Reykjavík. Needless to say, many local colleagues became very jealous! His wife, a fantastic soprano, with whom I had debuted in 1981 in La Bohème, was a good friend of mine. We were the best singers in the country. It is as simple as that. But then I could start hear people gossiping about us, spreading lies, being nasty. Now, I am no angel by any means, but things were being twisted and blown out of proportion… All this made me feel more and more separated from Iceland.




NM. Why coming back, then?


KJ. After singing for 30 years around the world as one of the best three or four tenors in the profession, facing also envy and gossip on your own, you become very self-centred. But the world doesn’t spin around you. In 1985, during the rehearsal for Un ballo in maschera, I met the woman that became my wife, with whom we will soon celebrate 30 years together. She was younger than me, a stage actress, I fell madly in love with her; and she with me, fortunately! Everything worked out well. There was something in her that my second wife also possessed: they were women of great culture, educated, and cosmopolitan. I had been alone for two year. Suddenly, thanks to her, I felt inspired again: I could receive so much from such a talented artist.  And she understood me. She came with me to Italy without any qualms, She had been abroad herself: 10 years in Norway. There was no uprooting. Nothing radical. She was cosmopolitan. She liked that kind of life. In Iceland, an artist’s life is very hard. Artists are paid poorly and, at times, treated poorly. People expect them to be available to act, sing or play, but they are flabbergasted if then the artists ask for money in return. And what they get is very little anyway. Thus the overall level of artistic life in the country, and I am talking about the widespread mentality not the artistic quality, has been condemned to provincial mediocrity.




NM. Haven’t things changed over the past 10-15 years though?


KJ. Yes, they have. And I think I played a role in this change. I insisted to be taken seriously and so all artists with and like me. It is fine to have amateur singers or artists that win their bread in a different way, but you also need people that go past that stage and turn their art into a career, a profession, a life. A life that can take you around the world: we lived for almost 10 years in Monte Carlo, we travelled regularly between Italy and the US.  And we had kids…




NM. That changes things, doesn’t it?


KJ. Yes, I used to joke about the fact that I led a better life than Onassis: travelling worldwide, singing in the best theatres, being famous, wealthy—and always with my family! But then the kids started growing and they had to go to school… As a result, my wife started being less mobile, while I travelled more and more often on my own; then she got seriously ill—now everything is fine, thanks God—and I was constantly worried for her while abroad. All this didn’t go down well, with her especially. She wanted to change things, for herself first of all. As for myself, I had had my shot. Thirty years on the top of the world, so to speak. Now she wanted, she needed, to think more about herself. And I understood that very well. After receiving so much from my family, I had to give back to them. So I slowed down, moved back to Iceland and began to teach on a regular basis, while she went to the university in Reykjavík. Meanwhile, I spent more and more time with the kids; she completed her first degree, got a Master’s degree… Now she earns more than I do! And that is just great: we are ready to face the future together. But be sure about this: I still love being, and I think I am still loved as, a man of music. In fact, I hope to die on stage!




NM. And what would you say of yourself as a teacher?  


KJ. I do my best to coach as many young voices as I can. Just few weeks ago, at the opera house in Reykjavík, there was Verdi’s Don Carlo: 8 singers were former students of mine. Some people acknowledged this fact; some didn’t… I am saddened, to tell you the truth, about the way in which Icelandic music schools operate. They are too relaxed, too lenient. Students approach their courses as some kind of fun or entertainment. I have always thought of education as something more than that. Getting an education, enriching your culture, pursuing a study line are meant to take you to some higher or deeper place—a stage at least! It is not just a bit of fun. I teach differently than most of my colleagues. I make demands.


Also, there are too many music schools in the country, which are starved of students, since these are never enough for all of them, hence the schools are always on the verge of bankruptcy, which reduces dramatically the scope for teachers to make demands on the students. Ten music schools, two for singing, would be enough in Reykjavík: there are 19 now! All are competing for the same funds. Fewer, better poles—that’s what we need. As long as the funds are not reduced, then they could be distributed among the fewer schools, which could then hire teachers as needed and increase the level of musical education in the country. Icelandic taxpayers pay about 65% of the cost of advanced students in music schools: the students should ponder upon this fact and behave more seriously, taking their studies more seriously, working much harder. On my part, I try to teach the way it is done in Italy: you pay more to study with me, but you get more hours, both with me and the piano accompaniment, and you are expected to do all that is required, such as music theory, etc. You are to be prepared as an artist. And I am much harder than my colleagues. You cannot spend five months studying one aria! And I can get very angry: sometimes I give the students a dressing-down. They accuse me of being mad, but mad are those students that do not study: they have the opportunity, the general population pays for much of it, and they are registered as students. Why on Earth should they consider studying as a discretionary option, then? If you are a student, then you study. It is that simple! 

A personal memoir by Róbert R. Spanó


It has always been a big part of my self-image to be “half Italian and half Icelandic”, although not in a negative way; quite the opposite.  I have always been proud of my background and have often wondered if and to what extent it has moulded my personality. Growing up I always felt a bit different from my “pure” Icelandic friends, in a subtle way, perhaps a bit more extrovert at times, certainly a loud and rather gregarious person; all in all classic stereotypical Italian characteristics. But for personal reasons my sisters and I did not cultivate strong ties with Italy initially. Later, my older sister and I have begun a pilgrimage of sorts, attempting to contact our relatives to the extent possible.


In my view it is important for those persons that have multicultural roots to attempt to understand from where they come from, as it is clear that one will better understand oneself in that way. Fortunately, I have not, directly, suffered prejudice during my life, due to being “half” Icelandic, despite having lived most of my life in Iceland. However, I could describe many amusing anecdotes that are related to my family name, which is certainly not a common one in Iceland. One of my favourites comes from the time when I worked as a Deputy Judge in the District Court of Reykjaness. I presided in a case where I had to appoint assessors in a real estate dispute. I later heard that one of the assessors, during an examination of the real estate in question with the parties to the case, read aloud from my court order appointing him for the job. Slowly he began by stating that in the District Court a hearing was held by… and then he paused, clearly having problems with the name of the judge, ending up by saying: “… held by Róbert R. Shampoo deputy judge”!


Currently, I work in a very international setting as a judge in the European Court of Human Rights in Strasbourg, France. In the Court, almost 700 staff members from all over Europe work together in a very interesting and collegiate atmosphere. I have already felt that my international background is an immense asset in this environment for many reasons. Firstly, having lived abroad myself when I was younger, both in Canada and in Italy, makes it easy to identify with others, their differing viewpoints on various issues and on the way they approach certain problems based on different starting points. Secondly, I have been very fortunate to work closely with my good friend and colleague, the Neapolitan Guido Raimondi, one of the Vice-Presidents of the Court and the judge elected with respect to Italy, and all the wonderful Italian lawyers in the Court. This experience has brought me closer to home, so to speak. I can converse with them in Italian and have dealt with many Italian cases for which I am, happy to say, well equipped.


I have four wonderful children, my foster daughter Rán, Karítas Diljá, Egill and Atli. They all have very Icelandic names and, with the exception of Karítas Diljá, they are light-haired and bluish-eyed like their mother, my wife, Arna Gunnarsdóttir, a very talented artist. My older sister, Ásdís Mercedes, is also an artist and a mother of two lovely boys. Unfortunately, Ásdís and I have not been very effective in teaching our kids about their Italian heritage, but hopefully that can be amended in the future.


Last summer my wife and I travelled to the Amalfi Coast to spend a week hiking in the hills, starting off in Ravello and ending in Positano. As I walked through the streets, sat in the cafés, ate pasta and pizza in the restaurants and drank some great red wine with my wife in the evening, I felt at home. It has always been like that, I think: living in Iceland, but sensing, to some extent, that I also have another home, far away to the south. It is a comforting feeling!

Icelandic Journalists & the Question of Professionalism

Characteristics of a profession

The conditions that an occupation must satisfy in order to count as a profession can be debated although certain elements seem well established as parts of any definition of the concept of a profession. We will approach this topic by considering first the related, but distinct, concept of professionalism and then turning to the concept of a profession.

Continue reading Icelandic Journalists & the Question of Professionalism

Papers from the NSU Summer session of 2014 – study group 3: “Crisis and Crisis Scenarios: Normativity, Possibilities and Dilemmas”


The general theme of the meeting was CRISIS: Crisis and Crisis Scenarios: Normativity, Possibilities and Dilemmas. In addition we had the special theme Neoliberalism, Economic Crisis and a New Economy.


The general discussion was a continuation of the work of the crisis study group on topics such as: the concept of crisis; democracy in crisis: the European Union and the public sector; crisis, existence and culture; Arctic crisis, climate change and environmental issues; crisis, paradoxes and new technology; globalization and crisis.

  Continue reading Papers from the NSU Summer session of 2014 – study group 3: “Crisis and Crisis Scenarios: Normativity, Possibilities and Dilemmas”

The Crash Course from Iceland

I. Preamble

In October 2008 dramatic events unfolded in Iceland when it became apparent that its economy could no longer sustain the sensational economic growth the country had experienced in the previous years. To most of the public the news of the downfall came as a frightening surprise. The country’s banking sector, which had led the growth of the economy and expanded to over ten times the gross domestic product (GDP) in a short time span, collapsed almost completely. Nearly all of the largest companies in Iceland were owned by the notorious financial Vikings, who owned the controlling shares in the oversized banks. Iceland’s crash was in part so drastic because of the unhealthy cross-ownership of companies and banks. As a result, share values in the country’s stock market were nearly erased. Iceland’s independent micro-currency, the Króna (ISK), that had attracted a lot of foreign hot money seeking high returns during the boom, was all of the sudden in free fall. Unemployment, which was unheard of during the boom (1%), went all of the sudden to 9% and some analysts worried that it could spiral upwards even more as events unfolded. The instability was underlined with interest rates and inflation moving upwards to a staggering 18 per cent and GDP predicted to fall around 10%.[1]

On the streets people were angry and wondered: How had it come to this? Everything was in tatters. Nothing captures this as well as the story of Landsbanki, traditionally a State-owned bank, which had functioned as a cornerstone of Iceland’s economy since 1885 and played a part in the country’s road to independence in 1944. Under State ownership the balance sheet of the banks had remained for decades modest in relation to GDP and yet stable even though the country did experience some turbulent times. Iceland’s economy is massively reliant on fisheries and the bank had seen difficulties when fish stocks suddenly fell or even when whole stocks like herring disappeared completely. External factors like two World Wars and the Cod Wars against the British did also have their impact. In 2003 the bank was fully privatized in an attempt, as the politicians of the day would phrase it, ‘to unleash the powers of the free market’, which is precisely what happened. In the years from 2003-2008 Landsbanki, under their new ownership, managed to expand its balance sheet from under 50% of GDP to over 250% of GDP, when it eventually collapsed. Such massive expansion was also experienced by the other two main banks, Glitnir and Kaupthing, whereas the banks not only expanded in Iceland but led an outvasion in acquiring huge assets and leading ventures abroad. This was duly felt in the United Kingdom where the financial Vikings grabbed headlines with investment in known brands on the high street as well as English football clubs.[2] One of the main owners and chairman of Landsbanki, Björgólfur Thor, made a trademark oligarch move and bought West Ham United in 2006; he became chairman in 2007, until he lost the club after the crash in 2008. This event raised eyebrows since, given the size of Iceland’s economy, the room their businessman were taking in the UK and elsewhere was considerable.

The country asked assistance from its Nordic neighbours and the International Monetary Fund in order to stop further deterioration of the economy and avert a total collapse. Not only did Iceland face a banking crisis, but also a currency crisis and a huge economic crisis. Politicians in other parts of Europe, where dark clouds were gathering overhead, stressed that although they might have problems of their own, at least they were definitely not Iceland. Such voices have now been silenced, since the country has experienced a remarkable turnaround in economic terms. In August 2011 the country completed its successful IMF programme and the fund concluded that key objectives had been met and the government had stabilized the economy. Growth resumed with numbers that many troubled countries in the Europe would give a lot for (2,7% in 2011, 1,5% in 2012, 3,3% in 2013). The budget deficit was turned into a surplus, unemployment was reduced to 5% and continues to fall, interest rates went down by 12%, inflation was maintained at under 4%, the currency was stabilised albeit under capital controls. Growth for 2014 is predicted to be 3,7%.

Although several economic problems remain, the country has emerged from its deep crisis. New banks were successfully resurrected that are dwarfed, however, in comparison with the monsters that emerged during the financial Vikings’ era. Both private and public debt stabilized and is on a downward trajectory with the sovereign successfully entering capital markets again in 2011. Iceland’s economic crash and recovery has sparked huge interest in this tiny economy of 300.000 inhabitants, which managed banks whose bankruptcies are among the largest in history. The before- and after-crash tale is dramatic, full of surprises and extravagances.



