Walrus Magazine's Eliza Reid reports on how some Icelanders are dealing with their post-crash economy through unusual forms of emigration.

In October 2008, Iceland became the first country to succumb to the global financial crisis. In a few short months, its banks collapsed, its government fell, and unemployment more than tripled. More or less flat broke, the tiny nation of 320,000 had to go begging to the International Monetary Fund for an emergency loan of US$2.1 billion, and it remains in an economic shamble. As the country licks its wounds, some Icelanders, especially those crushed by mortgage payments that skyrocketed when the currency crumbled, are once again seeking the relative economic stability of Canada as the key to rebuilding their lives. But unlike the nineteenth-century wave of emigration, when more than 16,000 islanders —roughly 20 percent of the population at the time — climbed into ships for the hellish voyage that would take so many of them off to Manitoba, these new Viking emigrants, generally highly educated and fluent in English, do not go steerage. They go online.

Jón Ólafur Ólafsson is an architect. His firm, Batteríid, is tucked away in a nondescript building in the gentrified former fishing village of Hafnarfjördur, where rent is cheaper than in central Reykjavik, eight kilometres away. Over a lethal macchiato, Ólafsson explained that since projects ranging from luxury high-rises to glam corporate headquarters have dried up, the architecture sector has become one of the hardest hit since the crisis began last autumn. Batteríid laid off a third of its employees, and of the twenty still left only half are working full time.

Yet Ólafsson is optimistic. Like his ancestors, he has looked to Canada. This spring, along with Winnipeg partners Cibinel Architects, Batteríid won a contract, its first outside Iceland, to design and construct a $40-million aquatic, wellness, and performing arts centre in Gimli, Manitoba (population 6,000). Gimli remains the unofficial capital of “New Iceland,” as the immigrants called it, and Manitoba is home to the world’s largest population of Icelanders outside of Iceland. Gimli’s mayor, Tammy Axelsson, is fluent in Icelandic, and the people retain strong ties to their ancestral land.

Hafnarfjördur is famous for having one of Iceland’s largest settlements of elves, dwarves and other mystical beings, which (translating from the Icelandic) are collectively called “Hidden Folk.” Centuries-old folklore has it that whole clans of such beings reside in the rocks that make up part of the town’s centre. We do not doubt this at all … Hidden Folk enjoy a certain regard, and nowhere more so than in Hafnarfjördur. There is even a Hidden Worlds tour that takes you to their home sites, stopping at places like Hellisgerdi park and the base of the cliff Hamarinn, which is said to be home to the Royal Family of the Hidden Folk.But Ólafsson and his colleagues are not moving house — just ideas. Instead of queuing up for visas and plowing through masses of immigration forms, they breeze in on Skype. Call it virtual immigration: Batteríid can visit Canada on a regular basis but complete its major work remotely from Iceland, thereby ensuring its survival.

It's unsurprising that, as the Associated Press' Karl Ritter notes, the question of Iceland's fisheries is a major issue in the first negotiations between Iceland and the European Union on membership.

Iceland formally applied Thursday to join the European Union but said it would not accept a "rotten deal" for its fishing industry, a key sector of the island nation's troubled economy.

Iceland's parliament voted last week to seek EU membership as a way to stabilize the country's economy, which was one of the first causalities of the global recession after years of strong growth.

The small North Atlantic country of 320,000 residents already meets most of the EU membership criteria, but tough negotiations await over fishing rights.

The independent-minded Icelanders are concerned that the 27-nation bloc's common fisheries policy would give other European fleets access to Iceland's rich waters.

"To be frank with you, if we would get a rotten deal on the fisheries, the Icelandic people would get quite angry," Foreign Minister Ossur Skarphedinsson said after presenting the EU application to his Swedish counterpart, Carl Bildt. Sweden currently holds the EU presidency.

"This is not only an issue of economics. It is also an emotional issue. It is also an issue that is related to sovereignty," said Skarphedinsson, a former fisherman.

[. . .]

In 2007, fishing employed 4 percent of Iceland's work force, just over 7,000 people. But seafood accounted for almost half of Iceland's exports and 10 percent of its gross domestic product.

I'd like to thank Will for informing me that Greenland's left-wing Inuit Ataqatigiit party is forming Greenland's new coalition government.

Greenland's pro-independence leftist party Inuit Ataqatigiit, which won the Danish territory's legislative election on June 2, has agreed to form a coalition with two centrist parties, it said Sunday.

The three parties will hold a majority with 19 of 31 seats in the local parliament, the Landsting, IA leader Kuupik Kleist said in a statement.

