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I&I Issues and Images


3 • 2009



4 On and off Innovation Honor for Icelandic Women Thirty Icelandic Authors Signed in Germany Swimmer Breaks Three Icelandic Records CEO of deCODE Receives Nordic Medicine Award 6 The Wheels are Starting to Turn Again The Icelandic banks collapsed with a bang heard around the world one year ago. Now new banks are being established. 8 Golfing in the Dark? Not in Iceland Does playing golf at midnight surrounded by a lava field and a panoramic view of large glaciers sound too strange to be true? Read on! 9 Power to the People On November 14, around 1,400 Icelanders—a cross-section of the nation—gathered to discuss their visions for the future at the country’s first National Assembly. 10 Our Girls The Icelandic Women’s Soccer Team is Playing with the Best in the World. 12 An Adventurer Returns to His Hometown Living in tents, braving snakes, rainstorms and active volcanoes for many months a year. 13 Discover the Fisherman Within Sea angling has grown from being a source of extra income and a means of putting food on the table to a popular hobby and tourist activity in Iceland. 14 Picture This A year into the economic crisis and Icelandic creativity is not about to go bankrupt. 16 Wild Thing, You Make My Heart Sing With record growth in tourism last summer, the West Fjords may finally have claimed their spot on Iceland’s ‘hot destination’ map.

Photo: Páll Stefánsson

18 The Golden Brew Presenting the fascinating history of beer making in Iceland and the best of modern Icelandic breweries. 20 A Diary of Business and Politics The top stories in business and politics in Iceland from September to November 2009.

Power plant at Hellisheidi

Issues and Images

Trade Council of Iceland Borgartún 35, IS-105 Reykjavík. Tel +354 511 4000 Fax +354 511 4040

Vol. 5 3-2009 Editor: Benedikt Jóhannesson Staff writer: Eygló Svala Arnarsdóttir Design: Erlingur Páll Ingvarsson Photographers: Áslaug Snorradóttir, Eygló Svala Arnarsdóttir, Geir Ólafsson, Páll Kjartansson and Páll Stefánsson TCI Editorial Consultant: Lilja Vidarsdóttir On the cover: The Steambath at Hveragerdi swimmingpool. Photo by Páll Stefánsson Back cover: Súlur at Breiddalsvík. Photo by Páll Stefánsson Printing: Oddi Published for the Trade Council of Iceland by Heimur Publishing Ltd. Copyright Heimur Publishing. No articles in the magazine may be reproduced elsewhere in whole or in part without the prior permission of the publisher.



INVEST IN ICELAND AGENCY Borgartún 35, IS-105 Reykjavík. Tel +354 561 5200 Fax +354 511 4040

Ministry for Foreign Affairs Rauðarárstígur 25, IS-150 Reykjavík. Tel +354 545 9900 Fax +354 562 4878

21 Emilíana’s Best Year Yet? Emilíana Torrini had a number one single in Germany with this summer’s ‘Jungle Drum’. Success and gold-selling records are just the tip of a long and steady climb for one of Iceland’s most charming song writers. 22 A Grandmaster in Charge Margeir Pétursson was well known in Iceland as one of the country’s strongest chess players. He is now chairman of MP Bank. 23 Icelandic Design Mundi label shakes conventional ideas of beauty.



On and Off

On and Off



Innovation Honor for Icelandic Women

Swimmer Breaks Three Icelandic Records

Female innovators from all over Europe met recently in Finland to honor those among them who have excelled. Seven Icelandic women received honors from the European Union Women Inventors & Innovators Network (EUWIIN). The EUWIIN Awards serve to recognize exceptionally creative, inventive, innovative female entrepreneurs or designers from all sectors and backgrounds throughout Europe. London Metropolitan University is the principal partner of EUWIIN in launching and promoting the new awards. The EUWIIN Silver Innovation in Home and Leisure Award 2009 went to Gudrún Gudrúnardóttir, inventor of Plasterplug—a product responsible for resealing holes in walls. c

Swimmer Jakob Jóhann Sveinsson of Aegir won the 50, 100 and 200-meter breaststroke in the Icelandic Championship in Laugardalslaug swimming pool in Reykjavík, November 20-21, breaking the Icelandic record in all instances. Sveinsson also became the first Icelander to swim the 100-meter breaststroke in less than one minute—58.91 seconds—which is the second fastest in Europe this year and the second fastest in the Nordic countries of all time. “There are many explanations for this progress. For example, I have started swimming in plastic pants which have less resistance in the pool,” Sveinsson said. “I have been aiming for swimming the 100-meter breaststroke in less than one minute since 2002.” c