II. Success stories

The success stories told of how Iceland bounced back from its near-death economic experience are many. Here is an example of something I have in mind:  

In contrast, Iceland avoided a public health disaster even though it experienced, in 2008, the largest banking crisis in history, relative to the size of its economy. After three main commercial banks failed, total debt soared, unemployment increased ninefold, and the value of its currency, the krona, collapsed. Iceland became the first European country to seek an I.M.F. bailout since 1976. But instead of bailing out the banks and slashing budgets, as the I.M.F. demanded, Iceland’s politicians took a radical step: they put austerity to a vote. In two referendums, in 2010 and 2011, Icelanders voted overwhelmingly to pay off foreign creditors gradually, rather than all at once through austerity. Iceland’s economy has largely recovered, while Greece’s teeters on collapse.[3]


There are various versions, but what they have in common is that they attribute success to the fact that Iceland did not bail out the banks. Some of them thank not the people for halting a bank bailout, but the government at the time. From this supposed fact Iceland did not have to impose austerity policies that are thought to have had a further negative impact on crisis-ridden countries such as Portugal, Ireland, Italy, Greece and Spain (PIIGS). In Iceland policy-makers seem to have escaped an IMF bailout package conditionalized upon imposing austerity and recapitalized oversized banks with toxic assets. [4] This in turn is given as an explanation as to why Iceland experienced a rapid recovery while the other countries, especially Greece, have seen very little progress.

I think there is a need to urge for caution in comparing economic crises of different countries. Greece and Iceland had very different problems leading to crisis. Greece did not have a banking crisis like Iceland and Iceland did not have a public debt crisis before the crash like Greece. Ireland had a banking crisis like Iceland, but the former has the Euro as currency and the latter the independent Króna. Putting to one side the need for caution in these circumstances, then this Icelandic saga of a heroic escape from the bad banker is just a myth and lacks any factual basis. Iceland attempted a bank bailout, but it failed, and the cost of the Icelandic crash has been considerable both in economic and social terms. Although Iceland escaped better from the circumstances than many had envisaged, the impacts of them are still being felt.



III. The mini-crisis of 2006

The tragedy in the Icelandic case is that so much harm could have been averted if the authorities had only taken measures in a mini-crisis, called the Geyser crisis, that hit the economy in 2006. Analysts, especially outside of Iceland and most notably from Denmarks Danske Bank, gave out warnings that Iceland was heading for disaster as its banking sector was seriously unstable.[5] This is what economist Gudrun Johnsen calls the ‘missed opportunity’ for Iceland and points out that, rather than taking this criticism to heart, domestic politicians and bankers responded to it by shooting the messenger. They maintained that the analysts had ill intentions as they were in competition with the banks or that they did not understand the Icelandic banking miracle. So, instead of reviewing the fundamentals of the financial system and asking questions about the direction of the banking outvasion, all the wrong lessons were learned from the Geyser crisis. Bankers and politicians agreed that in order to correct the misperceptions over the banks, a PR campaign was needed as well as a restructuring of how they financed themselves so that they could continue to grow. The bank managers saw that they could not only rely on the international bond market, as the view was getting more commonplace that all was not fine in Iceland. Funding was getting harder and more expensive by the month, which these heavily leveraged banks could not withstand. Most notably, this meant the banks moved into introducing high-interest-rate accounts. Landsbanki, for example, introduced the now infamous Icesave online accounts out of their branches in the UK and the Netherlands. It managed to accumulate billions of pounds in deposits in just over a year. However, when the accounts became unavailable due to the collapse of the bank in October 2008, the UK authorities used anti-terrorism laws to freeze all Icelandic assets on UK soil, sparking a hefty row between Iceland and the UK that ended before the EFTA court in 2011. In 2013, however, the EFTA court came to an interesting verdict, acquitting the Icelandic State of any claims made by the UK and the Netherlands to reimburse them for moneys paid to depositors of the failed branches of Landsbanki. Rather, the UK and Dutch insurance deposit schemes stand to get reimbursed by the winding-up process of the failed bank but, importantly, the Icelandic State is not liable.



IV. Contingencies

After the 2006 Geyser crisis, the banks did not only change their strategy and turn to the pockets of depositors. In addition to accumulating deposits, the banks manipulated their access to the Central Bank of Iceland and the European Central Bank for funding when international markets closed on the Icelandic banks. As Johnsen notes, ‘[i]nstead of using their existing asset portfolio (which was depleted), they issued new unsecured bonds in the domestic market at a favourable rate, then colluded on exchanging these bonds among themselves. Another bank could then use them as collateral against short-term lending from the Central Bank’.[6] Or to put it simply, the banks were taking money out of the Central Bank in exchange for IOU tickets they had exchanged among themselves. These tickets became known as “love letters” in Iceland. In effect, they were printing money, and on a massive scale. One of the results of this is that the Central Bank of Iceland became de facto bankrupt, with losses estimated at 11.1% of GDP, which is another peculiarity of the Icelandic case.[7] A court case is currently ongoing in Iceland where the CEO’s of Kaupthing are charged for financial transactions and loans made in the final weeks leading to the crash. Part of the money used in those transactions, 500 million Euros, was a large portion of Iceland’s currency reserve loaned to the bank by the Central Bank of Iceland.


The years between 2006 and 2008 are key in understanding the Icelandic case. One of the main questions one gets when discussing the lessons from Iceland is: Was the quick recovery due to how the country ‘burned’ the creditors? Myth has it that when things got tough for the banks, the Icelandic government denied to bail them out and the country therefore escaped the difficult long-term consequence felt by, for example, Ireland. But that is a serious distortion of what happened. The Icelandic banks were on Central Bank life support from 2006 to 2008. After the Geyser crisis, the banks got the funds needed in order to continue their ventures. Paradoxically, what turned out to be Iceland’s luck in the circumstances was that heads of other Central Banks did not abide to the demands of their colleague in Iceland, Davíð Oddsson, for a loan to continue funding the banks. In all actuality, it turns out that it was the Icelandic authorities that were the last to spot the ill health of their own banks. In a response to a letter from the Governor of the Bank of England Mervyn King, where he proposes the need for a downsizing the banking system and that more funds are not what is needed, Mr. Oddsson writes:

The Icelandic banks are well capitalized but they are dealing with a problem of perception. The signals we receive from the markets are that a swap facility for the Central Bank would contribute immeasurability to the alleviation of the problem. I hereby kindly ask you to reconsider this matter.[8]


Mervyn King did not reconsider nor did any other Governor of a Central Bank in Europe, which then meant that the authorities, out of necessity, had to switch to plan B i.e. to split up the banks and make them go into administration. For admirers of historical contingences, this case is a treat. Iceland did not take a calculated decision to let the banks fail, but an attempted bail-out failed. This meant that that its tackling of a banking crisis took an unexpected turn, as banks were put into a winding-up process, a move only considered in the face of failure. If drastic measures against the banks had been taken in 2006, then Iceland would offer a role model for averting crises. But then an interesting political question arises. The banks fuelled sensational growth. What politician would stop the promoters of such growth and who would vote for him? And in a political climate of complete confidence in the self-regulation of markets, the role of regulators gets very small.



V. Iceland’s bad/good bank move

Iceland’s bank manoeuvre has received a lot of interest because it deviates in important ways from the current orthodoxy in crisis response in Europe, where the argument for a bank bail-out is the standard. The recipe needs mentioning. In response to the crisis, the Icelandic Parliament passed emergency laws in 2008 that gave the financial services authority (FME) the tools to take drastic measures and intervene in the financial market. An important part of the legislation was to give all depositors (wholesale and retail) priority status over other creditors such as bondholders. On this basis domestic deposits were moved into new banks that received a capital injection from the State and assets and loans from the old banks matcing the deposits. The failed banks were then put into administration, which makes this a good/bad bank split. And even though Iceland did not deliberately choose this route, it turned out to be beneficial, which proves an important point that alternatives to bank bailouts are possible. One should also note, however, that the good bank / bad bank move is based on sound principles that are sadly overlooked by policy-makers in Europe. If the State finds it necessary to salvage a financial institution, then State funds should only be allocated to such bail-outs provided that the assets of the financial institution are sound and important for the functioning of society. Rather, it may be sensible to seize the opportunity to minimise risk by downsizing the banks and eliminating toxic debt. A bank that faces default is doing so for a reason and the government needs to ensure that it is not throwing good money after bad money. The argument that banks should always receive tax-payer money because of systematic importance and contagion fears should not be accepted as a wholesale argument. The State does not of necessity need to bail out the banks in the exact shape they are in when they seek assistance.


So, although Iceland stumbled upon the correct route eventually, the attempt to sustain the banks since 2006 became immensely costly. Despite the much-praised route taken by Iceland, the total cost of the economic crisis for the State has surpassed Ireland’s, which was thought to be the very bad case, in terms of GDP (Ice 70% Ire 60%).[9] The most recent IMF report discusses this surge in debt and estimates it for Iceland even higher than previously assumed, stating that ‘the collapse of the banking system led to an increase of Icelandic public-sector debt to almost 100 percent of GDP’.[10] The reason is that the pure size of the banking system was such that even though a late good/bad bank manoeuvre rescued Iceland from complete economic annihilation, the crash remained immensely costly for the tax-payer. But there are also important caveats to stress here. The fiscal costs are in part caused by the refinancing of the new banks. A lot of the increase in public debt is due to establishing an adequate foreign reserve of currencies to support the Icelandic Króna. The State also recapitalised the new banks and so the majority of the financial sector is now largely owned by it. And as Iceland’s economy is growing again, the assets of the banks are improving and the State will in the future be able to receive considerable revenue from the banks to repay its own capital contribution. Hopefully, it will all be repaid in full and with interest, which would make up for some of the costs of the crisis. Nevertheless, Iceland did not miraculously escape the crisis; although its recovery has been positive.



VI. Emerging from crisis

There are many factors that explain Iceland’s emergence from the crisis. Economists would point to the stabilizing and downward path of private and public debt and stabilization of currency, which brought down inflation. Another peculiarity of the Icelandic case is the introduction of capital controls in an IMF programme, which helped stabilize the currency. Some would point to how the depreciation of the currency helped hasten the recovery for an export-driven economy. But keeping in line with the peculiarities of the Icelandic experience, I want focus on other factors that I consider pivotal in its recovery. Bergmann notes that in terms of the recovery, a key component of it was that it was welfare-orientated.[11] One of the main aims of the government was to do as much as it could to protect Iceland’s Nordic welfare system and the consolidation measures implemented after the crash were based on social principles.[12] Cuts in the budget were curtailed to shelter the most important elements of the welfare structure. To meet the rising costs of such a social protection scheme after the crisis hit, in addition to falling revenue, considerable tax reform was introduced. An increase in income tax on the highest wages was introduced instead of a flat rate. Capital and corporate income tax rates were raised, new special wealth taxes and a bank levy introduced, environmental and carbon emission taxes launched. The capital controls also helped by preventing capital flight once they were set in place and they also retained the assets of the creditors of the failed banks. A special resource rent tax on the export-driven fishing industry that targeted substantial increases in profits resulting from the depreciation of the Króna was introduced. This and running a deficit to fund certain social programs necessary to soften the impact of the crisis were important in achieving economic progress. For example, in 2011 and 2012, 1% of GDP each year was used to subsidize interest rates to indebted households and a special social stimulus package was introduced in 2011 which increased wages and benefits. Both the IMF and OECD have pointed to this social emphasis with the latter claiming that “[c]onsolidation policies appear to have been designed in an overall equalising manner.”[13]


As a result Iceland was the only country within the OECD where the average income of earners at the top of the scale fell more than that of those at the bottom of the scale. During the boom inequality increased significantly, making Iceland an interesting test case for the debate surrounding Professor Thomas Piketty’s claims on wealth inequality and the development of capitalism.[14] But in tackling the crisis, socially just principles contributed to Iceland’s recovery. The Icelandic authorities were terrified of the prospects of a double-dip crisis which could have easily become the reality if funds were not redistributed through the tax system and social protection shielded from cuts. Strong moral arguments support such an approach, as measures should focus on getting the whole of society through the crisis and not just financial institutions, but they are also economically sensible. The focus should be on maintaining as much as possible the purchasing power of low- and middle-income groups. A counterproductive move would have been to cut unemployment benefits when it peaked, in the name of cost-cutting, and then introducing extra costs in areas people highly rely on, such as education or health services. Austerity not only hurts the individual who lost his job, but also the community that relies on him as a consumer, as his diminished income needs to pay for public services he previously did not have to.