IA, which ousted the social democratic Siumut party after 30 years in power, will hold 14 seats, the Democrats four seats and the Kattusseqatigiit Partiiat one seat.

Even though Siumut and IA had served in a coalition together as recently as 2007, Kleist had ruled out forming an alliance with Siumut after it became embroiled in a slew of scandals in recent months.

Final details still needed to be worked out on the government coalition and the cabinet portfolios were to be divided up Monday, Greenlandic radio KNR reported.

This comes just as the self-rule agreement with Denmark that I blogged about last year comes into force on the 21st of this month.

The question of what would happen if Greenland became an independent state--importantly, as a viable state, since its current economy heavily dependent on Danish subsidies would make independence spectacularly risky--doesn't seem to have crossed the minds of Canadian policymakers. European policymakers seem to have given the issue some thought, for even though Greenland left the then-European Community in 1985, some people in the European Union are interested in forging new relationship based on common interests in fishing, in energy and mineral resources, in the island's strategic position, and so on. Perhaps, like Iceland now, an independent Greenland will use its independence to move into the comforting embrace of a much larger bloc capable of protecting its interests? But, of course, Canada and the European Union are not the entire world, not even the entire Arctic world ...

(The title of this post is Greenland's national slogan, incidentally.)

Michael Lewis' article in Vanity Fair has gotten quite a bit of attention from my Facebook friends and from my Livejournal friends. Given my interest in West Nordic affairs, it seemed only fitting for me to follow suit.

Lewis argues that Icelanders' willing and often naive involvement in international finance came about as a result of structural changes which made Iceland very prosperous, which helped produce a very educated society, which helped produce a population uninterested in if not actually hostile towards the drudgery-filled old occupations of the fisheries and farming and the new occupation of aluminum smelting that characterize this island nation.

It was horribly unfair: a public resource—all the fish in the Icelandic sea—was simply turned over to a handful of lucky Icelanders. Overnight, Iceland had its first billionaires, and they were all fishermen. But as social policy it was ingenious: in a single stroke the fish became a source of real, sustainable wealth rather than shaky sustenance. Fewer people were spending less effort catching more or less precisely the right number of fish to maximize the long-term value of Iceland’s fishing grounds. The new wealth transformed Iceland—and turned it from the backwater it had been for 1,100 years to the place that spawned Björk. If Iceland has become famous for its musicians it’s because Icelanders now have time to play music, and much else. Iceland’s youth are paid to study abroad, for instance, and encouraged to cultivate themselves in all sorts of interesting ways. Since its fishing policy transformed Iceland, the place has become, in effect, a machine for turning cod into Ph.D.’s.

But this, of course, creates a new problem: people with Ph.D.’s don’t want to fish for a living. They need something else to do.

And that something is probably not working in the industry that exploits Iceland’s other main natural resource: energy. The waterfalls and boiling lava generate vast amounts of cheap power, but, unlike oil, it cannot be profitably exported. Iceland’s power is trapped in Iceland, and if there is something poetic about the idea of trapped power, there is also something prosaic in how the Icelanders have come to terms with the problem. They asked themselves: What can we do that other people will pay money for that requires huge amounts of power? The answer was: smelt aluminum.

Notice that no one asked, What might Icelanders want to do? Or even: What might Icelanders be especially suited to do? No one thought that Icelanders might have some natural gift for smelting aluminum, and, if anything, the opposite proved true. Alcoa, the biggest aluminum company in the country, encountered two problems peculiar to Iceland when, in 2004, it set about erecting its giant smelting plant. The first was the so-called “hidden people”—or, to put it more plainly, elves—in whom some large number of Icelanders, steeped long and thoroughly in their rich folkloric culture, sincerely believe. Before Alcoa could build its smelter it had to defer to a government expert to scour the enclosed plant site and certify that no elves were on or under it. It was a delicate corporate situation, an Alcoa spokesman told me, because they had to pay hard cash to declare the site elf-free but, as he put it, “we couldn’t as a company be in a position of acknowledging the existence of hidden people.” The other, more serious problem was the Icelandic male: he took more safety risks than aluminum workers in other nations did. “In manufacturing,” says the spokesman, “you want people who follow the rules and fall in line. You don’t want them to be heroes. You don’t want them to try to fix something it’s not their job to fix, because they might blow up the place.” The Icelandic male had a propensity to try to fix something it wasn’t his job to fix.