Morgunblaðið/Brynjar Gauti



CEO of deCODE Receives Nordic Medicine Award


Icelandic literature has been embraced by German publishers ever since it was announced that Iceland would be the guest of honor at the 2011 Frankfurt Book Fair. Now, 30 Icelandic authors—and counting—have been signed in Germany. Publication of Icelandic literature in the German market, which reaches 100 million readers, has been growing in the past decade, as stated on the website of Fabulous Iceland, the book fair marketing office, in mid-November. At the turn of the last century, approximately ten Icelandic books were translated to German each year. Now their number has reached 20 and is expected to rise to 100 in 2011—the year of the book fair. c



Photo: Páll Stefánsson

Thirty Icelandic Authors Signed in Germany

Icelandic physician Kári Stefánsson, CEO and chairman of deCODE Genetics*, received the Anders Jahres Award in Medicine at a ceremony in Oslo, with the King of Norway in attendance, in late October. Stefánsson is the first Icelander to receive the award. The Anders Jahres Award is one of the most respected scientific awards in Europe and is sometimes dubbed a Nordic Nobel Prize in medicine. Stefánsson was granted the award for deCODE’s contribution to research on the genetics of common diseases. The prize is NOK 1 million (USD 181,000, EUR 112,000). Stefánsson said the award is consistent with the recent scientific achievements of deCODE’s employees. “During the past few years there has been significant growth in all our scientific work and shortly our people will post a number of scientific articles in respected international journals,” Stefánsson added. *On November 17, it was announced that deCODE Genetics has signed an agreement with American company Saga Investments LLC on the latter company’s acquisition of deCODE and its entire operations. c




accumulated in the banking system, pushing retail deposit rates below the banks’ current account rate. The high level of uncertainty and the banks’ efforts to restructure and downsize their own balance sheets in the wake of the crash prompted them to cut back on new lending. Trust between market participants all but vanished. This type of behavior was common in many markets in the wake of the global financial crisis, but it was even more apparent in Iceland because of the scope of the domestic crisis. Before the banks’ collapse, about 70 percent of Icelandic businesses’ total debt was denominated in foreign currency. This is quite a large share and increased the difficulties in restructuring. The problem was confounded by the fact that the banks were technically owned by the state of Iceland, but at the same time owed a very large share of money to the creditors of the old banks. Very early on, the idea came up to transfer ownership from the state to the creditors. The idea caught on and in October 2009 it was decided that Glitnir’s creditors would take over Íslandsbanki. At the time of writing it is unclear, but considered likely, that the creditors of Kaupthing will take over Arion Bank. The situation of Landsbanki and NBI is different, because the bank does not appear to have enough assets to cover all of the deposits in foreign operations, the so-called Icesave accounts. Thus, Landsbanki will remain under national ownership. Íslandsbanki Taken Over by Creditors

The Wheels are Starting to Turn Again Photo Páll Stefánsson

The Icelandic banks collapsed with a bang heard around the world one year ago. Now new banks are being established.


ne of the most difficult tasks after the financial collapse in Iceland in October 2008 has been to build up the banking system again. All of the major banks were taken over by the financial authorities in accordance with an emergency act that was passed by Althingi (Iceland’s Parliament) on October 6, 2008. One of the main purposes of the act was to prevent a run on the banks and this was achieved. Three new banks were established: New Landsbanki, New Kaupthing and New Glitnir. Since then the ‘new’ banks have been renamed: New Landsbanki is now NBI (National Bank of Iceland) and New Glitnir is called Íslandsbanki, actually the 6


name of Glitnir before 2005. New Kaupthing is called Arion Bank. Although the new banks functioned from day to day, taking deposits and processing all routine transactions, they did face very serious difficulties. The Icelandic króna, our national currency, had devalued by more than 50 percent within a period of a few months. Many companies and individuals had taken foreign currency loans and had a very difficult and sometimes impossible task to repay them. The banks had only a preliminary balance sheet and estimates on recovery rates on loans varied greatly.