The Icelandic boom, bust and recovery story offers a fascinating study for policy-makers, journalists, academics or just anyone interested in understanding financial crises. The big question is whether Iceland can offer any lessons to other countries that face a crisis. I think the verdict is mixed. There are lessons in the failures leading up to the crisis and in what made the country emerge from crisis. It is right to stress that every country faces a different set of circumstances, even though they are all lumped together as countries facing economic crisis in discussions on “crisis”. But maybe the most important lesson from Iceland is that when tackling a crisis there are always more possibilities available than are usually laid on the table. Even when facing serious consequences, taking the unexpected route is not so disastrous.





Baruchello, G. (2013a), ‘The Picture—Small and Big: Iceland and the Crises’, Nordicum-Mediterraneum, Vol. 9, no. 3, available at: http://nome.unak.is/nm-marzo-2012/vol-9-no-3-2014/73-conference-paper/480-the-picture-small-and-big-iceland-and-the-crises


Bergmann, E. (2014). Iceland and the International Financial Crisis: Boom, Bust and Recovery. Palgrave Macmillan.


Byrne, E. & Thorsteinsson, H. (2012):‘Lessons for Ireland from Iceland’s financial crisis?’, in Lucey, B., Larkin, C. & Gurdgiev, C. (eds): What if Ireland Defaults?, Dublin, Orpen Press, pp. in press.


Halldórsson, Ó.G. & Zöega, G. (2010): Iceland’s financial crisis in an international perspective. Economic Institute Working Paper Series W10:02. Reykjavík, University of Iceland Economic Institute.


Huijbens, E. & Thorsteinsson, H. (forthcoming): Maintaining welfare in the wake of collapse – the case of Iceland‘. Geografiska Annaler B


IMF (2011): ‘Iceland’s Recovery – Lesson and Challenges’ The International Monetary Fund, 27th October, retrieved from: http://www.imf.org/external/np/seminars/eng/2011/isl/index.htm, 9th November 2011.


IMF (2012): Iceland 2012: Article IV Consultation and first post-program monitoring discussion. Washington, D.C., International Monetary Fund.


IMF (2013a): Baltic and Icelandic Experiences of Capital Flows and Capital Flow Measures. Washington, D.C., International Monetary Fund.


IMF (2013b): Fiscal Monitor April 2013 Fiscal Adjustment in an Uncertain World. Washington, D.C., International Monetary Fund (World economic and financial surveys, 0258-7440)

IMF(2014): Iceland: Fourth Post-Program Monitoring Discussions-Staff Report; Press Release; and Statement by the Executive Director for Iceland. Washington, D.C., International Monetary Fund. .


Johnsen, G. (2014). Bringing Down the Banking System: Lessons from Iceland. Palgrave Macmillan.


Lane, P. R. (2012). The European sovereign debt crisis. The Journal of Economic Perspectives, 26(3), 49-67. Chicago


Karanikolos, M. (2013) et al. “Financial crisis, austerity, and health in Europe.”The Lancet 381.9874: 1323-1331.


Konzelmann, S. J. (2014). „The political economics of austerity“. Cambridge Journal of Economics, 38 (4): 701-741


Loftsdóttir, K. (2010). The loss of innocence: The Icelandic fnancial crisis and colonial past. Anthropology Today, 26(6), 9-13.


Magnússon, G. (2010): Lessons from a small country in a financial crisis or Dr. Minsky and Mr. Ponzi in Iceland. Economic Institute Working Paper Series W10:03. Reykjavík, University of Iceland Economic Institute.


OECD (2011): OECD Economic Surveys: Iceland. Paris, OECD.  


OECD (2013): Crisis squeezes income and puts pressure on inequality and poverty. Paris, OECD.  


Ólafsson, S. and Kristjánsson, A.S. (2012): Skýrsla I: Umfang kreppunnar og afkoma ólíkra tekjuhópa [Report I: The scope of the recession and returns to different income brackets]. Reykjavík, University of Iceland Social Research Centre.  


Thorsdottir, T. K. (2013). Iceland in Crisis. Women and Austerity: The Economic Crisis and the Future for Gender Equality, 102.


Piketty, T. (2014). Capital in the Twenty-first Century. Harvard University Press.

Wade, R. and Sigurgeirsdóttir, S. (2010): ‘Lessons from Iceland’, New Left Review, 65: 5-29.


Wade, R. and Sigurgeirsdóttir, S. (2012) “Iceland’s rise, fall, stabilisation and beyond.” Cambridge Journal of Economics 36.1: 127-144.



[1] For an overview of main economic indicators before and after crash see IMF 2011, 2012 & 2014 and Halldórsson & Zöega 2010.

[2] Financial Vikings are discussed in Loftsdóttir 2010 and see Baruchello 2014 for discussion on the neoliberal ethos during the boom years.

[3] Stuckler & Basu. “How Austerity Kills”. New York Times. May 12, 2013. See also Karanikolos et. al. 2013 and see discussion in Byrne & Thorsteinsson.

[4] See Lane 2012 on crisis packages for European countries especially p. 57-59. On the history of the idea of austerity see Konzelmann 2014.

[5] Christensen 2006

[6] Johnsen 2014:93

[7] Byrne & Thorsteinsson 2011. See also Magnússon 2010.

[8] Johnsen 2014:185

[9] IMF 2013b

[10] IMF 2013b: 11.

[11] Bergmann 2014:159

[12] For detailed argument consult Huijbens & Thorsteinsson forthcoming.

[13] OECD 2013: 3. Gender issues are discussed in Thorsdottir 2013. See also Ólafsson & Kristjánsson 2012 for discussion on how changes in the tax system sheltered low income groups.

[14] Piketty 2014.

Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)


Historical memory is unwelcome by people who have too much at stake in the short term to realise that they may have much more to lose in the medium and/or long term. Historical memory is also unwelcome by people who wish that economic history could fit neatly within the theoretical constructs that they favour because of ideological, political, moral or pecuniary commitments of theirs (cf. Francesco Boldizzoni, The Poverty of Clio: Resurrecting Economic History, Princeton: Princeton University Press, 2011).

  Continue reading Sven-Olof Olsson (ed.), Managing Crises and De-globalization. Nordic foreign trade and exchange 1919-39 (New York: Routledge, 2014 pbk.)

Jón Ólafsson (ed.), Lýðræðistilraunir. Ísland í hruni og endurreisn [Democratic experiments. Iceland in collapse and renaissance] (Reykjavík: Háskólaútgáfan, 2014)


The indications are that the costs are 44% of Iceland’s GDP, meaning that it is internationally the third costliest financial collapse ever (Luc Laeven og Fabian Valencia. 2013. Systemic Banking Crises Database. IMF Economic Review, 61, pp. 225-270). The series of events leading to the collapse and what has happened afterwards has had serious consequences for Icelandic society and government. The most obvious sign of these consequences is that trust levels within Icelandic society have declined. The banks enjoy least trust of all Icelandic institutions, as is to be expected, as only 10.2% of Icelanders said in October 2014, six years after the financial collapse, that they trust Icelandic banks (MMR Market and Media Research). Just 12.8% trust Alþingi, the Icelandic Parliament, according to the same source.


One of the consequences of the financial collapse was that in 2009 the Icelandic republic had the first left-wing government in its history, i.e. since it was established in 1944. This government had to deal with all the most serious consequences of the financial collapse. On top of that, it tried to engineer changes to important Icelandic social institutions like the fishing quota system, which has been controversial since its inception in 1983, and the Icelandic constitution. The reasons behind the changes to the quota system were based on justice and fair allocation of natural resources. The reasons behind changing the constitution were not as clear, but it seems to me that the best construal of them is that the attempt to change the constitution was a confidence-building measure, an attempt to reconstruct the most important legal document of the republic´s legal system and secure general trust in governmental institutions. According to the same survey firm as referred to above, the legal system as a whole enjoyed the trust of 28.9% last November, but in November 2013 the same measurement was 38.1% and in October 2009 the trust in the legal system as a whole in Iceland was 36.5%. There is no reason to read too deep a meaning into these measurements, but they are some indication that the preparation, writing and rejection of the draft constitution have not affected public trust in the legal system. Some may think that we can infer from this that the whole affair surrounding the drafting of a new constitution was in vain. But this may be too hasty.


What actually happened in this process? First, there were public protests against the sitting government ending in its fall in early 2009. Second, after the general election in 2009, the first left-wing government in the history of the Icelandic republic was established. The prime minister of that government had long been of the opinion that the constitution needed revision. Third, some general meetings were arranged early in 2009, trying to find out which were the most important values of Icelanders. The government organised a similar meeting in early 2010 to figure out those values that should govern the revision of the constitution. Fourth, the government established a committee gathering data and evaluating various ideas about such a revision, thus preparing the work of a constitutional assembly. Fifth, the government decided that an assembly should be elected by the general public to write a new constitution or revise parts of the existing one. Sixth, the election to the constitutional assembly was declared null and void by the Icelandic Supreme Court after a legal challenge. The government decided then to establish a constitutional committee with the same mission and the same individuals as voted onto the assembly. Seventh, the constitutional committee delivered in four months a draft of a new constitution. This draft was never assented to twice by the majority parliament with a general election in between, as it must do according to the rules laid down by the present constitution.


This book is a collection of essays in Icelandic about this whole process and other democratic experiments in Iceland’s recent years. It is written by two Icelandic authors and six international authorities on democracy and democratic developments. Jón Ólafsson edits the book and writes an introduction describing the development of the constitutional project and other democratic experiments in Iceland. James Fishkin analyses some of the processes that took place in the constitutional preparation and the drafting of the new one, and he evaluates to what extent deliberation and rational discussion were features of them. His conclusion is that neither the general meetings nor the constitutional committee reflected the general population and we should be careful about drawing any conclusion about the views of the meetings and the committee coinciding with the views of the population as a whole. He is also critical of the lack of rational discussion both in the preparations and the drafting of the new constitution.


Hélène Landemore examines the process of preparing and writing a new constitution in Iceland from an epistemological point of view. She is interested in: how the constitutional committee dealt with the problem of writing a constitution; and how it used “crowdsourcing”, meaning the competence and the intelligence of the general public, especially in writing the draft of the new constitution. She is critical of the role of experts in writing and editing the draft of the new constitution; she believes that the process had serious drawbacks, as she thinks that the general public and its representatives are capable of writing a constitution upon the condition that as many as possible take part in the process. She believes that the current Icelandic method for establishing a change to the present constitution or adopting a new one is too restrictive. Tom Ginsburg and Zachary Elkins approach the preparations and process of writing the draft of the new Icelandic constitution from a comparative point of view. They review various views of transparency in such a process, as well as the role of experts. They are, like the other experts writing in this book, favourable to the opening up of the process for preparing and writing a constitution and the government process in general, but they realise that there is no simple solution or simple recipe for a constitutional process, in Iceland or anywhere else. Thus, they ask the difficult question: If the new constitution was the result of a grassroots movement, why was it so easy to stop it in parliament? Why were those parties that opposed the new constitution elected as the new parliamentary majority in 2013? There is no simple answer to that question and there are two appendices to their article that are informative and interesting.


Paolo Spade and Giovanni Allegretti write about novelties in democracy or new initiatives in democracy, especially participatory financial budgeting as practised in a number of Brazilian cities. They explore the connection between these new initiatives and the new possibilities that have opened up on the net. They realise that these connections are complex and they can easily become counterproductive from the point of view of participation, if not used carefully. Democratic experiments in other places are drawn into the discussion such as Portugal, Germany and the United States, and in Reykjavík, Iceland. This is not directly relevant to the process around the constitution but the discussion broadens the picture of new initiatives in democracy. The last article is by Kristinn Már Ársælsson and is an overview of democratic initiatives in Iceland in the years 2009-2013, i.e. the years of the first left-wing government of the Icelandic republic. These include the preparation and the writing of the draft constitution, plus two national referenda on the Icesave agreements between the Icelandic government and the British and Dutch governments. These referenda were engineered by the refusal of the Icelandic president to sign two laws supported by the majority of parliament. In both cases the general public voted against these laws. These were the first national referenda since 1944, when it was decided to establish a republic. He also discusses the initiatives taken by the city council in Reykjavík.


All these articles are interesting, make important points and throw light on the events that have taken place in Iceland in the last five years. This is of particular value for a small society like Iceland, because very few people outside the country can understand what happens here and why. Icelandic scientists are a part of their own society and sometimes find it difficult to analyse what actually happens. The critical distance of foreign scientists can bring benefits.


This distance has its drawbacks too. This is clear from the discussion of the constitutional process. There is no attempt to relate it to the political culture in Iceland. What is most interesting about this process, which elected a constitutional assembly from members of the general public, is also a major break with the Icelandic tradition of politicians and legal experts discussing and drafting changes to the constitution. Part of this tradition is that all the major parties have had to agree to the changes put forward. Even though this is not literally true of all the changes proposed, it is true of most of them. This has guaranteed that the changes proposed and consented to in parliament before it is resolved, are consented too unchanged in the newly elected parliament. This threshold to changes to the constitution has not proved to be serious or impossible in the Icelandic context. Changes have regularly been made to the Icelandic constitution. It is not fashionable nowadays to take Icelandic political culture seriously, since its vices rather than its virtues have been more prominent in recent years, but it seems to me that one of the reasons working against the new constitution was that there were serious political disagreements about it. Pushing it through parliament would have been a serious break with the national consensus tradition. You may not think very much of this tradition, but it is an historical fact; besides, traditions in political cultures have to be reckoned with.

