Portrait of a Viking Activist

Iceland after the Crisis

You wake up one morning, and the world has turned upside down. From one day to the next, the mortgage on your house has doubled, the loan for your car tripled. Theatre director and civil activist Gunnar Sigurðsson (53) turned virtue out of necessity and filmed a documentary about the Icelandic crisis. Four years on, he looks back and ahead.

  • Kristof Clerix Gunnar Sigurðsson: theatre director, civil activist, friend in Iceland. Kristof Clerix

In the Grand Hotel of Iceland’s capital Reykjavik, guests in gowns and suits are queuing up at a long buffet table full of local game specialties; on the menu: duck, reindeer heart, orca and whale. The evening breathes splendour…not exactly what you would expect in a land that was on the brink of bankruptcy in 2008. “Iceland is rich,” says Gunnar at the dessert buffet.

“We are a northern welfare state with a high standard of living, and we’ll keep it that way.” On the Human Development Index of the UN Development Programme, Iceland is 14th, beating Belgium by four points.

“But don’t get this wrong. Many Icelanders still have problems, especially families with kids, and people who took out loans just before the outbreak of the crisis. Trendy bars and four-by-fours show one face. There’s another Iceland, which I will show you later. In 2013 we will be hit by the crisis for real because people have used their savings to pay off the loans. Slowly but surely this money is running out.”

Financial Vikings

Drottinn blessi heimilið’, ‘God bless this house’, proclaims the plaque on the front door of Gunnar’s house. He bought it in a middle class neighbourhood of Reykjavik in 2007, paid a monthly mortgage of 100,000 Icelandic crowns (632 euros at the present, low rate). “Overnight I had to suddenly pay off 170,000 crowns (1,075 euros) a month. Of course I couldn’t afford that anymore, so another man bought the house and now I’m paying rent.

The car was an even bigger disaster: in one go, the payoff amount rose from 2 million crowns (12,500 euro) to 5 million (31,000 euros). So I returned the car, yet the banks continued to claim money. They won’t get a penny from me anymore. This is the first time in my life I have refused to pay. Many Icelanders act like this: they simply refuse to pay.”

Gunnar admits he has been naive. “In 2003 we privatised the national banks, in no time we became sort of financial Vikings. We started buying companies worldwide as if it were a matter of course. Between 2003 and 2008, everybody was praising the policy of the Icelandic banks. I also thought that everything was alright.”

Kreppa is the Icelandic word for the crisis that inexorably broke in 2008. Not long after the American banking crisis, the bubble of Icelandic Viking capitalism burst. Within months the three largest banks went bankrupt: Kaupþing, Landsbanki and Glitnir. The Icelandic economy proved to be overdosed on credit. The population had gone deep into debt to buy houses, cars, trips abroad. In no time, the Icelandic crown lost half of its value.

Michael Moore vs. Monty Python

“Maybe it wasn’t that bad for us to get a slap in the face,” says Gunnar. “When you’re doing things the wrong way, you need a good shake-up. The kreppa drew families in Iceland closer together. My family, too.”

Gunnar has four daughters, with four different women: Geirþrúður, Kristin, Halla and Unnur Regina. He has lived what you could call a colourful life. At twelve he started working on a fishing boat. Three years on, he became a father for the first time. Tough youth, drinking problem, detox. At 35 he decided to live out his dream. He set off for England and took a four year course at the Bristol Old Vic Theatre School. He returned to Iceland as a director.

Gunnar’s small business, 540 Floors, is located in a modern office building in Reykjavik, where lawyers work alongside PR-advisors for bankers, telling them which suit to wear when going to court. 540 Floors is a theatre company as well as a small film business. Its name refers to Viking mythology: Thor, the god of thunder owned the biggest house of all the gods, comprised of no less than 540 floors.

When the crisis broke, Gunnar was about to tour England with a play warning young people about the dangers of alcohol and drug abuse. The tour abroad was cancelled. So instead, Gunnar decided to make a documentary about the kreppa. In a Michael Moore meets Monthy Python-style, Maybe I should have recounts the search for the Icelanders’ lost money.

Unseen Success

“The past few years I’ve been invited to ten countries to lecture about the documentary,” says Gunnar, showing Facebook pictures taken in Spain, Portugal, France, USA and Japan. “Everywhere people ask me: what can I, as an individual, do? I always repeat the same answer: I sat home watching TV when the crisis broke, trying to grasp what was happening. I listened to the Prime Minister and other politicians talk, became none the wiser. No one pointed out the heart of the problem. So I went looking for answers myself.”

Gunnar rented a small theatre venue in the centre of the capital and organised the first civic meeting (Borgarafundur). “It worked. People ventilated their anger and frustrations, and they got answers.” Several meetings followed. At the fourth, 1200 Icelanders turned up. “Almost all important politicians from parliament and government were present. It was broadcast live on national television.” The civic meetings became an unseen success. Gunnar organised sixteen of them throughout the country.

“I am but one person, but I gathered people around me. Then we set up a political party, Borgarahreyfingin (Civic Movement). In two months’ time, four of our members had a seat in parliament. In contrast to before, I wasn’t in the least committed. I hated politics. Moral of the story: you can do a lot as an individual.”

However, the story isn’t all that fantastic. The elected party members each went their own way, broke with the Civic Action Association. Gunnar, too, distanced himself slightly from the political and public scene. “Right now I am busy with theatre and documentaries again. But I hold on to the experiences of the civic action movement, because I really believe in a kind of European civic forum.”

Join Forces

Gunnar shares his office with Guðmundur Andri Skúlason (41), with him one of the initiators of the civic action movement.