Months of Uncertainty

Deposits in the banking system increased because of uncertainty and flight from higher-risk investments, particularly because deposits enjoyed generous government guarantees. Banking system lending contracted, however, when banks began restructuring their balance sheets. Thus liquidity accumulated in the system, reducing the banks’ need for central bank liquidity facilities. These developments were more exaggerated in Iceland than in most countries, because of the scope of the banks’ collapse. Since May 2009, excessive liquidity has

In October 2009 Glitnir’s Resolution Committee, on behalf of its creditors, decided to take over 95 percent of share capital in Íslandsbanki. The outcome was based on thorough due diligence carried out by Glitnir’s advisors on Íslandsbanki’s operations. This concluded the settlement concerning those assets transferred from Glitnir to Íslandsbanki. According to the agreement between Glitnir’s Resolution Committee and the Icelandic government, signed 13 September 2009, the government will provide the bank with an ISK 25 billion subordinated loan to strengthen its equity and liquidity position. The agreement represents a very significant step forward in the future reconstruction of the Icelandic financial system. The participation of creditors will facilitate the bank’s co-operation with foreign financial institutions. This outcome will also mean that the cost to the government of refinancing the bank will be ISK 37 billion lower. Steingrímur J. Sigfússon, Minister of Finance, was pleased: “This decision by Glitnir, in consultation with creditors, to acquire an Icelandic bank is definitely gratifying. It is a clear sign that in the assessment of foreign investors an end is in sight to the international financial recession we have been struggling with in recent years. The final steps are now being taken in the reconstruction of the Icelandic banking system which will be fully prepared to service individuals and households, while promoting the recovery of business and industry.” The view of the minister is widely shared in Icelandic business circles. It is anticipated that in the months to come restructuring of debt by companies and individuals will provide a new foundation for sustainable economic recovery in Iceland. c






Photos Eygló Svala Arnarsdóttir

Power to the People

Midnight golf in Akureyri Photo Páll Stefánsson

Golfing in the Dark? Not in Iceland Does playing golf at midnight surrounded by a lava field and a panoramic view of large glaciers sound too strange to be true? Read on!


any people don’t know that golf is one of the most popular sports in Iceland. Every year more and more people are going out to enjoy this great outdoor sport. Icelanders are used to their surroundings but foreigners know that golf in Iceland is a unique experience. The wealth of wide open space surrounded by incredible nature preserves makes golfing in Iceland an unforgettable experience. Midnight golf is available in summer due to Iceland’s northerly location, and one tenth of Iceland’s surface is adorned with lava. Sweeping mountain and ocean views characterize Icelandic golf courses, which follow the contours of the landscape—a popular trend in golf course design today. One of the most famous golf tournaments in



Iceland is the Arctic Open Golf Championship. It is an international event which attracts golfers from various parts of the world. Up to 120 international players have taken part in this unusual event. It takes place in Akureyri in the center of northern Iceland at the end of June every year, a time when the sun never sets. Hence, the players can play at midnight without any problems. Many golf courses in Iceland have been laid out with minimal disturbance to existing terrain and in harmony with nature. The making of golf courses has even been part of restoring vegetation in the sandy landscape within lava fields. Their design pays tribute to the first golf courses in Scotland—the home of golf. There are fifteen 18-hole golf courses and

fifty 9-hole golf courses in the country available to visitors. Golf in Iceland has gained in popularity by leaps and bounds in recent years to become the nation’s second-most popular sport. Many people now come to Iceland exclusively to play golf. According to Vilhjálmur Kjartansson at Iceland ProTravel people had started to book golf tours in November 2009 for the coming season. The company, which runs the website, specializes in organizing golf holidays in Iceland for individuals, families, groups and couples where the focus is on golf and travel. Kjartansson adds: “This type of travel, where you can combine a one-of-a-kind landscape and this great outdoor sport, seems to be taking off.” c

On November 14, around 1,400 Icelanders—a cross-section of the nation—gathered to discuss their visions for the future at the country’s first National Assembly.


hrongs of people appear out of the dark and gather at the entrance of Laugardalshöll arena where the Icelandic flag and the National Assembly’s flag have been raised. There is sense of anticipation in the air. “Good morning,” gleams a middle-aged woman in line next to me. “This is so exciting!” I agree, return her greeting and smile back. Ready to brainstorm our ideas for a new and better Iceland, we enter the arena with the other participants: around 1,200 people aged 18 to 88 from all around the country, who were invited at random. The remaining 200 participants are MPs, ministers and leaders of businesses and organizations. The National Assembly, Thjódfundur in Icelandic, was organized by a group of people from different backgrounds who call themselves the Anthill. They include singer-songwriter Björk, businesswoman Halla Tómasdóttir of Audur Capital, film director Lárus Ýmir Óskarsson and Minister for the Environment Svandís Svavarsdóttir. All of the ‘ants’ are volunteers, apart from the project leader, Kristín Erna Arnardóttir, and the assembly was financed with donations, including from the Icelandic state. I find my table and introduce myself to my discussion leader and group members: four men, three women. I sense positive energy at the table—and the entire room. People are talking quietly, not arguing, despite some of the topics being controversial and some of the attendees being known for their controversial opinions. At a table to my left sits Minister of Finance Steingrímur J. Sigfússon, brainstorming with the public without furthering his policies, and behind me sits Left-Green MP Gudfrídur Lilja Grétarsdóttir, laughing at something the person beside her said.