Per Eliasson, KG Hammarlund, Erik Lund & Carsten Tage Nielson (eds.), Historie didatik i Norden: del 1, historiemetvetanda – historiebruk (Malmö & Halmstad: Malmö högskola and Högskolan i Halmstad, 2012)

The challenge is tackled in two volumes; “historiemetvetanda – historiebruk” [history usage] rewieved here;  and “historisk kunskap” [historical knowledge], in a separate volume, not covered here.

The authors constitute a group who have a background in history teaching and research in history teaching. They cover all three levels of schooling, from compulsory school through upper-secondary and university level.

Continue reading Per Eliasson, KG Hammarlund, Erik Lund & Carsten Tage Nielson (eds.), Historie didatik i Norden: del 1, historiemetvetanda – historiebruk (Malmö & Halmstad: Malmö högskola and Högskolan i Halmstad, 2012)

Deweyan Democracy: The Epistemic Context

Dewey’s characterizations of democratic conduct show that he thinks of it as involving a give and take. One’s contribution (according to ability) creates a claim (according to need). The individual has duty to his or her community (or society) and society has corresponding duties toward him or her. The mutual dependence of individual and society is the dynamic that generates values. Intellectual freedom, cultural and intellectual diversity, growth and participation are examples of central values made possible by the democratic dynamic. Democracy for Dewey is thus primary: It is an ideal because of the conditions for value formation that it creates. Other values are then (or can be) derived from the democratic ideal.

It is in this complex sense that Deweyan democracy is a “way of life.” The claim is not that democracy is just one of many possible choices of a way to organize society or a way to live. It is in Dewey’s view the only possible framework for the ever-increasing intricacies of the modern world.

There are two ways to explore the conception of democracy sketched here. One is a thorough exegesis of Dewey’s works to investigate whether this characterization of his view makes sense – to check its correctness. Another is to look beyond Dewey and see whether the approach to democracy so inspired by his philosophy is a good approach to democratic theory, if the goal is to seek a useful justification of democracy. In this paper I am interested in doing the latter. In what follows I will attempt to show that “Deweyan democracy”—i.e. the idea of democracy as a way of life—offers interpretive possibilities that help understand how we can both have a substantive notion of democracy and put it in a justificatory framework where rejecting it is certainly possible, but fails to make sense unless, before rejecting it, one is prepared to accept it, in which case rejection, of course, does not make sense.



The democratic ideal—democracy as a way of life—looks like a moral concept. It has, obviously, a moral side to it in the sense of presenting a morally superior way of organizing social life (to use Deweyan vocabulary) to other available ways of doing so. But it is a mistake to overemphasize this moral side of the concept (although a frequently to be seen in comments on Dewey’s philosophy). The moral side in my view is less important than the epistemic side of Deweyan democracy. Democracy as a way of life provides the environment that protects and fosters science or, more generally, inquiry. The reason is proximity in method: In a democratic arrangement moral and political problems get a treatment similar or even analogous to what scientific method would dictate for inquiry. One must be careful not to take the analogy too far however. It does not mean that the method of science should be used to solve moral issues, but it is a recipe for moral cognitivism. Moral as well as political problems should be approached by reason and argument: Democracy is the intellectual environment that fosters reason and argument.

One should also follow Dewey in drawing a distinction between the idea of democracy and the manifestations of democracy (Dewey 1954, p. 143-144). The forms of power associated with democracy, such as representative government, majority rule, parliaments, elections etc. are no necessary features of democracy. Democracy is thus characterized by its ends rather than by the specific means that have traditionally been used to reach them.

Deweyan democracy has evoked considerable discussion in recent years. Many philosophers, who are generally sympathetic to Dewey, have been skeptical about his democratic theory and some have rejected it outright. Robert Talisse has argued that if democracy is a moral ideal it must be treated as other (possibly competing) ideals and values, from the point of view of value pluralism. Talisse correctly points out that from this perspective one cannot think of it as a shared or basic value, it would only amount to a moral value which could certainly be chosen or desired by any reasonable person, but could equally well be “reasonable rejected” by anyone adhering to different values (Talisse 2012, p. 109). For Talisse, Deweyan democracy fails the “pluralism test.” He argues that Deweyan democracy is simply one version of perfectionism because of the emphasis on human flourishing that it entails. In other words, if we read Deweyan democracy from the point of view of a Rawlsian conception of liberalism, the democratic ideal turns out to be just one more “comprehensive doctrine” which can never serve as a basis for a political organization acceptable to all reasonable persons (Talisse 2012, p. 112-114).

Matthew Festenstein points out—contra Talisse—that the notion of reasonable rejectability is not the kind of constraint that the pragmatist (i.e. the Deweyan) could accept. Since it only proposes a fixed standard to adopt or reject basic values it amounts to an a priori evaluation, which is not very useful from a pragmatist point of view. While Festenstein recognizes that one can reasonably reject the democratic ideal that, in his view, does not exclude it from being a possible “basis for the justification of state power.” It is difficult to see, however, what is gained by his result, since relativizing the democratic ideal does not remove Talisse’s objection, it only refocuses the difficulty (Festenstein 2010, p. 42).

Eric MacGilvray picks a useful element out of Deweyan democracy when he argues that it provides a kind of a test, similar to the pragmatic maxim, to determine whether one or another belief is fit for public discussion. It means that holding—and promoting—a belief about how to justify state power e.g., requires willingness to present it in experimental terms. The threshold for access to discussion about basic values for the social contract need in his view not be higher than that. If a belief can be tested and discussed experimentally—it would not have to be experimentally tested—and its meaning (conceivable consequences) for society can thus be assessed and discussed, there is no way to say that it is unfit for providing a justification of state power (MacGilvray 2004, p. 163-167; see also Festenstein 2010, p. 33). While MacGilvray provides a more interesting way of filtering issues fit for public (and political) discussion, his argument is no direct counterargument to Talisse’s. He carves out a role for Deweyan democracy, i.e. to offer a framework for determining the democratic meaningfulness of beliefs. While I think this is an interesting and in fact very useful and practical way of using the idea of Deweyan democracy, it limits it to a methodological tool.

Other authors such as Elizabeth Anderson have praised Dewey’s experimentalist account of democracy and yet other, such as Cheryl Misak, suggest that by using the more rigorous Peircean approach to inquiry as a model for understanding Deweyan democracy, one can exploit the inquiry/democracy analogy and apply methods of inquiry to the search for common solutions to social, political and even moral problems (Anderson 2006, p. 14-15; Misak 2000, see p. 45-47).


The question still remains whether and why Deweyan democracy should be chosen as an ideal, what kind of choice that would be, and what one has so chosen. I think this choice must be seen as a result of two related beliefs:

  1. Value articulation: The choice of democracy as a way of life implies accepting the claim that democracy is a necessary condition for articulating central activities, goods and values in community such as freedom and equality, education, public discussion, openness and opportunity.
  2. Opportunity creation: Democracy is a better way to create opportunities for inquiry, experimentation and in general solve problems using best available means and methods than other models of social organization.

If these beliefs can be sustained, one could see democracy as a prism through which certain values become articulated rather than itself a simple or core value. To reject democracy is therefore to refocus or rearrange social or moral values. If a democratic approach is not seen as basic, values such as the ones already mentioned, as well as many other central values of modern society such as pluralism, toleration and participation loose the meaning that democracy as a way of life gives them. Democracy thus should be chosen as “a way of life” in the sense of a principle of articulation and arrangement.

I depart from the authors I have mentioned in this paper since I want to show that the best argument for democracy comes neither from the independent standard that a Peircean model might create, nor from the experimentalist vision that it entails. The public action test does not per se provide an argument for democracy it only explains how we can make a useful distinction between issues that properly belong to public discussion and those that don’t. One might simply argue, of course, that there is no alternative. In a very practical way democracy is accepted as the only viable kind of social and political arrangement in modern society. The superficial acceptance of democracy does not mean that democracy is ideally practiced (or even practiced at all) in every case. It only reveals the dominance of the discourse of democracy.

There are however alternatives to democracy, some of them quite powerful. Sometimes these alternatives are presented as the necessary basis of democracy and there are social forces that promote them as necessary restrictions of democracy, since without certain restrictions democracy could lead to undesirable results.

As Bo Rothstein has shown, the correlation between democracy and good life is not always in democracy’s favor (Rothstein 2013, p. 15). Many surveys show it to be negative over a range of accepted indicators measuring quality of life. Good governance seems, on the other hand, to be strongly correlated to success in improving the lives of citizens, and increased democracy may lead to deterioration in governance. The alternative to democracy might thus be efficiency and justice in the design of institutions, as well as basic liberties that promote equality and individual freedom in accordance with liberal principles. It is clear in any case that if increased democracy is shown to go against improving the quality of life for citizens that indeed would deliver a strong argument against democracy.[1]

My contention is that by “choosing democracy” one is not choosing a particular method or procedure for a specific kind of decision-making but rather a general framework for public choice and deliberation. One could see such democratic commitment as a moral commitment. In such a case one would argue that the fairness of democratic approaches should commit one to them, even in cases when certain problems might seem better solved using a different approach. But the commitment is clearly epistemic as well: If there is an approach to problem solving best described as democratic to which one is committed, then one is also committed to the limitations of the approach. While Dewey seems not very keen on providing a moral justification for choosing democracy, he seriously attempts to provide an epistemic justification, i.e. argue that democracy will, in the long run, provide a better environment, better tools and on the whole better approaches to problem solving than other conceivable (or available) approaches.

From the Deweyan point of view the epistemic commitment must therefore be seen as prior to the moral commitment. It means that democracy should be seen as a way of dealing with and solving problems. It would not do to argue simply that democracy somehow ensures that the best methods are used or that solving problems democratically will always yield the best solutions. What it does mean is to take seriously the duty to seek not only solutions that can be had by majority decision or solutions that can be forged by negotiation and compromise but to seek the best solutions. If “real” democracy often (even most of the time) falls short of the democratic ideal, this does not make the idea of democracy any less clear. Quite the contrary, since it is the idea by which political decisions should be elucidated and criticized.



In the last part of the paper I want to sketch how I think that the idea of Deweyan democracy should be used to discuss and judge political and administrative practice. The objective is on the one hand to see how democratic practice falls short of an ideal of democracy (or not), on the other to provide a healthy angle of democratic criticism. Dewey’s emphasis on experimentation in connection with democracy, i.e. seeing democracy as the free exchange and discussion of ideas where the point is to have a generation and selection process based on making full use of “intelligence” is key to understanding this conception of democracy (Dewey 1985, p. 362). This means that in democracy as a way of life, individual contribution to decision and policy-making is matched with (conceivable) individual influence on decisions and policy.

In addition to the two basic democratic beliefs—that it is a framework for value articulation and opportunity creation—one should think of two central conditions of democracy:

  1. The efficiency condition: For each participating individual success does not necessarily entail being able to convince others of one’s point of view or being in the majority but on the efficiency of democratic process. Success is to be a part of a conclusion based on discussion, fact-finding, deliberation, debate and eventually (perhaps) voting that harvests the input of the participants.
  2. The integrity condition: A decision made, or policy adopted, must be a result of what has been democratically concluded. If the logical space of decision-making is different from the logical space of reason-giving, the procedure used is meaningless.

The efficiency condition deals with the ability of a group to come to a conclusion and the integrity condition with the relation between that conclusion and an eventual decision or action. Democratic failures may appear in both parts undermining either grounds for policies or legitimacy of decisions. The work of parliaments often evokes suspicion about the integrity of the democratic process when the connection between arguments and information revealed in deliberation and the eventual decision seems vague or absent; when positions are known in advance, more or less, and the debate carries only a symbolic function.