Skúlason is head of the Icelandic Association of Debtors. The organisation has 4,000 members, mostly house owners and SMEs. Skúlason: “We joined forces, because on your own it is too expensive to fight the banks in a lawsuit. People all over the world should do this: read the legislation, look who doesn’t respect the law, then sue them. It is hard, it takes a long time, but it works.”

The association won a lawsuit against a small bank that specialised in financing property through loans in foreign currency. The judge considered these loans to be illegal.

As a consequence, the Icelandic government decided that the mortgages had to be recalculated retroactively, based on Icelandic indexes. But the association fought this decision too, as mortgage payments remained far too high and the Supreme Court set them right.

In the meantime, the association and the banks struck a bargain: at present, the debtors can make the same monthly payments as they did before the crisis. But the case hasn’t been definitively settled yet. The future remains unsure. Skúlason hopes the EFTA Surveillance Authority can help.

According to Skúlason, “it is thanks to a number of well thought out governmental measures that four years after the crisis, Iceland hasn’t been left shipwrecked economically, and is actually improving. An emergency act split up the banks in two parts, domestic and foreign. This way the banking system could continue to function and everybody could go to the supermarket on Monday as usual. So we let the existing banks collapse.”

To Skúlason, this approach differs completely from how the crisis has been handled in Greece and Ireland. “First, they wanted to save the banks there at all costs. Secondly, we have our own currency. We saved jobs by devaluing the Icelandic crown. We could export fish at competitive prices, and we attracted tourists.”

A thriving fishing industry and increased tourism helped to boost the economy. After a serious downfall in the first years of the crisis, Iceland saw a 3.1 per cent growth in 2011. 2012 will see an expected 2.5 per cent growth. But figures don’t tell the whole story.

Food Parcels

At a house in a Reykjavik suburb some forty Icelanders of every age are queuing up in the drizzle. Here, every second and fourth Wednesday of the month, volunteers of charity organisation Fjölskyldu Hjálp (‘Family help’) fill bags with milk, meat, fish, bread, butter, cheese, toilet paper, vegetables and vitamins.

“It is very sad. Thousands of people are suffering hard times. In 2011 we distributed 25,560 parcels among some 5,000 Icelandic families,” says Ásgerður Jóna Flosadóttir, manager of Family Help. “Elderly, single mothers and disabled people were have been struggling anyway over the last two decades. The crisis has worsened their situation. After rent and bills have been paid, there’s hardly any money left to buy food and medicine.”

Gunnar nods in agreement. “Every day I meet people in this situation,” he says. “It makes me sad that a wealthy, thinly populated country like Iceland is unable to solve this. But it is a real shame the charity organisations don’t cooperate more. If we want to change things in society, we have to organise ourselves better. We are fighting a well-structured system that has been in power for almost half a century. A few people are getting rich on the backs of many poor. Why is that? Because they’re well organised.”

All Aboard

One of Gunnar’s daughters, Halla (31), is the policy advisor for Ögmundur Jónasson, minister of Internal Affairs.

“No, I didn’t inherit the political instinct from my father, he got it from me,” laughs Halla in her office at the ministry. Her boss is part of the left government led by Jóhanna Sigurðardóttir. She came to power after the electorate punished the wild speculation capitalism of Geir Haarde’s centre-right government.

Austerity measures were the green-left government’s unrewarding task. “Over the past four years, we’ve had to cut 20 to 25 per cent of government expenses, including education and healthcare. It put enormous pressure on social services,” says minister Jónasson.

“In government there’s been a debate whether we went too far. Personally, I think we did.” But, she stresses, with a right-wing government it would have been worse. “They would have used the crisis to privatise. Our policy is smart enough not to use the crisis for this kind of purpose. On the contrary, we want to reinforce the social fabric in our country. We don’t know exactly what is going to happen in the next few years. But one thing’s for sure, we’ll make our way out of the crisis.”

Jónasson is certain Iceland is recovering little by little. “There’s an Icelandic saying, ‘if you get into trouble at sea, everyone must take a paddle and row.’ That’s what we have tried to do. Undoubtedly, to take up the paddles together you have to be on the same boat. This was our political assignment: get everyone on the same boat.” The parliamentary elections of 2013 will show if the Icelanders have honoured this approach.

Geysers and Glaciers

In Laugavegur high street (‘Washing Street’), tourist shops sell Viking statuettes, hiking equipment and sturdy woollen jumpers; ‘Whale watching tours’ cry the big billboards in the port of Reykjavik. Tourist boats are lying at anchor. Whale watching is but one of many tourist attractions in Iceland.

A study by the Icelandic Tourist Office shows eight out of ten foreigners visit the island for its nature: volcanoes, geysers and glaciers, waterfalls and hot water springs, unspoiled landscapes, wide panoramas and the unique northern lights. Thanks to the weak Icelandic crown, a trip to the once pricey island has become affordable for many Europeans and Americans.

In particular, American, British, Norwegian, Danish, German, Swedish and French tourists make their way to Reykjavik and beyond. The number of foreign visitors has doubled in ten years, from about 300,000 in 2000 to no less than 565,000. If it continues in a similar vein, by 2020 Iceland can expect one million visitors.

Gunnar too sees opportunities in tourism, “as I can’t live from film and theatre alone”. He created a new website ‘Friend of Iceland’ a quasi booking agency for foreign visitors.

“The idea is we bring tourists into contact with ordinary Icelanders. You can have dinner with locals, go and work on a farm for a day, that kind of thing. We will launch the site with a Facebook campaign, and then see what happens. I am 53 years old, been there done that, my kids are grown; I only have to take care of myself. I’ll be alright.”



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