The first round of discussions determines that integrity is the assembly’s top value. Equality, respect and justice were mentioned often, as were love, responsibility, freedom, sustainability and democracy. Family and trust were also given high priority. We change these values into sentences summarizing our ideas and visions for the future and use them to form nine themes for the next round of discussions: education, economy, equal rights, family, environment, public administration, welfare, sustainability and other (later renamed ‘opportunities’). Then we dig deeper into the nine themes and each group creates a twenty-word sentence. My group focuses on equality and we come up with the following sentence: “A just society without poverty based on welfare and equality, where human rights are respected, the participation of all is guaranteed and the individual is given a chance to shine.” Critics of the National Assembly have called the values empty words and the sentences wishful thinking. However, the National Assembly wasn’t intended to be a strategy-making platform but rather a place for the public to exchange ideas, discuss their visions for the future, bond, and to establish a direct link to ministers, MPs and business leaders. They have the power to incorporate the assembly’s conclusions into their policies. And they are. The government decided at a cabinet meeting on November 20 to launch a direct partnership with the Anthill. Power to the people, indeed. Everything that was written down during the National Assembly will be entered into a database and made public on the assembly’s website: c Eygló Svala Arnarsdóttir.




Photos This spread Geir Ólafsson


Our Girls

The two faces of team captain, Katrín Jónsdóttir: The footballer and the doctor.

The Icelandic Women’s Soccer Team is Playing with the Best in the World.


nce upon a time mentioning female soccer would at best provoke a yawn, at worst nobody would notice. Those days are gone. Iceland now has a star-studded national team in women’s football, one of the best eight teams in Europe. It is currently ranked as the 18th best national team in the world by FIFA (the men’s soccer team is ranked 92nd). On October 30, 2008, the national team qualified for the 2009 UEFA Women’s Championship, the first major football tournament Iceland has taken part in. A big part of the nation was glued to the TV screen when the team played in Finland in the Women’s Euro 2009. When the team scored a goal against France after only a few minutes 10


of play, hearts began to beat faster in living rooms all around Iceland. Unfortunately, the dream ended there and the team lost all three games in the tournament. However, the girls put up a good fight, and only lost by one goal to the German team, which eventually won the championship. The nation refers to the team fondly as ‘our girls’. The Doctor is in

Team captain, Katrín Jónsdóttir, is one of the most experienced players on the team. Her regular club, Valur, won both the national title and the Cup in 2009. Besides keeping in top form as a world class athlete she is also a

medical doctor. She started her sports career at the age of eight, and it is no exaggeration to say she is an all-around athlete. On her way to becoming a soccer star she played basketball, track and field and gymnastics. She finished her medical studies in Norway before returning to Iceland to work and play football. She has many interests, but of course it helps that her husband is a former soccer player. Jónsdóttir plans on further studies in medicine in the future. From Soccer Stars to Film Stars

Generally the men’s soccer teams get most of the media attention, but lately Jónsdóttir

feels that is reversed. “We are proud of the attention that we have gotten. Strangers are congratulating us on our success. That is completely new to us.” One reason that the team is well known in Iceland is the fact that a documentary, appropriately named Our Girls, premiered shortly before the competition in Finland this fall. The producers, Thóra Tómasdóttir and Hrafnhildur Gunnarsdóttir, followed the team for over a year, watching what happened behind the scenes. Jónsdóttir says she was afraid that the portrait might seem too intimate and the humor too local to the team. The fear was not necessary: the film got excellent reviews.

Who are the Heroes?

It may come as no surprise that Jónsdóttir’s idols all come from sports. She names handball stars Ólafur Stefánsson and Gudjón Valur Sigurdsson, both members of the silver-winning team at the 2008 Olympics in Beijing. She also admires Eidur Smári Gudjohnsen, her colleague as captain of the men’s national soccer team, who has played with two of the best teams in the world: Chelsea and Barcelona. As for herself and the national team, she says that the secret behind their success is a great team spirit and very hard work. When somebody mentions Our Girls these days everybody listens. c

I&I 11



Discover the Fisherman Within

An Adventurer Returns to His Hometown

Sea angling has grown from being a source of extra income and a means of putting food on the table to a popular hobby and tourist activity in Iceland.


