by Peter Geoghegan
In Iceland, ‘Borgartún’ has become a byword for the excesses of the decade up to 2008. This wide, nondescript avenue less than ten minute’s walk from the centre of Reykjavik, was Iceland’s financial district, its soi-disant ‘Wall Street’.
Formerly a quiet row of squat office blocks with fantastic views of the snow-capped mountains that circle Reykjavik bay, Borgartún today is an ugly mishmash of hubristic glass, steel and concrete. During the boom every major Icelandic financial institution built headquarters here. Now many of the towering glass-fronted buildings, which block the sunlight leaving the street cold and desolate, are empty. Further down the street is a half-built apartment block, across the road billboards advertise tens of thousands of feet in office space nobody wants or can afford.
In 2008, when the global credit crunch engulfed Iceland like a tsumani washing over a low-lying atoll, the total debt of three banks, Landsbanki, Glitnir and Kaupthing, was almost ten times the country’s GDP. During the previous decade, a cabal of Milton Friedman acoloytes in the government and central bank extended a massive experiment in privatisation – which began with the introduction of a market in fishing quotas in the 1980s – to the banking sector. The result was the most famous state default in European history.
In Scotland, we know Iceland mainly as either one arm of the ill-fated ‘arc of prosperity’, a stick to beat Alex Salmond and the SNP with, or as those plucky fishermen who stuck two fingers up at the world – and particularly Gordon Brown – in October 2008 and, again, last month. But, as ever, the reality is much messier than the myth.
Iceland today is a country struggling between two visions of an independent future, one based on rapaciously harvesting natural resources for private gain, the other on building the world’s first truly sustainable society. For Scottish nationalists, this confrontation throws up into sharp relief a question that isn’t asked often enough: ‘Socially and economically, what should an independent Scotland look like?’
Once again, Iceland’s ‘Wall Street’ is instructive. Best-selling Icelandic author Andri Snær Magnason calls Borgartún the ‘Boulevard of Broken Ideologies’.
Here, in a whitewashed wooden building looking out onto the roaring Atlantic Ocean, Ronald Reagan and Mikhail Gorbachev met in at the 1986 Iceland summit. A permanent thaw in the Cold War, and the end of Soviet Communism, soon followed. Just over twenty years later, a few doors down at the headquarters of Kaupthing bank, the fourth biggest default in corporate history – after Lehman Brothers, WorldCom and Enron – was announced to a startled nation.
Borgartún might be Ozymandis to the follies of Iceland’s adventure in Viking capitalism but the ideology behind it has proved remarkably, nay shockingly, resilient. The rightwing Independence Party – responsible for Iceland’s financial crisis in the first place – was defeated in the 2009 general election, for the first time since its formation in 1931, but now regularly attracts 40% support in opinion polls.
In the wake of the kreppa (the Icelandic for ‘crisis’), there was a purge of the Independence Party’s upper echelons. Many famous faces retired, while one, former leader Geir Haarde, prime minister when the kreppa hit, is to stand trial for misconduct. Yet many of the political and banking class that oversaw Iceland’s disastrous experiment in mass privatisation remain in prominent positions. Haarde’s predecessor, David Oddsson, who was the head of the Central Bank when the crash hit, is now editor of Morgunblaðið, Iceland’s most influential daily newspaper.
Many big names from Iceland’s failed banking experiment are still major players in the fishing industry. Much of Iceland’s natural resources remain in private hands. Fishing magnates own most of the nation’s rivers, elsewhere powerful voices are pushing for more damming projects and the construction of further aluminium smelters, which already have caused untold environmental damage in the underpopulated east of the county.
But there is another vision for Iceland. The country has fishing rights to 1% of the world’s stock, produces more energy per capita than just about any nation on earth, retains a variant on the Nordic social model and has a long history of self-preservation.
In Future of Hope, a refreshingly upbeat documentary on Iceland after the kreppa, director Heather Millard presents a compelling vision of a future based on sustainable fishing, farming and energy production. The economics are green but also achievable and necessary, especially given the wider global context of peak oil, climate change and population growth.
Iceland and Scotland share plenty in common; climate, geography, resources, even temperament. If winning the argument for sustainability ahead of profitability is proving difficult in a country of just 320,000 people that essentially declared bankruptcy less than three years ago then it will be even more difficult here. All the more reason, then, to start asking now what a future Scotland could, and should, look like.