The give and take mentioned earlier need not be understood as individual willingness or commitment to participate in public debates or policy-making and therefore the efficiency condition does not depend on actual participation. Instead of seeking a standard to determine the content of public reason, one should seek a framework to connect participation and policy. The point should be access rather than inclusion, where the possibility of participating, not only in exercising free speech, but in actually providing input into policy, is at stake. The problem with participatory approaches taken by governments is often their reluctance to acknowledge the importance of public participation seeing it rather as a possible hurdle in successful governing. Therefore there is tendency to both limit the power of extra-institutional participation and place all kinds of security valves on the possible decisions to be reached by such extra-institutional participants. To illustrate this and at the same time probe the conditions of democracy and the basic democratic beliefs, I want to discuss four recent examples from Icelandic politics:

  1. National assemblies 2009 and 2010
  2. Annulment of the elections to the constitutional assembly 2011
  3. The first Icesave referendum 2011
  4. National referendum on the constitutional bill 2012

After the financial collapse in Iceland in 2008 there was considerable pressure on the government to use unorthodox methods to change the course in Icelandic politics and promote democracy. The first attempt to create a public voice in order to influence policy systematically was made by an independent group of people who formed an NGO called “The Anthill”. The Anthill organized a so-called National Assembly (Icel. Þjóðfundur) whose purpose was to articulate basic values and general policy goals for Icelandic society (Gunnar Hersveinn 2010). The National Assembly consisted of over one thousand people, a random sample from the general population, who were asked to participate in a meeting held in one day, 14 November 2009. The Anthill then planned to have the government accept the results of the assembly as guiding principles in the political renewal ahead.[2] Although it turned out to be problematic to simply adopt the results of the National Assembly and include them in the various tasks of the government, these results were taken seriously. The government adopted the methodology used in organizing National assemblies for public consultation regionally and nationally. In 2010 the Constitutional commission, whose task was to prepare for the Constitutional assembly, held a second National assembly elected in 2010 in order to revise or rewrite the Icelandic constitution.

There were several problems in the selection of participants for the National assemblies, which strictly speaking make it difficult to talk of participants as random samples of the population. Some other organizational problems have also reduced value of the results, but here I will focus on something else.

The task of the first National assembly was to articulate core values to guide governmental policy. The task of the second was to identify the core values to guide the revision of the constitution.[3] In both cases a number of general policy statements were also generated by participants to further identify policy goals. The problem with these results was their generality. The meetings neither provided priority rankings for goals nor any interpretation of value commitments and therefore policy-makers could hardly use them to plan policy. Therefore, even if the meetings were admirable exercises of public participation and engaged all kinds of people in thinking and talking about political issues—many had perhaps never been consulted except by occasional opinion polls—their overall usefulness was difficult to see. These meetings may have carried some meaning for participants who saw certain general value commitments articulated in a dramatic way as a result of the one-day meeting. They could however hardly have seen it as an opportunity for inquiry since the meeting was not deliberative. Its purpose was to express rather than critically engage the views of the participants. The assembly also fails both the efficiency and the integrity condition. The lack of systematic discussion created a gap between whatever was said during the meeting and the results published after the meeting. No problem was dealt with during the meeting and therefore nothing can be said about efficiency in doing so. Worse since the results were overly vague, it was difficult to see how the integrity condition could be fulfilled either. The relation between these results and eventual decision-making could not be spelled out. From the perspective of Deweyan democracy one could then say that the meetings were democratically meaningless, since while it allowed symbolic participation, it could not effect policy- or decision-making in any meaningful way.

Elections to the Constitutional assembly were held 25 November 2010. A large number of candidates ran for a place in the assembly – 525 competed for 25 seats. The elections were unusual in many ways. The government was criticized during and after the elections for many flaws in how the elections were conducted. There were certain problems with the design of the ballot, the ballot boxes, the voting booths and some of the procedures used. After the elections a group of citizens complained to the Supreme Court who then reviewed the elections and found it to be flawed in six respects. Although the flaws were technical and gave no reason to conclude that the elections had been rigged or the vote misrepresented, the Supreme court used its authority to annul the elections.

One might argue that a decision, made by a judicial body such as the Supreme Court, should not be evaluated in terms of democracy since it is based on the law and on judicial authority. It was clear however, that having pointed out certain flaws in the way the elections were conducted, the Supreme Court had a choice to annul or not annul the elections. Since the results were not in dispute, the Court had no democratic reason to annul, i.e. doing so did not serve to ensure that the democratic will of the electorate was protected, in fact the will of the voters was in this respect not considered to be the most important issue. The decision was thus undemocratic and one could even argue that it was anti-democratic, or, in other words, an attempt to put an end to a democratic process, rather than facilitate it.

From the point of view of Deweyan democracy one should argue that the Supreme Court had a duty to point out the flaws in the elections but also to base its decision on a commitment to serve democracy. As was later pointed out by critics of the decision, it is not in accordance with the rule of law that a judicial body may decide to annul a democratic election conducted legally, without significant failures and whose results clearly express the will of the electorate.[4] Here a commitment to democracy should have guided the Supreme Court. It is an epistemic commitment in the sense that the will of the people was known, it is also a moral commitment since serving democracy will then be seen as a more important value than technical perfection in the conduct of elections.

One of the bitterest issues debated in Iceland after the collapse of Iceland’s international banks, was the so-called Icesave case. Landsbankinn, one of the three big banks that collapsed in October 2008, had in 2007 started individual savings accounts in Britain and Holland that were quite lucrative for private savers. When Landsbankinn’s foreign operations were separated from its Icelandic operations and declared bankrupt, thousands of people lost their savings but were partially compensated by the British and Dutch governments in accordance with the European banking insurance policy. The British and the Dutch claimed that the Icelandic government was liable to pay the compensation and so they demanded to get back the amount paid to the individual savers. The Icelandic government to begin with accepted its responsibility and an agreement was negotiated. When the agreement was put to the parliament for ratification, a huge controversy ensued. Although the agreement was passed in the parliament it was clear that it created much anger among voters, who felt the Icelandic nation was being forced to pay debts created by irresponsible bank managers. The Icelandic president intervened by refusing to sign into law the bill on the agreement passed by the parliament, after having received petitions to do so from thousands of Icelandic citizens.

The Icelandic constitution stipulates that if the president refuses to sign a law, it must be put to a national referendum. As the referendum was being prepared, however, the government entered into new negotiations with the British and the Dutch. When the referendum on whether to accept the agreement passed by the parliament or reject it was conducted, the agreement was no longer relevant. It made therefore no difference whether the voters accepted or rejected the agreement since the government already had an offer that was clearly better for the Icelanders than the one they were voting on, even if not a formal signed offer or agreement. The referendum was therefore meaningless, and no democratic purpose in conducting it. One might argue that from some formalistic perspective it was unavoidable to conduct the referendum since it had already been scheduled. Parliament could however also have revoked the bill. The question here should be what would be more democratic to hold the referendum or abandon it. From the perspective of Deweyan democracy a referendum that fails to give a meaningful result—whatever the result—is not democratic. Other approaches might yield positions such as that holding the referendum is harmless; anyone who fails to see the point in participating could refrain from doing so, and so on. But it seems to me that if there is no problem–solving purpose in holding the referendum, and the whole point of doing it has become secondary, i.e. declaring support for (or opposition to) the government it has lost its democratic legitimacy. Whatever purpose there may be in participating (or not participating) it is different from the question being voted on.

Finally I want to discuss the national referendum on the constitutional bill submitted by the Constitutional Council.[5] The bill was submitted in the summer of 2011 and was meant to be passed before the end of the term in the spring of 2013. In October 2012 a consultatory referendum was held on the bill and at the same time participants were asked to express their view on six key questions on the content of the new constitution. While expressing support or opposition to the bill itself was relatively straightforward and yielded clear results (around two thirds were in favor of the bill, 50% of the electorate participated), the questions were vague and the results therefore begged the question. I will not go into detail in describing the various questions or the problems the evoked. It will suffice to take one example. One of the questions had to do with the national church. Iceland has not taken the step to separate the national church from the state. The current Icelandic constitution says that the state must “support and protect” the Evangelical Lutheran Church.[6] The question in the referendum was whether the voter thought that the new constitution should have a clause dealing with the national church. It did not ask what (if anything) the voter thought the constitution should say about the National church. Since (to many people’s surprise) the result was that the majority wanted there to be something on the church in the constitution, it was unclear how to interpret the will of the voters in that respect.

Again, from the point of view of some democratic theories this flaw in the referendum might not be taken to mean that it was undemocratic, but from a Deweyan perspective one would be able to conclude that since the result was democratically meaningless the referendum did not fulfill the epistemic conditions of democracy. The answer to the question made problem-solving more, rather than less, difficult, and the referendum therefore was meaningless for democratic problem solving.


Dewey’s discussion of democracy and the framework referred to as Deweyan democracy makes sense of a democratic commitment according to which we can assess democratic initiatives and results from an epistemic and moral point of view. The epistemic commitment is prior to the moral commitment since in many cases the moral commitment is a result of the epistemic commitment. Once democracy as a way of life is understood in this context, there is no need to fear that a democratic commitment amounts to committing oneself to a comprehensive doctrine such as an ideology or a religious belief. It is simply to make demands not only about democratic procedure, participation or deliberation but also in regard to the results of democratic decision- and policy-making.


Anderson, Elizabeth. “The Epistemology of Democracy.” Episteme (2006).

Dewey, John. Democracy and Education. New York: Free Press, 1966.

—. Reconstruction in Philosophy. Boston: Beacon Press, 1957.

—. The Public and Its Problems. Athens: Swallow Press – Ohio University Press, 1954.

Festenstein, Matthew. “Pragmatism, Inquiry and Political Liberalism.” Contemporary Political Theory 9.1 (2010): 25–44.

MacGilvray, Eric A. Reconstructing Public Reason. Harvard University Press, 2004.

Misak, Cheryl J. Truth, Politics, Morality. Routledge, 2000.

Talisse, Robert B. “Can Democracy Be a Way of Life? Deweyan Democracy and the Problem of Pluralism.” Transactions of the Charles Peirce Society XXXIX.1-21 (2003).

—. Pluralism and Liberal Politics. New York: Routledge, 2012.


1 The terms democracy and governance are sometimes conflated. In his introduction to a collection of papers on democracy, Giorgio Agamben maintains that “the word democracy is used in most cases to refer to a technique of governing” (Agamben 2011, p. 1). While it is probably true that the term democracy is often used inaccurately, the distinction between governance and democracy is quite clear. Agamben probably overstates the confusion. There is however a tendency to describe administrative restrictions of democracy as part of a democratic framework.

2 The website created for the 2009 National assembly only has information in Icelandic. See thjodfundur2009.is. In the Q and A section of the page it is stated that the goal of the assembly is to create “a strong common vision” for the nation which will help “solve difficult and complicated problems”. In another section the intention to present them to the government with, as well as to institutions and associations whose role it will be to contribute to the recovery of the country after the crisis.

3 The National assembly (also referred to as National forum and National gathering) is described on its website, also available in English. See http://www.thjodfundur2010.is/english/ n.d.)

4 Reynir Axelsson, Athugasemdir við ákvörðun Hæstaréttar um ógildingu kosningar til stjórnlagaþings. Published 23 February 2011 at stjornarskrarfelagid.is.

5 The Constitutional Council was appointed by parliament after the nullification of the elections to the Constitutional Assembly. All 25 elected Assembly members were appointed except on who decided not to participate in the appointed body.

6 Constitution of the Republic of Iceland, Article 62. See: http://www.government.is/constitution/.

Brian Lucey, Charles Larkin and Constantin Gurdgiev (eds.) What if Ireland defaults? (Dublin: Orpen Press, 2012)



There is a story to be told about this turn of events; both a general story about crises in the capitalist system, including this particular crisis, and also about how the crises have unfolded in particular countries. When I talk about crisis in this review I am not referring to the Euro crisis but to the banking crisis.


It is worth pointing out at the beginning of this review that it is a significant fact that a number of countries have avoided this crisis even though they have been affected by it as, I guess, every country in Europe at least has been. The Scandinavian countries, Norway, Sweden, Denmark and Finland have been able to avoid this crisis and the same applies to Canada. Finland has adopted the Euro and is having problems because of it, but all the four Scandinavian countries had learnt their lesson from their banking crisis in the early 1990s and managed to avoid all the pitfalls in the time leading up to the banking collapse in the autumn 2008. The key issue seems to have been a close monitoring of their banking systems and a tough management of the system by the state. It seems to me that the role of the state is probably the most important issue in this crisis. In the decade leading up to 2008 it seems to have become an accepted orthodoxy that somehow the market system needed only a minimum of regulation and was self-perpetuating. If there is any fairly clear lesson to be learnt from this crisis it is that this orthodoxy is a myth. The state is the most important institution for a well-functioning market, not because the state should regulate every minute detail of the market, but because the state must put in place a good legal framework, close monitoring and the willingness of the institutions to use those powers supplied by the state to control the financial market.