Back away from the Icelandic economy and you can’t help but notice something really strange about it: the people have cultivated themselves to the point where they are unsuited for the work available to them. All these exquisitely schooled, sophisticated people, each and every one of whom feels special, are presented with two mainly horrible ways to earn a living: trawler fishing and aluminum smelting. There are, of course, a few jobs in Iceland that any refined, educated person might like to do. Certifying the nonexistence of elves, for instance. (“This will take at least six months—it can be very tricky.”) But not nearly so many as the place needs, given its talent for turning cod into Ph.D.’s. At the dawn of the 21st century, Icelanders were still waiting for some task more suited to their filigreed minds to turn up inside their economy so they might do it.

Enter investment banking.

Lewis also finds there to be an unusual amount of distance between Icelandic men and women, and finds the latter to be much more realistic and better-suited to deal with Iceland's problems, even with international finance.

The Guardian's Gwladys Fouché reports that some Icelanders see a closer association with Norway as an alternative to European Union and Eurozone membership.

While Iceland is debating whether applying for EU membership is really the best option to rescue its crisis-hit economy, there is another option on the table growing in popularity: monetary union with Norway.

None other than Iceland's new finance minister, Steingúrmur Sigfússon, is considering the idea of using the Norwegian crown as the country's currency – a move that would have been unthinkable only a few months ago.

Asked by the Norwegian daily Klassekampen on Friday whether this was a serious option, Sigfússon answered: "We hope so. It will be natural to talk about it when we celebrate our party's 10-year anniversary [this week]. Nordic socialist party leaders are invited and I hope of course that Kristin [Halvorsen, the Norwegian finance minister] will come."

Sigfússon is the leader of the Left-Greens, the most popular political party in Iceland today, while Halvorsen leads the Socialist Left party in Norway, the sister-party of Sigfússon's.

"A strong and deceptive belief in adopting the euro has emerged [in Iceland] even though Iceland is just as far away from complying with euro criteria as poor countries in eastern Europe," continued Sigfússon, whose party is strongly opposed to EU membership. "So we think that the possibilities of currency co-operation with the Nordic countries, preferably Norway, must be thoroughly investigated."

Iceland was originally settled from Norway in the 9th century and was part of the Norwegian kingdom until the Congress of Vienna when continental Norway was handed over to a personal union with Sweden and Norway's insular possessions (Iceland, Faroes, Greenland) went to Denmark. It seems unlikely that Norway will go for a monetary union with its much more troubled European neighbour, however, and new Prime Minister Jóhanna Sigurðardóttir still favours the European Union option.

Patrick White's article in The Globe and Mail "In downturns, Icelanders look to Gimli", has a subject matter that really isn't surprising once you think about it.

Several generations after an economic crisis compelled thousands of Icelanders across the Atlantic to this expanse of auburn prairie and Lake Winnipeg ice, their fair-haired descendants are anticipating a new wave of financial refugees from their ancestral home.

“We've had a number of inquiries from Iceland,” said Tammy Axelsson, Gimli mayor and director of the New Iceland Heritage Museum. “I've never seen this before. They're telling me things are not going well over there and want to know about job opportunities here.”

With its government collapsing in the wake of a financial crisis that has qualified the country for International Monetary Fund loans, Iceland's economy is bleeding red ink and shedding jobs.

Such bleak prospects have prompted some Icelanders, for the first time in nearly a century, to look west, for a new home among the Manitobans they affectionately call Vestur Islandingur – West Icelanders.

“It's a trickle, not quite a torrent,” said Atli Asmundsson, consul-general of Iceland's Manitoba consulate.

“But unemployment will be hitting hard in the next couple of weeks and we may see more.”

If it's some place like home that Icelandic migrants seek, this is it. While the saucer-flat fields and calm lakefront might not look like the island nation's volcanic cones and craggy fjords, it is one of the few places in North America where you're as likely to hear góðan dag as good day.

The farmland 80 kilometres north of Winnipeg first beckoned Icelanders in 1875. A downturn in fishing and sheep farming drove thousands here by 1915. After a few brutal winters that sent some fleeing to the Dakotas, the new settlers learned to farm wheat instead of sheep and fish pickerel instead of cod, embracing the area to such a degree that they named this town after the mythical paradise of the gods from Norse mythology.

The immigrant pipeline dried up in 1915, but the Icelandic influence did not, evident in a towering Viking statue along the waterfront, an Icelandic-only tea at a local café and a constant procession of Icelandic dignitaries, including Geir Haarde, the Icelandic Prime Minister whose resignation brought down the government Monday.

“People in Iceland know more about Gimli than they do about Canada,” Mr. Asmundsson said.

