The source of Europe's consternation

Kirk Semple

In the fall of 2008, it suffered an economic implosion so spectacular that the noise somehow rose above the worldwide din of financial calamity, leaving Icelanders with $5.4 billion in IOUs to British and Dutch depositors. Now, of course, the large continent to the east is once again feeling this underpopulated island's outsized effect in the form of the enormous volcanic ash cloud that has snarled air traffic throughout Europe and beyond.

“It seems we're getting pretty good at exporting our disasters,” said Egill Helgason, a political commentator and host of a well-respected political talk show. “I think people might get funny ideas about Iceland.” But, he quickly added, “We're not to blame for an eruption.”

While they are careful not to appear to take pleasure in this latest bout of troubles, Icelanders have met the volcanic eruption mostly with a collective sigh of relief. The financial meltdown may have shattered Iceland's reputation as a place of Nordic rectitude and caused deep soul-searching among its leadership and citizens, but this crisis — they gladly point out — was not one of their own making.

Iceland has been largely spared the worst effects of the eruption, at the Eyjafjallajokull glacier on the island's southern coast, with the prevailing winds carrying most of the ash abroad. And except for farmers in the sparsely populated area around the glacier, whose land was flooded by melting glacier water, or blanketed with ash, the direct impacts have been minimal.

In Reykjavik, the air has been clear, the sea breezes clean and life has gone on more or less as normal. “They picked a clever spot for the capital,” Helgason said wryly.

While air traffic from Reykjavik to Europe was curtailed most of the week, flights between Iceland and the rest of the world remained on schedule. “It's interesting: We haven't felt any ash,” said Ossur Skarphedinsson, the foreign minister, during a late-afternoon drive around the capital on Saturday. He grinned and then, taking his hands off the wheel and turning his palms upward in a mock-dramatic gesture of appeal, he blurted: “What should I say, ‘I'm sorry'?”

Skarphedinsson and other Icelandic politicians do not try to conceal their resentment toward the British government for its use of terrorism laws to freeze the Icelandic banks' assets during the financial crisis in 2008. But if they are feeling any schadenfreude in Britain's suffering, it has been well concealed, cropping up only in jokes that have been making the rounds here.

One, perhaps told with more glee by Icelanders than by mainland Europeans, has Iceland misunderstanding what Europe was requesting: “We wanted cash,” Europe says, “not ash.”

Another: It was the last wish of the Icelandic economy that its ashes be spread over Europe.

The volcanic eruption has been such a nonfactor for most Icelanders that, after a day or two, attention quickly shifted back to the other prevailing domestic topic du jour: the continuing political fallout from the financial crisis.

Last Monday, a special investigative committee released a much-anticipated report that analysed events in the nation's public and private sectors that led to the bank failures. The report, which ran more than 2,300 pages, accused seven government officials, including the former prime minister and the former head of the central bank, of acting with “negligence” in their oversight of the financial sector.

The findings prompted three members of parliament to take leaves of absence pending the outcome of a parliamentary review of the report. More are expected.

“We thought we were living in this well-ordered society, a respected member of the Nordic countries, stable, well-organised, well-behaved, deeply democratic and certainly not corrupt,” Jon Baldvin Hannibalsson, a former foreign affairs minister and ambassador to Washington said in an interview on Sunday. “This investigation showed a totally different picture.”

It may seem to outsiders that Iceland has leapt on to the world stage, but Icelanders say otherwise. Sparsely populated with about 310,000 residents, they say it has long had a streak of influence elsewhere far out of proportion to its economic power or population. Settled in the ninth century by Norsemen, it was, for several centuries thereafter, a zone of experimentation in radical free market economics known as the Icelandic Free State, with no taxes, no police or army and certainly no bureaucrats.

It was those settlers' descendants — spiritually, at least, and known, unflatteringly, as “the Vikings” — who ran all over the globe in the last decade brokering wild, overleveraged deals that led to the crash in 2008.

And this latest volcanic cloud is not the first to settle over Europe. In 1783, volcanic activity in Iceland cast a persistent haze over western Europe and is believed by some historians to have contributed to conditions that helped incite the French Revolution six years later.

But Icelanders, wise after centuries of living among exploding volcanoes, say that Eyjafjallajokull (pronounced EY-ya-fyat-lah-YO-kut) could be thrust front and centre in their lives and become a far bigger problem with a slight shift in the wind toward the west and Reykjavik, where most of the country's people live.

Many conversations here about the volcano and its import eventually seem to migrate to Katla, a far more powerful volcano on Iceland's southern coast just east of Eyjafjallajokull. Scientists fear that the recent volcanic activity at Eyjafjallajokull could set off Katla, which erupts on average about twice a century, the last time in 1918 when it set off dangerous glacial floods.

Hallgrimur Helgason, a novelist and artist, said that with the recent political and geological events, the true character of the nation and its land has been on full display.

Nature in Iceland, he said, is “harsh” and “full of surprises” and the national psyche has been moulded by that.

“You never know what's going to happen,” he said. “There's never a dull moment in Iceland.” — ©2010 New York Times News Service