[Iceland's booming tourism industry has helped bring in vital
foreign currency]
[The Reykjavik concert hall will not open until 2011]
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A year ago this week Iceland's economy collapsed along
with three of its biggest banks. Since then the country has been
struggling to recover and there is still a long way to
go.
The setting is a restaurant with a stunning view over
Reykjavik's harbour. But even in this idyllic location the effect
of the recession - or "kreppan" as the Icelanders call it - is all
too visible.
Blocking some of the view is the massive concert hall which was
supposed to be a symbol of prosperity overlooking the Faxafloi bay.
Its first concert was to take place in December this year but since
Iceland's economy collapsed, construction on the building has come
to a halt.
It is now a forlorn sight as it lies unfinished in one of the
capital's beauty spots.
Back in the restaurant the discussion keeps drifting towards the
recession - in fact, in Iceland the talk is of little else.
Perhaps that is not surprising since there is hardly anyone in
this society of just over 300,000 people that has not been
affected.
'Viking' blame
Prices have soared since the value of the krona halved. At the
same time wages have gone down and many have lost their jobs.
Loan repayments have doubled for most people - especially those
who borrowed in a foreign currency.
And foreign currency is a big issue. Icelanders have gone from
having almost unlimited access to it to severe rationing -
something, one man pointed out, that they share with Cuba.
Now if you want to buy foreign currency you have to show a valid
airline ticket to the country you are travelling to - and even then
the amount is limited.
So Icelanders are still very angry about the situation.
They blame everyone from Britain and its Prime Minister Gordon
Brown, to the EU to the big Icelandic investors - sarcastically
referred to as the "Vikings" - whose antics abroad are considered
to be a big catalyst in Iceland's downfall.
And many of these so-called Vikings have felt the full force of
that wrath. Their cars and houses have been vandalised - a level of
violence unheard of in Iceland for many decades.
So far no-one has been arrested but most Icelanders do not
condone such extreme behaviour, inflicted by what is thought to be
just a handful of people. They prefer to voice their frustration in
a more constructive manner.
Crippling debts
The biggest issue of all is Icesave. When Landsbanki's saving
accounts in the UK and Holland collapsed last October it left
Iceland with a bill of around £4bn ($6.3bn:4.3bn Euro).
On a global scale, that is barely worth a mention but for this
tiny nation the repayments of the UK loan will be crippling.
Although there are people who believe Icelandic taxpayers should
not be footing the bill for the collapse of a private bank, more
are saying that Iceland needs to meet its obligations.
But just what these obligations are has sparked a big row. A few
weeks ago the new leftist government was shaken when one of its
ministers walked out in protest at the government's handling of the
case.
Ogmundur Jonasson, the former health minister, believes Iceland
should take its case to the courts to find out just what the
repayment obligations are for a country whose whole banking system
has collapsed - a move he says has been blocked by the British and
Dutch.
"We are experiencing the worst of British behaviour - that of
the colonial power - instead of the best that Britain has to offer,
which is fairness and democratic traditions," he says.
"We are devastated by the collapse of the banks and their
irresponsible behaviour makes people here angry and bitter. We want
to pay our debts - but we want to pay what we are responsible for
and no more."
Return to welfare
Financial support from other countries and organisations such as
the IMF - and membership talks with the EU - are conditional on
Iceland solving the Icesave dispute, which is why it has taken up
most of the government's time.
Some say too much time has been spent on it and too little focus
has been on the other big problems Iceland faces, such as
increasing household debt.
Prof Stefan Olafsson from the University of Iceland says the
government needs to finish the Icesave deal so it can start helping
the people of the country.
The crisis has also caused a radical U-turn in people's views of
society.
"There is clear evidence that the nation believes free
capitalism has completely failed and now wants to focus on the
Scandinavian welfare model," says Prof Olafsson.
But it is not just capitalism that Iceland has turned its back
on.
Icelanders' attitude to the European Union has similarly
changed.
In the weeks after the crash there was huge support for EU
membership but as the Icesave row has dragged on many have started
blaming the EU.
Opportunity
It is not all doom and gloom in Iceland - Prof Olafsson points
out that the vast majority of households are likely to get through
the crisis without needing government help.
Many of the traditional industries such as fishing, energy and
wool knitting are also coping well.
But it is tourism that has seen the biggest rise, with many
foreigners taking advantage of the weak currency.
A spokesman for Iceland's biggest national park, Vatnajokull
Park, said it had had around 350,000 visitors so far this year, an
increase of around 30% on last year.
Many also see the recession as an opportunity.
In a picturesque valley in the middle of Reykjavik a group of
entrepreneurs has taken over a huge old power station and
transformed it into what they are calling a "greenhouse for good
ideas and design".
"We want to look ahead and utilise the wealth that lies in
Icelandic entrepreneurship and creativity in the coming years,"
said Gudrun Ingvarsdottir, an architect and one of the creators of
Toppstodin.
So in many ways Iceland is starting to feel like the Iceland of
old - where the emphasis is on hard work, creativity and good
values and less on making quick money.
But it is clear that this small country will be paying for its
flirtation with free capitalism for many years to come.
[Iceland's natural beauty has attracted more tourists since the
collapse]