The other option is to leave the financial system to its fate in the market, so that the banks and other financial institutions can collapse and become bankrupt like any other business. It is an interesting fact that no government in Europe or North-America was willing to do this. There are various reasons for this but the two most important ones seem to me to be:


(a) First, the risk of contagion, meaning that when one financial institution falls the confidence in the others falls sharply, so that a bank that is in no way insolvent can suddenly become so because people do not trust it any longer. This does not happen in other markets: If a building firm collapses other building firms are not in danger of collapsing and the same does seem to apply generally to the manufacturing industry. What is so special about banks? The reason why financial businesses are not in this position is because they rely so heavily on trust in their operations. A bank is not like a library where money is stacked on every shelf, because the money that you put into your account the bank lends to somebody else, who is willing to pay the interest the bank asks for. So at any time there is only a tiny portion in the bank of the money people have put into it. If there is a run on the bank, it cannot pay all the owners of current accounts their money, even if it is in perfect order. That is the basic reason why we need central banks, banks that lend to other banks, when for some reason or other their own money does not suffice.


(b) The second one seems to me to be the fact that banks have become so important for the everyday life of ordinary members of the public that no government can leave the bank system alone. The smooth running of the banking system has become a matter of security for the public and government is responsible for public security. If government is found wanting in public security this can easily lead to public unrest. This fact, that is, the centrality of the banking system in the life of the members of the modern public is usually overlooked when examining the financial crisis and its importance. 


This book explores what would happen if Ireland defaulted, did not pay any of its debts, only paid some, or paid most of them but not all. It seems to be the case that it will in all probability be impossible for the Irish state to pay all of its debt, because the Irish state decided to underwrite all of the debts of its banking system when it was grinding to a halt. This has had the consequence that public debt in Ireland is so large that it prevents the growth of the economy. Also, since Ireland decided to take up the Euro, it does not have the option of devaluing its own currency. So all roads to renewed profitability are paved with serious difficulties. This does not mean that it is impossible, but it will take a long time. The default of a sovereign state is not the same as the bankruptcy of a large business. It is much more complicated and serious, especially for the citizens of that state. All this is examined in this book.


The book is in four parts. The first part is general, where the authors explore research done on crises and contagion and there is a description of the problems facing Ireland and the possibilities the state has in its public finances. The second part consists of four essays on various aspects of the Irish financial crisis. It will probably have to restructure its debt and this will have to be selectively done; the public debt is analysed and it is discussed if the Irish state will be able to finance its public debt on the market when it returns there or whether the interest rate that the market requires will be unsustainable. One essay explores how Ireland´s problems are connected to the problems of the Euro. The third part collects five reflections on financial crises in other countries: Russia, Iceland, Argentina and New York. The fourth part is a collection of essays from various Irish perspectives on the debt and possible default of the Irish state.


This is an important book that deserves to be widely read. Every essay adds something to the panorama and at the end the reader is in a better position to evaluate the possibilities. The viewpoints are clearly expressed and well argued and even though acronyms are to be expected in this field of research they are kept to a minimum and should not prevent understanding of the issues. The arguments expressed here have relevance for many states in Europe at present.





Páll Björnsson, Jón forseti allur? Táknmyndir þjóðhetju frá andláti til samtíðar (Reykjavík: Sögufélag, 2011)

When taking into consideration the warm reception the book has received, as well as the prestigious awards, one ponders upon whether the nation is relieved by the loss of its leading political patron? Or whether this acceptance unveils tolerance towards anyone who tries to tarnish the president’s image. Páll Björnsson deconstructs the very icon that was consciously constructed of Jón Sigurðsson for a political purpose.

The story begins in a society of inequality. The funeral procession in Reykjavík in the spring of 1880 when President Jón Sigurðsson (hereafter “President Jón”) and his wife Ingibjörg Einarsdóttir (1804 -1879) were reburied, was deliberately divided by class and gender. In the very farewell of the nation to President Jón, the occasion token was used for reproducing the existing social inequalities. Women were assigned a lower status in the celebrations to commemorate President Jón. Also, there was lack of consideration towards President Jón’s widow during the preparations for President Jón’s funeral in Copenhagen in December 1879, which was organised in such a way as to promote political consolidation. Páll Björnsson writes the book from a gender point of view, thus making it an uncomfortable reminder of the national patron’s lack of stand when it came to the one of the most controversial issues in political debate of the age.


Páll Björnsson analyses how the political icon of President Jón was cultivated by the new media (newspapers) by appealing to emotions, whereby sorrow was converted into national mourning, remembrance into national commemoration, and funerals into national festivities. This analysis is welcomed by the reader who interprets the political presence of President Jón in modern politics after his death as a key-factor in a nation-building process. where the inhabitants of a country have been transformed into a political nation that is able to have a state of its own. Páll Björnsson does not specifically mention this, but President Jón himself lead actual Icelandic politics, which for decades prevented the parliament of Iceland (Alþingi) from acquiring a treasury under its own power for the sake of implementing a nation-building policy.


The publication of the book has not resulted in the loss of the overnight loss of the icon of Presidet Jón as regards the legitimisation of political authority in modern society. On Iceland’s national day of 2010, the Icelandic Minister of Education referred to his ideas on educational matters in a speech held at President Jón’s birthplace in Hrafnseyri. Páll Björnsson questions, in a footnote, whether President Jón was a prime mover in educating the nation as hitherto believed. His school-policy did not gain ground in his lifetime. Quite the opposite, the focus on independence politics made it impossible for Icelanders to establish a comprehensive school-system as other nations did in that period.


Páll Björnsson‘s book is not about President Jón himself, his life and actions. The book is about diverse exploitation of him as an icon, from souvenir production to image creation of big companies. The book is about Icelanders and how an image has been utilised for political purposes. In the beginning, this was done to preserve a society divided by class, gender, age groups and regions, characterised by the authorities’ fear of common people’s political organisation. The endeavor was to create a single opinion in a disparate society. Páll Björnsson infers how powerful a political weapon the image of President Jón was for those who wanted him in their camp. All stakeholders wanted to have a share in him as their icon of choice.


Páll Björnsson also concludes how difficult it has been for state authorities to honour their duty to pay respect to the “the legacy of President Jón” (pp. 183-211). We read about the problematic realisation of the objectification of the icon in such a way that it can be more than just that. For one, the difficulties in finding an objective for the rebuilding of President Jón’s birthplace at Hrafnseyri in a remote and depopulated area, or in justifying what kind of function it would have. However, the couple’s sepulcher in Reykjavík found its function, while the real success story is the statue standing opposite Alþingi. Páll Björnsson’s book is a contribution to the analysis of the original legend of the birth of a Republic. President Jón himself spent most of his life in Copenhagen, the capital of the Danish North-Western-Atlantic empire. The icon-creators realised the importance of an untainted image of the unequivocally Icelandic Jón Sigurðsson. This can be interpreted as the solution of the paradox for nationalistic thinking of a national -hero who chose to live amidst the claimed oppressors.


The author uses in an original way the fact that the ship carrying the bodies of the couple for the funeral in Iceland had the name of the mythological Phoenix, the bird that in our culture symbolises renewal. President Jón was renewed. Here the reader calls for further analysis of the Jesus-like symbolism that can be found in the writings on President Jón in the first decades after his demise. There are many examples therein of religious symbols being replaced with political ones during a time of secularisation in Western societies. It is clear that the book rests on a theoretical analysis and that the discourse in Iceland on the ideological roots of the Republic calls for theoretical writings on this issue. Here, however, we merely have a description.


Páll Björnsson quizzes the nation on President Jón as a good teacher would do. This is done by using questionnaire (N 1363, response rate 70%). The answers are analysed by gender, age, region and schooling. The result is that image is superior to knowledge. Only a minority knows well the life and work of President Jón and why he was given the title “President”. Highly educated males in the prime of life know President Jón best, other groups less so. However, the majority regard President Jón as an important unifying symbol for the nation, consider it right to honour his memory and are proud of him.


The acceptance that characterises the response to the book Páll Björnsson has written is justifiable. Páll Björnsson enters a new field in the research on President Jón’s legacy. The book is an elaborate treatise. You can appreciate this elaboration even just by looking at the carefully chosen pictures. Some are in colour. Viewed as a whole, the pictures tell us as critical a story as the written text itself. Interestingly, President Jón is revealed as two different characters in two different paintings, as a bronze statue in fabrication, alongside gentlemen, protesters, extremists, women, students, commoners and in a teargas haze. The narrative is lively. The footnotes are quite many and often replicating the text of the sources, thus deepening the premises for the descriptions in the text. The book offers lists of people’s names, pictures and sources. No misspellings or grammatical errors could be found.


This review discussed whether the warm reception of a critical book on a national-hero at his bicentenary represents tolerance towards a new sentiment on President Jón or a liberation from his enduring authority. The book on President Jón written by Páll Björnsson offers the nation a chance to reunite with an ex-national -hero and finds it difficult to understand why he is still so politically massive in spite of his physical absence.


“Karlson” – A Stasi “Kontakt Person”. An episode of Iceland’s Cold War legacy



Iceland’s geographical position gave this small nation a special strategic importance in the political and military chess game between east and west during the Cold War era. Placed in the mid Atlantic, Iceland constituted an important post for the NATO defence forces and surveillance activities. This importance can be seen in the presence of American troops at a NATO base in Keflavik from 1951 until 2004. The military base and the NATO alignment created stark divisions among the population and was one of two major cleavages that characterized Icelandic politics throughout the post- WWII era, especially during the Cold War. The other cleavage that marked Icelandic politics of the time was the left-right dimension. The four traditional parties of the Icelandic party system ranked in a different order on these two continuums, with the right wing Independence Party allying with the Social Democrats in its support for NATO and the military base, while the centre agrarian Progressive Party supported NATO membership but joined forces with the Socialist Party in the opposition to the military base. The Socialists however were stern opponents of both the base and NATO membership, while they expressed sympathetic views for the People’s Democratic Republics in the eastern bloc.[1] Left wing socialists held up ties with their sister parties in the Soviet Union and Eastern Europe, while bourgeois politicians cultivated their links with western or mainly American liberal democracy.  The political discussion was framed in terms of the Cold War and the press, which throughout most of the 20th century was a party press, continuously suggested that the political motives of their opponents were conspicuously linked to or derived from either the interests of Soviet or Eastern European communism or US capitalist imperialism.

It was in this circumstances that in the fifties and sixties young left wing people sought to undertake their university education in the Eastern block and more often than not the Socialist Party in Iceland (SEI) was in one way or another the go-between in arranging for such student positions. Many of these left wing students kept contact with each other even though they did not study in the same place or country. At a point in the late fifties these students had formed an organisation, SÍA, Sósíalistafélag Íslendinga Austantjalds (The Society of Socialist Icelanders in the Eastern Bloc) that had considerable influence within SEI, the Icelandic Socialist Party.[2] In 1962 members of the youth organisation of the conservative Independence Party managed to get hold of – in fact steal – some of the internal correspondence of the SÍA group and subsequently the correspondence was published letter by letter in the daily newspaper Morgunblaðið along with some political explanations from a right wing standpoint. The correspondence was also published by the Conservative youth organization, Heimdallur, in a special booklet labelled the “Red Book”. Remarkable as it may sound, the correspondence between the Icelandic students in SÍA shows a great deal of criticism of the socialist system as practiced in the Eastern bloc, though in general of course their views were very sympathetic to the People’s Democratic Republics. From the standpoint of the conservatives in Iceland the purpose of the publication of the SÍA correspondence was to show that the students in Eastern Europe, along with the Socialist Party of Iceland, were plotting a communist takeover in cooperation with their communist allies in the east, even though they knew that the system was not working well and had all sorts of flaws.[3] This whole affair exemplifies the frenzy and the tone of the political discussion in Iceland during the Cold War and the suspicion that was created around the students that studied in the Eastern Bloc.

The legacy of heated feelings of the Cold War has in many ways survived the Cold War itself. The demand for some sort of reckoning or historical rectification has frequently come up, particularly in relation to the publication of documents that have become accessible after the fall of communism. This has been felt in Iceland mainly at a general political level but its implications have also been personal – putting the spotlight on the individuals that supported communism and in particular those who studied in the Democratic People’s Republics, not the least the German Democratic Republic. This paper will examine to what extent demands for a historical reckoning are relevant by looking at a particular case that can be found in the Stasi archives. By conducting a case study of this kind, a light is shed on important factors that tend to be lost in the more ideological and normative public political discussion. The case examined is the one of a young student who became a Stasi informer in the early 1960s, know as “Kontakt Person Karlsson”.


“Kontact Person (KP) Karlson”

According to the archives of East Germanys State security service (Stasi) one Icelandic student cooperated with the Stasi while studying in East Germany.[4] His name was Guðmundur Ágústsson, who after returning to Iceland became a bank manager. In 1959 he arrived as a young student via Vienna in East Germany, where he first attended a language course in Leipzig before taking up his studies at the University of Economics in Berlin-Karlshorst. Later his sister followed him to East Berlin.