Wikipedia claims that, with some eighty thousand claiming Icelandic-Canadian identity, Canada has the second-largest number of Icelanders in the world behind only Iceland itself. Multicultural Canada provides a thorough dissection of the Icelandic diaspora to Canada, such a relatively intense flow that at one point in the late 19th century Icelandic immigrants in Manitoba created the autonomous region of New Iceland. It's not surprising that Icelanders would think of Canada as a destination then--certainly people from the other North Atlantic fisheries-dependent nation of Newfoundland have found their ways here in large nunbers!

The subtitle of this article in the most recent Economist, "Why a crisis-hit Iceland may apply to join the European Union as soon as March," says it all.

The European commissioner for enlargement, Olli Rehn, is a strong ally. A Finn, Mr Rehn says that Iceland “would complement the EU, both philosophically and economically”. Its strict fish-management policies have been praised by the fisheries commissioner, Joe Borg (who is from Malta, a small island that has no selfish interests in cod). But there will be a new European Commission in the autumn. To catch both Mr Borg and Mr Rehn in their current jobs, an application must go in by April at the latest. The commission could rush through a formal positive opinion in six months (Iceland already applies two-thirds of EU laws). Iceland could then become a formal candidate in late 2009, when Sweden (another ally) holds the rotating EU presidency, and a full EU member by 2011. Membership of the single currency would take a bit longer, but pro-EU politicians say the simple act of applying and working towards euro convergence would reassure the markets.

The article makes the point that with the Icelandic krona lacking any credibility and the Icelandic economy risking isolation, adopting the euro may be the only way out for Iceland and in order to do that without wrecking relations with Brussels Iceland will have to join the European Union. The country will likely have to compromise on its exclusive control over its fisheries, but the anonymous author suggests that the country may be able to obtain temporary opt-outs.

In the past, I've blogged about "West Norden", the Nordic North Atlantic island societies of the Faroes, Iceland, and Greenland. In the past, I've suggested that the Icelandic precedent of political independence from the metropole may be catching. With Iceland's sharp move towards the European Union, I can't help but wonder whether Greenland and the Faroes--both polities which have formally opted out from the European Union--may end up paradoxically reinforcing their political independence by joining the EU as member-states in their own right.

This Bloomberg article was eye-catching.

Almost 1,200 years after Viking chief Ingolfur Arnarson left Norway to found Reykjavik, the crisis engulfing Iceland is forcing his descendants home.

"There are no jobs here," said Baldvin Kristjansson, an 18-year-old former container repairman from western Iceland, at a European job fair in Reykjavik. "I’m going to move away and go to Norway."

The Atlantic island of 320,000, suffering from its worst financial crisis since gaining independence in 1944, faces the biggest exodus in a century. Iceland’s $7.5-billion economy may shrink about 10 percent next year, according to the International Monetary Fund, which is helping provide a $4.6 billion bailout package.

About half of Icelanders aged between 18 and 24 are considering leaving the country, Reykjavik-based newspaper Morgunbladid said, citing a survey of 1,117 people between Oct. 27 and Oct. 29.

"Tens of thousands" will depart, estimated Jesper Christensen, chief analyst at Danske Bank A/S, the biggest lender in neighboring Denmark.

Iceland’s biggest wave of emigration was in the late 1800s and early 1900s. Then, 15,000 out of a total population of 70,000 left, joining a flow to North America from countries including Norway, Sweden and Ireland.

Foreign Debt

A hundred years later, Iceland’s economy is struggling after the nation’s banking system collapsed under the weight of its foreign debt last month.

Inflation surged to an 18-year high of 17.1 percent in November following a currency collapse that drove up prices. A protest against the government turned violent last week as police used pepper spray to battle activists in front of Reykjavik’s main police station.

Unemployment is forecast to rise to 7 percent by the end of January from a three-year high of 1.9 percent in October, the country’s Labor Directorate estimates.

"A lot of people are registering unemployed," said Valdimar Olafsson at European Employment Services in Reykjavik. "It’s very hectic and Icelanders are asking for jobs, especially in Norway."

Norse settlers arrived in Iceland around 874 on sail- powered wooden longships. The country came under Norwegian control in 1262 and then under Danish dominion in 1380. It gained autonomy 90 years ago yesterday and became fully independent from Denmark in 1944.

‘State of Coma’

The Danes and Norwegians, along with Germans and Poles, returned to pluck Icelandic talent at a job fair on Nov. 21 and 22. It drew 2,500 people.

