Icelanders search for solutions

With unemployment rising and prospects bleak, the island of 300,000 faces uncertainty.

kaupthing bank crisis
Icelanders protest for a more effective government response

Every Saturday for the past few weeks, thousands of people have braved the harsh cold weather to protest in the square outside Iceland’s parliament in Reykjavik, the capital.

The crowds do not belong to one group or political party, but are comprised of ordinary people expressing their anger at their government’s handling of the current financial crisis.

This small island state – with a population of just over 300,000 – was hailed as one of the world’s financial miracles.

Icelandic companies were involved in aggressive global expansion, backed by three of the country’s biggest banks and fuelled by money borrowed abroad where rates were cheaper. 

When the credit crisis erupted, Iceland’s banks could not repay their loans. The banks were nationalised and that brought the country to the verge of bankruptcy.

Things are not getting any better.

Last month, the unemployment rate doubled to reach two per cent; the forecast is it will reach 10 per cent by the coming spring. 
Life getting harder

Lara Omarsdottir’s home in the suburb of Mosfellersbaer, 11km from Reykjavik is where silence is a stranger. 

With five children, the household has been a constant bubble of activity and noise. 

The first of the Christmas decorations are up on the outside of the house, but its likely to be a quiet one this year. 

Lara has just been paid off by her company where she worked as a journalist for Iceland’s biggest newspaper. 

Her husband, Hauker Olavsson, a project manager for a computer software company, has been given formal notice he will be out of work by February 1. 

They have already started economising; the food is a little cheaper, the rooms a little colder, and they know life could soon get a whole lot harder. 
Miracle becomes mirage

Lara watched as Iceland’s economic miracle took off at the beginning of the century.

“I never invested … I always knew there were ups and downs and what was happening seemed too good to be true”, she told Al Jazeera.

Her caution failed to protect her, however.

Five weeks after she too up her job at the newspaper, she was laid off.

“We can survive until April, maybe May. If things do not get better, then maybe we have to leave. Maybe we will go to Norway. We have to feed our children and the only way we can do that is if we have a job – if it isn’t here, then it will have to be somewhere else,” she said.

When I asked her who was to blame for the financial turmoil, she said: “At the moment I do not care. We will find out in time. I want the politicians to sort this first, then we can worry about who is to blame.”

Geir Haarde, Icelands prime minister, says the financial situation will be very difficult in 2009 but should improve by 2010.

The problem is no one in Iceland is ready to trust the politicians or their judgements.

Source: Al Jazeera