On the 9 February 1963, four years after entering East Germany, a note is found in the Stasi files concerning “making contact with the person”.[5] Before this remark in the files, the Stasi had already gathered information about Guðmundur Ágústsson , since a report explains that he seemed to be “open towards our problems”.[6] In this first description of Guðmundur Ágústsson to be found in the files, his appearance is described as “modest and dutiful”, also his “perfect moral conduct” is underlined,[7] contrary to the one of his sister who, according to the report, is “in some cases very impulsive”.[8]

According to the minutes of the first meeting between the Lieutenant Koch as representative of the Stasi and Guðmundur Ágústsson, Koch explained to the Icelandic student that lately pubic disorder in East Germany was increasingly initiated through West Berlin and therefore it was necessary for GDR “to take measures against the enemy’s intentions. In order to do so we have to involve foreigners, and since we knew that he [Guðmundur Ágústsson] was a member of our brother party SEI, we have turned to his person”.[9] According to the minutes Guðmundur Ágústsson answered positively to the request of the Stasi; he agreed to visit West Berlin and establish contacts with students there as well as to report on activities at the University of Economics where he studied.

Guðmundur Ágústsson was, according to the Stasi files, one of 25 Icelandic students studying at the time in the GDR. All were members of the SEI. They all came to East Germany through the mediation of the SEI or the Federation of Icelandic Trade Unions. During their first meeting Lieutenant Koch asked Guðmundur Ágústsson not to talk with anyone about his contact to the Stasi and they agreed to use the codename “Karlson” for him. After this meeting the Stasi run “Karlson” as a “Kontakt Person” (KP) in its files. “Kontakt Persons” were individuals used by the Stasi, sometimes without their knowledge, but also, as in this case, people who knowingly cooperated with the Stasi. “Karlson” knew, as the documents indicate, that his interlocutors were working for the Stasi.

“Karlson’s” first job assignment consisted of establishing a contact with an Icelandic student in West Berlin, “with the aim of assessing if this contact could be further exploited”. In order to do so “Karlson” should find out, “with whom he [the friend] has contact”, and further, he should report about groups and “their participation in actions against the anti-fascist protective barrier” (meaning the Berlin Wall)[10] and evaluate the general mood in West Berlin. “Karlson”, according to the minutes, agreed to do so. But he did not agree to introduce his acquaintances in West Berlin to the Stasi.[11] The reason he gave was that in his opinion the friend “was politically not ready”.[12] However “Karlson” proposed approaching another Icelander in West Berlin who might be willing to cooperate with the Stasi. According to “Karlson” this was a friend who had gotten an invitation from the Free University of Berlin to become a lecturer. The minutes state that at this time it had not yet been decided whether the acquaintance would accept the job at the Free University or not, because in the words of “Karlson”, a “decision on this matter would be made by the SEI”.[13]

Five weeks later at the following meeting “Karlson” could not report much, because he had not traveled to West Berlin. However, he had by now learned that his friend would take the position at the Free University in West Berlin. Until the year 1962 the acquaintance had been working as a lecturer at the University of Greifswald. Both he and his wife were members of the SEI. “The KP estimated the [name blackened] as a very humorous and outgoing person, who sometimes because of his comical appearance, his physique and his facial expressions is viewed as ridiculous.”[14]

Furthermore, “Karlson” reported in this meeting that he had recently received another visit from an Icelander, but he was politically not organized and in “his political development not yet mature”. Therefore “Karlson” declined bringing him into contact with the Stasi. In addition the Stasi noted in the minutes of the meeting that the KP would “soon get his own flat on the basis of his collaboration and his political work.”[15]

In May 1963 Lieutenant Koch gave his first evaluation of his Icelandic spy:

The [Kontact Person] is honest in the cooperation, but had not yet been reviewed. He takes his tasks seriously, makes his own proposals and he is venturous. His [cooperation] is based on conviction.

Control: Regular meetings every 14 days in the CA [Conspiratorial Apartment].

Range of duty: Supply of suitable candidates for recruitment. Naming appropriate candidates, as well as being used on special occasions in West Berlin.”[16]

In the following meeting “Karlson” and his Stasi officer discussed mainly how to establish the actual contact with the Icelandic lecturer at the Free University in Berlin. First of all, it was agreed that there was “no need to pretend to be a member of the press, but the KP should just contact him as an employee of the Stasi”.[17] “Karlson” agreed to organize the meeting. During the meeting they discussed three more Icelandic students living in West Berlin, but the minutes state that “Karlson” did not want to be the person who “arranges the meeting”.[18] Therefore they agreed on a different approach: while “Karlson” would celebrate the moving into his new apartment with the Icelanders from West Berlin, he would contact the Stasi as soon as his Icelandic friends would leave. On the way back to West Berlin the Stasi would have then the possibility “to address” the Icelanders at the checkpoint in Friedrichstraße: “this way the (KP) would be kept out from the conversation and the staff can safely carry out their own conversation.”[19]

At this meeting it was further agreed that “Karlson” would participate at the upcoming regional Social Democratic Party Congress as a member of the media and report to the Stasi about it. Furthermore he should monitor the preparations for the rallies on May 1 in West Berlin. One day before the first of May “Karlson” received specific instructions. In particular, he should find out where the loudspeaker van with the “inflammatory agitation” was stationed that was supposed to “disturb the activities on May 1 in democratic Berlin”.[20]

During this meeting the status of the recruitment of the Icelandic lecturer was also discussed. According to “Karlson” the Icelandic lecturer wanted to find out whether the people whom he would meet were “really from the Stasi”.[21] Furthermore, the Icelandic lecturer informed “Karlson” that the Senate of the Free University of Berlin had told him that they were informed about his membership in the SEI. They also warned him not to get involved with “Russian agents”.[22]

At the next meeting, on the 1st of May, “the Kontakt Person ‘Karlson’ had returned from his excursion to West Berlin and shared his observations about the deployment of the police, the position of the radio car, the tribune and more, which were then immediately submitted to the headquarter.”[23]

According to the minutes of the meetings “Karlson” reported about his intended trip to England, France and Italy. The minutes end with the note that the next meetings will be arranged by phone. Although there are no further minutes of meetings to be found in the archives, one can assume that the contact continued, since a receipt exists for the 28 January 1964 with the note: “The Kontakt Person ‘Karlson’ was given 50 DM for costs.”[24]

On 20th of November 1964, Lieutenant Koch closed the file, since “Karlson” had returned to Iceland. The file contains also the exact statistics of the border crossings by “Karlson” to West Berlin, and thanks to the collection of data by the Stasi, we also know that “Karlson” for example, on the 4th of February 1964, brought “2 nylon shirts; 2 pairs of women’s stockings, 20 PCs. cigarillos (Intershop); 250 gr coffee and 1 kg bananas”[25] from West Berlin to East Berlin.

The Icelandic lecturer at the Free University in West Berlin refused being recruited by the Stasi. On the 19 December 1963 one meeting had taken place between the lecturer and the Stasi at Café Sofia in East Berlin. At this meeting the Icelander stressed the “security of his person”. He said that “if the contact should become known it would have serious consequences for the party and him.” He also pointed out in this context the “unprofessional work of the security organs of the Soviet Union concerning the radar station in Iceland, where arrests had been made and which greatly damaged the reputation of the Soviet Union and caused great dismay for the comrades of the SEI.”[26] Lieutenant Koch was not very optimistic about a possible cooperation, since the Icelandic lecturer said that he “does not want to have anything to do with the secret service”.[27] But at least the reader of the files learns that the Icelander was very “sloppily dressed”, wore summer shoes in December and “a grey suit, a red shirt and a blue tie”.[28]


“Kontakt Person Karlson” revisited

In Iceland a discussion of the relations between Icelanders, Communist parties and secret service organizations in the eastern bloc have regularly surfaced – not only throughout the Cold War but also in the post Cold War era. Several times the issue has come up whether some Icelander had been working for Stasi.[29]

In early February 1995 a documentary film, “Í nafni sósíalismans”, (In the Name of Socialism) by the historian Valur Ingimundarsson and the journalist Árni Snævarr was shown by RÚV, the Icelandic State Broadcasting Television. The film was based on some documents that the authors had had access to after the opening of the Stasi archives in Germany and it spurred some discussion in the Icelandic media.[30] The name of the banker Guðmundur Ágústsson came up, as it appeared that he had been a Stasi agent in the period 1963-1964. The documentary claimed that Guðmundur Ágústsson had the codename “Karlson” in the Stasi files, and that one of his missions was to recruit Árni Björnsson, who at the time was a guest lecturer at the Free University in West Berlin. Árni acknowledges in the film that he had had some encounters with the Stasi, but that he had not answered indirect requests for him to become an informer for the secret organization. He does however mention an incident when his nice had been visiting him and had gone to a theatre show in East Berlin. When she did not return, Árni Björnsson became worried and went to a border control gate to ask about her. There Árni was detained for a while, until a Stasi officer came and asked if he had not received a message from them some while ago. Árni Björnsson acknowledged that and asked about his nice. There were no news of the girl, but in light of the circumstances Árni Björnsson thought it would be wise to agree to meet with the officer two weeks later. He says that he met with a Stasi officer two weeks later in a coffee shop and that was the end of it.

On the other hand, Guðmundur Ágústsson, alias “Karlson”, had refused to talk to the makers of the documentary, so his side of the story appeared in a newspaper only after the film had been shown on national TV. In an exclusive interview with the newspaper DV, Guðmundur Ágústsson explains that he had agreed to do some trivial exercises for Stasi in order to secure his own peace and eventually a safe passage home for him, his German wife and their child. Guðmundur Ágústsson refers to his contact person at Stasi (Lieutenant Koch) as the “young man with the cigarette”. He tells of a “spy mission” to West Berlin in the following way:

I met the young man with the cigarette and he asked me if I could go over to West Berlin and check if there was a military truck convoy in a certain boulevard in the southern part of the city. I was also supposed to stop by the Wall there in the neighborhood and see if a big hole was being dug in the ground behind a hill. I went to these places, but there were no army trucks, no digging and no hole. So I stood there like a fool. I went back and told the young man that nothing was there. That was the last I heard from Stasi. I probably did not pass the test or possibly Stasi was just training the young man in talking to somebody.[31] 

Later in the interview Guðmundur Ágústsson reflects on the documentary value of the Stasi files about himself. “I understand that there is a large folder on me in the Stasi archives. I do not think I want to see it. But the documents are there and people must then remember that the text that is written there is just what a man with a cigarette thought about me. He might even have been trying to look good in the eyes of his superiors. I never wrote a single letter for them.”

As it is apparent by now, two parallel stories have been told of the same course of actions involving  “Karlson”. On the one hand there are the files written by Lieutenant Koch, whilst on the other there are the stories and experiences as these are remembered by both Guðmundur Ágústsson, the student, and Árni Björnsson, the lecturer. Much of the factual evidence comes forth in both stories, but the interpretation and explanations of what actually happened and what it meant is very different.
Whose truth? – a discussion

After the Berlin wall came down and the Stasi archives were opened the news came to Iceland that Guðmundur Ágústsson had been a Stasi informer in 1963-1964. More than 30 years later, in 1995, Guðmundur Ágústsson had to explain to the Icelandic press that by cooperating with Stasi he had “secured himself peace and a safe passage home with his German wife and child”.[32] And still just over ten years after the explanations in the DV newspaper, Árni Björnsson, who was the friend of Guðmundur Ágústsson that worked and lived in West Berlin in 1963-1964, came forth in the scholarly magazine Þjóðmál to explain his involvement with Guðmundur Ágústsson and Stasi. Árni Björnsson was reacting to another article in the magazine where he was named as a likely Stasi informant.[33] The title of Árni Björnsson’s article is “Stasi and I. What is the truth?” He does not takes issue with the Stasi files themselves or even the reports by the Stasi officer that approached him, but points out that they are based on the officer´s personal interpretation, social conditions and circumstances. He therefore asks whether that interpretation is necessarily the whole truth.  In other words, Árni Björnsson is suggesting a cautious approach in interpreting the files and documents that can be found in the Stasi archives.

At least two lessons can be derived from comparing the two different accounts at issue. Firstly, it seems clear that Stasi did not necessarily ask its Icelandic informers to collect sensitive or hidden information, but asked for all sorts of public information, such as reporting about public student meetings and the curriculum of the Free University. This could make the Stasi request for cooperation look almost trivial to the student in question, so much that it would seem irrational to refuse such a small favour and risk being considered uncooperative by such a powerful organization as Stasi was then.

Secondly, the Stasi files give us a fragmented and indeed limited view of what really was going on. This is due to three main factors:

a) The nature of the reports to be filled out gives limited space for accounting for different and sometimes complex situations.
b) The evaluation and interpretation of the writer of the report is subjective and coloured by Marxist ideological phrases. Furthermore the reports are written by officers for their superiors and it can be expected that things that might be thought interesting for the secret police are overemphasized.
c) The fact that some of the files and reports may be missing limits their comprehensiveness.