Neither country has been fully spared from the effects of the global crunch. Denmark’s economy will shrink 0.5 percent next year, according to the Paris-based Organization for Economic Cooperation. Norwegian economic growth more than halved to 0.2 percent in the third quarter.

Both remain in much better shape than Iceland, though, and Norwegian and Danish companies are seeking skilled workers.

"Iceland is more or less in a state of coma," said Sigrun Thormar, who runs a consulting business for Icelanders moving eastward. "There’ll be an increase in the number of Icelanders seeking work in Denmark."

Danish unemployment is 1.6 percent. In Norway, the jobless rate rose to 1.8 percent last month from 1.7 percent the previous month. Norway’s Labor and Welfare Administration, or NAV, expects unemployment to stay below 3 percent over the next two years.

Iceland has been implementing the Schengen Agreement since 2001 and was a party to the Nordic Passport Union since 1965 long before Schengen, so there's certainly no legal or other institutional bars to Icelandic migration to the countries of mainland Norden. There's no reason why it can't take on huge proportions, either, judging by the experience of the Faroe Islands in their economic crisis of the early 1990s: "The important fishery sector collapsed (fish makes up approx. 90% of exports), the major Faroese banks went bankrupt and foreign debts were very high. Most of the many fish processing plants were closed and the Faroese economy was put under Danish administration, resulting in the concentration of most fish processing plants in one United Seafood firm. During these years, the population of the Faroe Islands declined from 48,000 to 42,000 (approx.) due to emigration." The subsequent recovery of the Faroese economy has not stemmed the outmigration, with Danish paper Politiken pointing out that twenty-three thousand Faroese live in Denmark versus the forty-eight thousand who live in the Faroe Islands. The Faroes do have a much closer relationship with Denmark than Iceland, but comparison might hold in terms of absolute numbers if not relative proportions.

Canada's northern neighbour, Greenland, has reached another political milestone almost unnoticed by us.

Greenland voted massively in favour of self-rule in a referendum that paves the way for independence from Denmark and gives it rights to lucrative Arctic resources, final results showed.

A total of 75.54 percent voted "yes" to greater autonomy, while 23.57 percent said "no."

A self-rule proposal hammered out with Denmark earlier this year gives Greenland, which was granted semi-autonomy from Copenhagen in 1979, rights to potentially lucrative Arctic resources, as well as control over justice and police affairs and, to a certain extent, foreign affairs.

The new status will take effect on June 21, 2009.

The head of the local government Hans Enoksen hailed the outcome in an emotional televised address.

"I say thank you to the people of Greenland for this overwhelming result. Greenland has been given a mandate to take another step" toward independence, he said.

In Nuuk, the capital that is home to a quarter of the island's 57,000-strong population, fireworks lit up the night sky even before the final results were announced.

Opinion polls prior to the referendum had suggested the result would be a clear "yes."

Anne Sofie Fisker, a voter in her 60s, was prophetic as she left a Nuuk polling station earlier in the day. "It's a day to celebrate, a historic day, one that I have waited for for years and years," she told AFP.

"It was time for us for to regain our rights and freedoms that were stolen from our ancestors, a people of free and proud hunters whose lands were colonised" by Denmark 300 years ago, said David Brandt, a former fisherman.

Others however, including Johannes Mathiassen, feared the self-rule "is too early, and the country is not ready to assume these new responsibilities."

There are potentially lucrative revenues from natural resources under Greenland's seabed, which according to international experts is home to large oil and gas deposits.

Melting ice in the Arctic owing to climate change could make the region more accessible to exploration in the future.

The countries ringing the Arctic Ocean -- Canada, Denmark, Norway, Russia and the United States -- are currently competing over territorial claims in the region and Greenland is keen to garner its share.

A Danish-Greenlandic commission that studied which policy fields would be transferred to the local government in Nuuk in the event of self-rule proposed among other things that "the revenues from activities related to raw materials be distributed to Greenland" in return for reducing annual subsidies from Copenhagen.

"Self-rule will bring with it only good things for Greenland," said Lars-Emil Johansen, who was prime minister of the island from 1991 to 1997 and who helped bring about its semi-autonomous status in 1979.

Home to the US Thule radar base, Greenland will also with its new status be consulted on foreign and defence policy, which are now decided by Copenhagen, but Nuuk would not have the final say and little is expected to change in that area.

Greenlanders, who voted to withdraw from the European Union in a 1982 referendum, will be also be recognised as a distinct people in line with international law, and Greenlandic will be recognised as the official language.

See Der Spiegel, here, for a critical perspective on the vote's negative and positive consequences for Greenland.