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Economic Collapse Forces Iceland Rethink


From NPR News, this is ALL THINGS CONSIDERED. I'm Madeleine Brand.


And I'm Melissa Block.

If you think the U.S. took a hit from the global recession, spare a thought for poor old Iceland. It has a population of only 320,000 people and it had become rich as the center of international banking. But Iceland's banks built up massive debts. It all came crashing down in October of 2008.

Now, as NPR's Rob Gifford reports from Reykjavik, people in Iceland are trying to rebuild their economy by getting back to basics.

Mr. STIGODO FRENSSEN(ph) (Factory Owner, Iceland): It's the coolers of the (unintelligible) now.

ROB GIFFORD: Stigodo Frenssen shows visitors around his small factory producing dried fish for export on the western coast on Iceland. It's on a family small holding. The next door is the home of the owner of Iceland's biggest bank that collapsed 15 months ago.

Mr. FRENSSEN: I was struggling then. Then, he was flying helicopters over my head here. This was a very strange thing. Yesterday, he was buying land, farms, buying companies, flying around, having big parties.

GIFFORD: Frenssen and his compatriots struggled in traditional Icelandic industry overshadowed by the banking boom, the building boom and the transformation of the Icelandic economy. To him it was clear it would all end in tears.

Mr. FRENSSEN: I think they forgot what was the basic foundation of the country. They forgot the foundation of their living, which is the fish and the agriculture.

GIFFORD: And Frenssen is not the only one who says that because they forgot this, they pulled the whole country down with them.

Ms. OUSKEDO RIONESS FLOCEDOTIAR(ph) (Soup Kitchen Owner): And there is a (unintelligible) sky over Iceland. And I will say it will be like that for the next five, six, seven, eight years.

GIFFORD: Ouskedo Rioness Flocedotiar runs a soup kitchen in central Reykjavik and she sees everyday the human fallout of the bankers' greed.

Ms. FLOCEDOTIAR: Iceland there has been in the first five seats of the wealthiest country in the world. But now we are seeing thousands of people needing food just to be able to survive. People don't have food for their children.

GIFFORD: The long line outside proves what she is saying. Hundreds of people stand shivering, waiting for the food handout. Among them, 28-year-old Anna Helgadotta(ph) who returned to work last year after having children but did not work long enough to qualify for unemployment benefit before she was laid off.

Ms. ANNA HELGADOTTA: Because I don't (unintelligible) morning. I have a kids and I have to feed them. I have to come here. I don't want it.

GIFFORD: Do you see any signs of improvement in the economy?


GIFFORD: Do you have hope?

Ms. HELGADOTTA: No. Not anymore. It is just going to be harder and harder and harder.

GIFFORD: Asked what she thinks of the bankers who did this to the country, she lifts up her hand like a gun and pulls the trigger. But the issues facing Iceland these days are not just economic. In 2006, the United States closed down the airbase it had maintained here for nearly 60 years, a move symbolic of the changed world. Iceland was no longer seen as a crucial part of the West's defenses. Cilia Olmosdaughter(ph) is a professor at the University of Iceland.

Professor CILIA OLMOSDAUGHTER (University of Iceland): Icelandic security identity, Icelandic foreign policy have really shaped around and revolved around the American military presence. So, now, we have to figure out where we want to place ourselves in the world, what is our foreign policy going to be? And then the banking crash comes on top of this. And that takes away our economic identity.

(Soundbite of factory)

GIFFORD: Back at the processing factory the fish continue to slop down off the conveyor belt for sorting. Stigodo Frenssen's business is looking up. The depreciation of the Icelandic krona means he gets much more for his exported dried fish. He says his neighbor, the banker, hasn't been flying his helicopter overhead recently. The bankers don't dare show their faces in public now, he says. In fact, some of them have fled the country.

Mr. FRENSSEN: No they had the party, big party and now they have a hangover. They thought it would all come. We were all going to get rich out of, I don't know, nothing. Iceland is fish, has always been. They are now realizing that they have to go through the you know, they have to go to work and they have to cut fish, pile fish, work, work.

GIFFORD: That work ethic is coming back, he says. People are getting back to their roots and remembering what being Icelandic has always been about.

Rob Gifford, NPR News. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.

Rob Gifford
Rob Gifford is the NPR foreign correspondent based in Shanghai.

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