In light of the latter point, an important lesson can be learned about the way in which documents and reports of official agencies not meant for publication, be they secret agencies or ordinary embassies, should be interpreted. To be sure, uncovering such secret files can provide valuable and important information, as recent WikiLeaks documents on embassies have shown, for instance. However, such documents call for careful consideration of the circumstances in which they were written and of the values and motivations of those who wrote the files. The limitation of the files makes them useful for political polemics, since they leave so much space for interpretation, but not for careful, detailed historical accounts of the past. And last but not the least, one may also just be stunned by their banality.



Guðmundsson, Birgir and Meckl, Markus, 2008, Á sumarskóm í desember. Ísland í skýrslum austurþýsku öryggislögreglunnar Stasi, in Saga, Tímarit Sögufélags, XLVI: 2, 2008, pp. 86 – 113.

Knabe, Hubertus,1999, West-Arbeit des MfS. Das Zusammenspiel von „Aufklärung“ und „Abwehr“Ch. Links Verlag, Berlin

Ólafsson, Jón , 1999,  Kæru félagar.Íslenskir sósíalistar og Sovétríkin 1920-1960, Mál og menning, Reykjavík

Snævarr, Árni and Ingimundarson, Valur, 1992, Liðsmenn Moskvu, Almenna bókafélagið, Reykjavík


[1] Ólafur Ragnar Grímsson (1977) The Icelandic Multilevel Coalition System. Expanded version of a chapter in E. Browne (ed) Cabinet Coalitions in Western Democracies. Faculty of Social Sciences, University of Iceland, Reykjavík.

[2] Ólafsson, Jón , 1999,  Kæru félagar.Íslenskir sósíalistar og Sovétríkin 1920-1960, Mál og menning, Reykjavík bls. 212-213

[3] Ibid pp. 214

[4] In the archives of the Stasi there are approximately 250 pages concerning Iceland. Among the material is one folder concerning the collaboration of an Icelander with the secret service. A complete overview over the material found is given in Icelandic in the article: Birgir Guðmundsson and Markus Meckl, Á sumarskóm í desember. Ísland í skýrslum austurþýsku öryggislögreglunnar Stasi, in Saga, Tímarit Sögufélags, XLVI: 2, 2008, pp. 86 – 113.

[5] Report on the contact of the person, BStU, central archives, 1496/65, BL. 9.

[6] Investigation report, ibid. 3.

[7] Ibid.

[8] Ibid. p. 5

[9] Report on the contact of the person, BStU, central archives, 1496/65, BL. 10.

[10] Minutes of the Meeting, 20. 2. 1963, ibid. 13.

[11] Ibid.

[12] Ibid.

[13] Ibid. 14

[14] Minutes of the Meeting for the 15.3.1963, p. 15-16.

[15] Ibid p. 16.

[16] Assessment of “Carlsson”, dated on the 7.5. 1963, ibid p. 18. In the documents one can find different spellings for “Karlson”.

[17] Minutes of the Meeting for the 19. 4. 1963, ibid. 19.

[18] Ibid.

[19] Ibid. 20.

[20] Minutes of the meeting, 30. 4.1963, p. 21.

[21]Ibid. 21.

[22] Ibid.

[23] Report from 6 May 1963, ibid, page 23.

[24] Recipt, 28.1.1964, ibid., page 27.

[25] BStU 12225/66

[26] Report of the 20 12 1963, BStU, central archives, 1496/65, p. 29 f. The matter the lecturer might be referring to here is an episode often called “The Hafravatns case” that came up in February 1963. Two deputies from the Soviet Embassy were expelled from Iceland for trying to recruit an Icelandic man as a spy. See: “Miklu fargi af mér létt”, Morgunblaðið 28th February, 1963 pp. 23-24

[27] Ibid. 33.

[28] Ibid.

[29] For a discussion of these connections between Icelanders and the Eastern Bloc see e.g.: Árni Snævarr and Valur Ingimundarson, 1992, Liðsmenn Moskvu, Almenna bókafélagið, Reykjavík; Jón Ólafsson, 1999, Kæru félagar, Mál og menning, reykjavík ; Rauða bókin :leyniskýrslur SÍA, 1984, Heimdallur, Reykjaví k; Helgi Hannesson, 1989, “Sósíalistafélag Íslendinga austantjalds og SÍA skjölin 1956-63”, Háskóli Íslands. Sagnfræðistofnun Ritröð sagnfræðinema, Reykjavík.

[30] See Morgunblaðið web page: http://www.mbl.is/mm/gagnasafn/grein.html?grein_id=176466 and DV, daily on the 6th and the 7th of February 1995.

[31] „Fékk frið og heimferð fyrir konu og barn“, DV 7th of February 1995

[32] DV, daily newspaper. 7.th of February, 1995 pp. 1-2

[33] Árni Björnsson, „Stasi og ég. Hvað er sannleikur“. Þjóðmál II:4 (Winter 2006), pp. 28

Aðalheiður Ámundadóttir & Rachael Lorna Johnstone, Mannréttindi í þrengingum: Efnahagsleg og félagsleg réttindi í kreppunni (Akureyri-Reykjavík: Háskólinn á Akureyri og Mannréttindaskrifstofa Íslands, 2011)

Three of the biggest Icelandic banks, which had been privatized in the late 1990s and early 2000s, collapsed and were taken into public ownership. An economic collapse was a fact and the former Prime Minister Geir H. Haarde asked God to bless the Icelandic nation at a press conference in October 2008. Certainly, the crisis (kreppa) was not a nightmare we would wake up from, but a reality that had to be dealt with. The next step was when the International Monetary Fund (IMF) was called in to organize a crisis management program. Then the currency collapsed. The unemployment rate has since been on the increase; from 1.5% in September 2008 to 8.7% in May 2009 with others taking wage cuts and/or cuts in working hours.


Although the everyday life of the Icelandic general public was in some way perceivably paralyzed in the fall 2008, people began to revive themselves. It was at this time that “The Kitchenware Revolution? was conceived in Iceland. The general public started a massive protest against the government. Icelanders, who have no great tradition of political resistance, rallied in the streets with their pots and pans. In front of Althingi (the national Parliament) people knocked upon their household utensils. January 2009 witnessed masses of people who gathered everyday, aiming to disturb the operations of the parliament, demanding that the government resign. For the first time since 1949, when Iceland’s entry into NATO was objected to, the police used tear gas to keep protesters back from the Althingi. Icelandic society was experiencing formerly unknown turbulence.


The Kitchenware Revolution won its first victory on the 23rd of January 2009, as the government resigned. New elections were called for and took place on the 25th of April 2009. The new government elected confronted the great task of “saving? Iceland from bankruptcy without jeopardizing its rather strong welfare system. For that to be possible it is obvious that the prosperous population of Iceland has to adjust to a new way of living. During these times of kreppa and turbulence both the national government and the municipalities have been facing huge decline in their annual budgets and the undertaking of cutbacks in services has been the biggest task ever since.


It was, and still is, a huge project to restructure the welfare system during these times of great cuts in national budgets. During such difficult times a book like ‘Human rights in crisis: Economic and social rights during an economic crisis’ is greatly appreciated. Not only is it the first research conducted after the economic collapse focusing on human rights issues; it also provides valuable guidelines for those working in the public sector and raises the issue of the importance of awareness of human rights in it.


By outlining some of the main issues of the International Convenant on Economic, Social and Cultural rights, the authors provide valuable guidelines on how the national and the local governments can avoid infringing the human rights of the citizens when cutting down expenses. As the authors Aðalheiður Ámundadóttir and Dr. Rachael Lorna Johnstone point out, it is more important than ever to appraise human rights during financial decline.


The main aim of the book is twofold; firstly to serve as a guide for Icelandic politicians, officialdom and the general public on economic, social and cultural human rights during times of economic crisis, as it outlines what these rights are and how they can be secured and accomplished through laws and policy making. Secondly, to increase the nation’s general knowledge in the field of economic, social and cultural rights. As the authors of the book recognize clearly, it is during times of kreppa that the task of protecting human rights may very well be more important than ever. A primary reason is that during such difficult times the economic situation tends to overshadow every other aspect of society, and the commonly heard phrase “it is not the right time to focus on this now” tends to distract people from other pressing issues and important accomplishments such as first and foremost protecting the actual human rights of the citizens.


Although Iceland has been a country of prosperity, human rights issues can be argued to have rather been in the shadow of public discourse on citizen’s wellbeing. The focus has been on the ‘welfare’ of the citizens, which of course is deeply related to human rights, but does not coincide with it. Indeed, the book casts light on how one of the main issues of past Icelandic governments has been to protect the general public’s welfare, sometimes in conflict with human rights considerations. The book’s body is built around the International Covenant on Economic, Social and Cultural rights and Ámundadóttir and Johnstone argue convincingly why they choose to build on this specific covenant rather then than theInternational Covenant on Civil and Political rights.


The aim of the book to increase knowledge and educate about the International Covenant on Economic, Social and Cultural rights and human rights issues in general is well conceived. The book starts with very informative chapters on the Covenant; its geneses and its role within the nation states and the work of its UN committee. Iceland’s legal obligations are also extensively discussed, since the covenant has been long ratified. Also, there is a chapter that outlines the essence and intentions of the commitments undertaken by the member states.


Since the book is designed for people working in the public sector with very diverse backgrounds and knowledge of the existing laws, these chapters are very enlightening and essential for further understanding the foundations of the covenant and, no less importantly, how it can be applied to policy and planning during times of restructuring and retrenchments in public services. The authors manage to explain the ideology of and the key-concepts pertaining to economic, social and cultural human rights clearly and in a helpful way, also for persons with no legal background. The reader obtains a good overview of the central tenets of the covenant and is likely to be better informed on how retrenchment has to be considered with regard to protecting human rights during economic decline. Good examples of these are the clear explanation of ‘progressive realization of rights’ and ‘progressive-regressive measures’.


Chapters engaging with specific issues of the Covenant in the Icelandic perspective follow these first instructive chapters. Ámundadóttir and Johnstone explain their choice of using the examples of employment rights, social rights and rights to education to outline the implementation of the covenant in Iceland before and after the economic crises. It can be argued that they could have taken different examples from the Covenant, or that it would have been helpful to use more than just three specific fields. However, it can also be argued that the authors manage to give a very concrete representation through their choice of specific fields, especially concerning the aim of the book to serve as a guide for national and local government and officialdom.


As stated above, the unemployment rate in Iceland has risen enormously since the fall of 2008. The chapter on the right to employment gives important insights on how governmental policy and regulations impact human rights and what has to be taken into consideration to keep the commitments under the Covenant on Economic, Social and Cultural rights. The authors give examples about certain things that have worked out well despite decline in budgeting; and they very well advise on what has to be taken into improved consideration in respect of the economic, social and cultural rights. The standpoint of the book is very relevant for the public sector and easy to learn from as it is summarized in a very resoluted manner and without any preciosity.


A good example is when Ámundadóttir and Johnstone point out how changes in regulations concerning the rights of students to unemployment benefits greatly affect their possibilities to make a living during the summer months, since the Icelandic Student Loan Fund only lends funds to students during a nine-month period each year. Therefore these changes in regulation concerning unemployment benefits leave students that do not have a summer job out of their right to enjoy the benefits of the welfare system. This is just one example on how the authors provide constructive illustrations on the subject matters, which gives the reader an idea of what kind of problems they can expect to approach during cutbacks in the public sector and in what ways they might be solved without violating human rights.


The book is in general written in an approachable language suitable for any reader. My conclusion is that Ámundadóttir and Johnstone reach the aims of their book, which is very enlightening and informative and manages to clear the line between ‘welfare’ and ‘human rights’. But as the authors state in the book, the Icelandic focus on ‘welfare’ has somehow shrug off the great importance of respecting human rights. The difference between those two concepts has not been clear enough, neither in political nor in public discourse. The book does deepen the understanding of the importance that the people who participate in the decision-making process with regards to economic, social and cultural rights. As well as it underlines the importance that the citizens themselves be aware of their rights.


This book is also an important contribution to human rights education in Iceland, a field which has been neglected by the educational system. Therefore this book is treasured even more for politicians, public officials and the general public. As Ámundadóttir and Johnstone underline correctly, there is great need to increase human rights awareness in Icelandic society, not least during these times of crisis, in order to enable politicians and public officials to make decisions based on enlightened knowledge of human rights, thus avoiding violations of basic rights of the population. It is also in the interest of the citizens to be more knowledgeable about their human rights, as it helps them to experience themselves as rightful owners rather than receivers of charity and enjoy human rights with dignity.


Today’s demand is resting on open, transparent and trustworthy administration; this book can help to direct us toward that path. It has to be distributed widely among officials and politicians in national as well as municipal governments for the benefit of the wellbeing of all Icelandic citizens and in order to minimize the negative effects of the crisis during times of retrenchment.