A relatively small island of only 375,000 people – of which one-third live in the capital Reykjavik – in one of the harshest climates on earth, Iceland also has the highest (or second-highest, depending who measures it) per capita income in the world. Until the 20th century it was one of the poorest countries in Europe, while less than a decade ago the country was nearly broke.
How is such a remarkable turnaround possible?
We visited this country in early June when there was hardly any darkness during the night, just a few hours of dusk. We had one day of 13oC while the rest was all under 10oC. We had one sunny day, the rest were windy with occasional rain. One day the wind was such that we were not allowed, by law, to drive the motorhome we had rented. Weather conditions differ greatly from region to region, and sometimes even from one valley to the next.
Just with my ICT hat on for a moment, I was impressed with the digital road signs all over the country that provide in real time very local information about the wind speed (including gusts), temperature, road condition and so on. This is an amazing nationwide digital system, all monitored and managed from one central control centre in the capital city. We also received a free mobile modem and SIM card as we needed to check the extensive – and again real time – websites daily regarding local road and weather conditions.
We were there at the start of summer. Imagine what this country is like in winter!
It is a wild and rugged country, in many places a moonlike lava landscape as a result of its volcanic nature. There are still live volcanos and there is ongoing geological movement beneath the earth of the island. Some of these volcanos have glaciers with large glacier rivers and waterfalls, so it truly is an island of ice and fire (and, yes, many scenes from the Games of Thrones were shot in this country). We loved the many hot springs on the island, a nice relief from the mostly cold climate outside.
Iceland is the country with the world’s first national parliament, known as the Alþingi (Althing). We visited its natural outdoor setting in a rift valley known as Þingvellir (Note that the Þ is the only rune letter that is still in use. It stands for a th – so Thingvellir)). It was established in 930AD and the Althing took place in this outdoor setting till 1798, only after which it moved inside in Reykjavik. No wonder democracy is such an important issue, very close to the hearts of all Icelanders as we will see later.
We also followed in the footsteps of Snorri Sturluson, who was a lawmaker at the Althing at Þingvellir and is famous for his writings of the Icelandic Sagas (covering the period of early settlement by the Norwegian Vikings in the 9th century till the death of Snorri, which coincided with the end of Iceland’s independence in the early 13th century). We visited several of the places mentioned in the sagas as they are still very recognisable in Iceland. Many families can trace their genealogy back to the early settlers and many of those original names are still continuing.
One of our other travel themes this year was Viking history (we also visited Denmark and northern Germany for that reason – Ribe and Hedeby). An interesting observation regarding Iceland is that DNA research has shown that most of the males are of Nordic origin while the females are from Gaelic origin, brought back by the Vikings as slaves from the British Islands.
From Iceland the Vikings also settled in Greenland and started colonies in what is now the USA.
The country only became fully independent from Denmark during WWII; when Denmark was occupied by the Nazis the Brits and Americans occupied Iceland as it occupied this very strategic position in the Atlantic. Thanks to this massive infrastructure investments were made, including the building of two airfields, new roads and communication systems. This certainly helped the country to place itself in a much better situation to become fully independent. While there are no longer permanent foreign military forces in the country its strategic position remains important in the overall NATO organisation of which Iceland is a founding member.
It is also a member of the European Economic Area (EEA), which allows the country access to the single market of the European Union (EU).
Many people will still remember the country from the banking disaster in late 2008, which involved the default of all three of the country’s major privately-owned commercial banks. Before the Great Financial Crisis they offered unbelievable investment returns, but the unsustainable schemes collapsed following their difficulties in refinancing their short-term debt and a run on deposits in the Netherlands and the United Kingdom.
Relative to the size of its economy, Iceland’s systemic banking collapse was the largest experienced by any country in economic history. It brought the country to the brink of bankruptcy and led to severe economic hardship. The buck stopped with the corrupt ring-wing government that had allowed this to happen, and many of whom had been able to enrich themselves in the process.
The people went onto the streets in Reykjavik and with pots and pans created so much noise that finally the President gave in to the wishes of the people and resigned. This became known as the ‘Kitchenware’ or ‘Pots and Pans’ Revolution.
Next a new left-wing government was formed after elections in 2009 and it initiated a reform process that included the judicial prosecution of the former Prime Minister. In accordance with a complex and unique process 25 common people of no political party were elected to form an Icelandic Constitutional Assembly that wrote a new Constitution of Iceland, and they presented a Draft to the Iceland Parliament later that year.
The new government was led by Jóhanna Sigurðardóttir who became Iceland’s first female Prime Minister and the world’s first openly lesbian head of government. This was a non-issue for the country and it shows a tolerant and progressive society.
Fast forward to 2018 and the country once again has a female at the helm. She now leads a coalition government consisting of the Independence Party, the Progressive Party and the Left-Green Movement.
The economic environment that has been created after the GFC has seen Iceland rapidly building up its tourism industry (over a million visitors a year, or three times its own population) and its fishing industry is now one of the most productive ones in the world. The country uses its natural energy resources to heat their houses (some 90% of them). What also helps them financially is that they don’t have a standing army. They do have a coast guard, which they also use to fulfil their international obligations in relation UN peace-keeping requests.
After their economic crisis the country has started a rapid economic diversification program and this has seen a boom in innovation, especially driven by their ICT industry. The country spends around 3.11% of its GDP on scientific research and R&D, more than 1% higher than the EU average and it has set a target of 4% to reach by 2020. I have covered smart city developments in a separate blog: Smart City Reykjavik
But there is also growth in other highly specialised industries such as healthcare and biotechnology. Industrial activity now accounts for a quarter of the economy. Declining fish stocks has led to an increase in efficiency and this sector accounts for 40% of exports (and only 7% of the workforce). After a total overhaul of the financial system this sector is now one of the most modern in Europe.
The island runs almost completely (85%) on renewable energy – hydro and geothermal. As a result of its commitment to renewable energy the 2016 Global Green Economy Index ranked Iceland among the top 10 greenest economies in the world. It is also one of the few countries currently capable of producing hydrogen in adequate quantities at a reasonable cost – because of the country’s plentiful renewable sources of energy.
The country has become the world’s largest electricity producer per capita and is in talks with the United Kingdom about the possibility of constructing a high-voltage direct-current connector for transmission of electricity between the two countries. Such a cable would give Iceland access to a market where electricity prices have generally been much higher than those in Iceland.
We thoroughly enjoyed our trip through Iceland – this despite the fact that it is one of the most expensive countries we ever visited. What is remarkable is that, despite its dreadful weather, 😊 the Icelanders just love their country and are understandably immensely proud of its history.
As many countries and many people are currently struggling with the complexity of their societies, Icelanders have shown that you can do something about taking control of your own situation. They have shown that people power works and despite some initial opposition from a police force that was used by the government to suppress the uprising through teargas and arrests, the ‘Pots and Pans ‘ was largely a peaceful – albeit a noisy – one.
But the biggest lesson that can be learned is the way the people then decided on how to move forward, putting politics aside and using respected and trusted citizens to create a progressive and positive environment that allowed its people to quickly get back on their feet again. Measured per capita, the country is now one of the wealthiest in the world.
Last but not least, it was also very pleasing for me to see and experience a range of new smart technologies and services that have been developed in this country.