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Iceland Diary

travel Updated: Sep 06, 2010 10:41 IST
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Sometimes the names of countries can lie to us. There is, for instance, little greenery in Greenland (only a lot of ice) despite its name. And there's rather a lot of greenery in Iceland and not as much ice as you would expect.



Before I went to Iceland, I knew very little about it. I knew it as the home of the unpronounceable volcano (pilots called it E15 to avoid tripping over their tongues) that disrupted air travel in Europe for so many weeks. I had heard of its President Olafur Grimsson, a long time friend of India from Indira Gandhi's day and winner of the Nehru Prize earlier this year. And I was dimly aware that its improbable burst of prosperity at one stage, Icelandic companies owned half of the British high street had came to an inglorious end a couple of years ago and that the country was now in a strict fiscal sense effectively bankrupt.



That's not a lot of knowledge to base a visit on but when the Icelandic ambassador to New Delhi phoned on behalf of his Foreign Ministry to ask if I would visit his country, I accepted the invitation on a sudden impulse. And I am glad I did. The first thing I discovered when I got to Iceland was that there were very few countries like it (though New Zealand is not dissimilar). For a start, it is very isolated. The country is about the size of England but its total population of around 3.5 lakh is roughly equal to the population of a Delhi locality - say, Karol Bagh. When we got to the countryside, we would drive for miles and miles without seeing a soul, the quiet isolation only relieved by the occasional herd of magnificent stallions.


Then, there's the landscape. According to geologists, Iceland is one of the world's youngest countries. It was created millions of years after, say, India which means it probably rose out of the Atlantic Ocean as a consequence of volcanic activity.



So, Iceland is still a land in ferment. Forget about E15, much of Iceland is volcanic. Driving into Reykjavik from Keflavik Airport (a distance of around 40 km), I was stunned by the landscape. For most of the way, I did not see a single tree. Instead the land was covered with mounds of an unusual rock. It turned out to be lava, the legacy of innumerable volcanic explosions over the centuries. At various places, the earth itself would seem to be boiling and hot steam would rise from holes in the ground another consequence of volcanic activity is that hot springs bubble away under the soil.



By the time we got to Reykjavik, however, the landscape changed again.



Now, it was typically Northern European, full of greenery, manicured grass, tall trees and verdant bushes. I was to learn that this was not unusual in Iceland. In 20 minutes you could go from a sort of lunar landscape to a lush forest.



Despite their President's status as an honorary Indian, there has been little contact between the people of Iceland and the people of India.



The Indian community is microscopic and there were times when I felt like the only brown person in a land of tall, blue-eyed, blonde men and women. Over the last couple of years, we have finally established full diplomatic relations and proper embassies have opened in both countries.



Now, the Icelanders want to have more to do with us. They want Indian tourists (doesn't everyone?) believing that their country's spectacular natural beauty and proximity to London (just over two hours by plane) makes it a perfect destination. They want Bollywood to come and shoot there (it is certainly less chocolate-boxy than Switzerland) and are offering a fabulous part-of-your-money-back deal to the film industry.



For our part, we are fascinated by their experiences with geothermal energy. Iceland has some of the world's cheapest and cleanest electricity. I visited a power plant in which the turbines were driven by the steam escaping from the earth. While the initial cost was significant, the plant was then virtually cost-free to operate because the natural steam was free. It produced more energy than a city like Reykjavik would need, had only eight employees and at night all employees went home leaving the plant to keep producing cheap, entirely clean electricity without any human supervision.



The Indian ambassador to Iceland told me that we had enough geo-thermal energy beneath the surface in Ladakh to run similar plants and that he was hoping to use Icelandic expertise to introduce India to clean energy that was not dependant on expensive petroleum or coal.



Iceland is still recovering from the banking crash. This is a complex phenomenon. From what I can tell, the country seems to have been a victim of capitalism gone mad.



During the greed-fuelled global boom years, Icelandic banks followed the example of Wall Street and expanded wildly. They made dubious loans without sufficient collateral and ran international operations where they paid out needlessly high rates of interest. The governmental regulators tried to keep a check on the borrowing culture by making it expensive to borrow in Icelandic Kroner. No matter. The banks by-passed this regulation by offering loans in foreign currency.



Eventually it got to the stage where some banks had turnovers that were 12 times Iceland's GDP.



When the global financial crisis occurred, the consequences for Iceland were sadly predictable. The banks failed. The government had to guarantee their deposits so that



Icelanders did not lose faith in their currency. But the Kroner collapsed anyway. Then Britain and Holland announced that they would pay back those of their citizens who had put their money in Icelandic banks. When Iceland went to the IMF for help, the Brits and Dutch asked the Icelandic government to pay back the money they had handed out to their citizens. The Icelanders had no choice but to agree or to risk losing the IMF package with the consequence that the country is now saddled with a massive debt.



Meanwhile those Icelanders who had taken foreign currency loans found that while they were earning in severely devalued Kroner, their borrowings were dollar or Euro denominated. Therefore the real cost of their debts (and their interest payments) had shot up.



Iceland is now struggling to find a way out of this crisis (as a matter of interest nearly everyone of consequence I met in Iceland congratulated India for not having listened to the international banking whiz kids and thus having escaped the global collapse).



But it should not be too difficult to find a solution. The population is tiny. Iceland's fisheries sector is still going strong. It got half a million tourists last year (more than its total population). And it has the world's cheapest energy.



The first thing you notice about the people of Iceland is how informal they are. Everybody uses first names. There is very little sense of hierarchy. In many ways, Iceland is a truly egalitarian society.



But nothing had prepared me for the informality of the President's house. Olafur Grimsson, who had been President for over a decade, lives in a nice bungalow with no security whatsoever. There is not even a proper ring fence around the property. Anybody can walk up to the front door and ring his doorbell. It is even possible that the President will open the door himself.



When I went for dinner, I was startled to find that he did not even have much in the way of staff. A lady opened the door, served the food, etc. and presumably there was a cook who made all the delicious food we ate. But that was it.



The President and his hyper-elegant wife Dorrit are great India lovers. He came often to Delhi when Rajiv Gandhi was Prime Minister and had launched an initiative for nuclear disarmament. Since then, he had been a frequent visitor, has many friends in India (

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