ray waves ripple the fjord’s surface, sea water sprays my face. There is a distinct smell of salt and fish intestines in the air. Seagulls circle the small boat bobbing like a cork on the waves, occasionally letting out a cry in anticipation of the upcoming meal. Despite feeling queasy and cold I grab the handle of the roll of line and hooks and start pulling hard. My muscles ache as the first fin surfaces, belonging to a beautiful golden-brown cod with a tiny little goatee, signifying its species. Excitedly I unhook the fish and toss it into the boat. Then comes the bloody work. With a sharp knife I make a deep cut below the fish’s gills, slashing its heart. This method is called blódgun, and is supposed to grant the fish a short and painless death. The seagulls fly closer. Then I gut the fish and pull out the intestines, tossing them overboard. The seagulls scream in excitement as they fight


araldur Sigurdsson has now returned to his home town of Stykkishólmur, situated near the legendary Snaefellsjökull glacier and volcano. And he has founded The Volcano Museum, the only one of its kind in the world. In his extraordinary 40-year career he has discovered a lost city, led research on legendary sites such as Pompeii and found the link between meteorites and the extinction of the dinosaurs. Entering the museum, there is the smell of fresh paint and optimism in the air as carpenters add the finishing touches. To begin with, a sample of his collection of volcano art will be on display, along with a selection of rocks dating back millions of years from the earth’s core, and his own archeological finds: tools from the Stone Age, pottery from the Bronze Age and pieces from Pompeii. Later, technological and scientific aspects will be added. He is clearly excited about this project which aims to make the museum into an international institution.



“Volcanoes are the most spectacular phenomena in nature. They are both threatening and beautiful and the best word to describe them is sublime,” muses Sigurdsson, whose passion was kindled growing up hiking around and exploring his native Snaefellsnes peninsula. “As a student I got a job in earth drilling and geological research. I was thrilled to discover that it was possible to make a living from that.” Living under a volcano is like being a fly on an anvil, he says. “The hammer will strike once every 1,000 years and you’re lucky if you don’t get in its way. The thing about volcanic soil is that it is extraordinarily fertile, making it a highly valuable place to live. There is always a certain tension involved but amazingly all these different cultures see things the same way: there was an eruption once, and sure it will happen again. But not in my lifetime. People are surprisingly quick to forget.” Sigurdsson is a fervent collector of volcano art. He has even written an encyclope-

dia on the subject. He tells the fascinating story behind each painting and the volcano it depicts. Naturally, he has worked at them all. There is an Andy Warhol print, a Tiffany stained glass window from a Jewish synagogue, painted Japanese porcelain showing Mount Fuji, a painting by renowned Mexican painter Siqueiros and a 400-year-old painting of Naples with Vesuvius fuming in the background. “Sometimes my friends buy pieces and then ask me to buy them from them. That can be difficult. But I never say no,” he says with a smile. Despite a handful of paintings by significant Icelandic artists such as Ásgrímur Jónsson and ‘Gudmundur from Middal’, Sigurdsson points out that, unlike other volcanic communities worldwide, Iceland has no tradition of volcano art. “People simply didn’t care for paintings showing natural disasters and calamity hanging on their living room wall. They preferred something serene and beautiful. Life was hard enough as it was.” c

Photos this spread Páll Stefánsson

Living in tents, braving snakes, rainstorms and active volcanoes for many months a year, volcanologist and geochemist Haraldur Sigurdsson has lived adventures that would put Indiana Jones to shame.

over the goodies. At home the fresh catch is filleted and boiled, then eaten with potatoes, yellow turnips and dark rye bread with plenty of butter. A meal well deserved. Back in the early 1990s when I went sea angling with my family in Eyjafjördur fjord I didn’t suspect that it would later turn into a popular hobby and major tourist attraction. The National Union of Icelandic Sea Angling Associations (Sjól) lists eight local associations, which organize sea angling tournaments in different parts of the country. In 2009, tournaments were held from May to August from Patreksfjördur in the west to Neskaupstadur in the east. The winner in the Siglufjördur tournament, north Iceland, held in late August with 50 people participating, caught a total of 346 fish. The contagious atmosphere at these tournaments has reached other countries as well; a documentary crew from a German television station participated

in the sea angling tournament in Sudureyri, the West Fjords, in 2007. Sea angling tours are offered by a number of companies around the country; the West Fjords are an especially popular sea-angling destination. To the delight of travelers, every now and then stories are heard of giant fish caught on such tours. In 2007, German tourist André Rosset caught a 240-centimeter halibut weighing 175 kilos—a European record at the time. Larger fish have been caught in Icelandic waters but not on an angle. A combination of whale watching and sea angling is also a popular choice—such tours are offered by all the major whale watching companies: Elding ( and Hvalalíf ( in Reykjavík and North Sailing ( in Húsavík. c

More sea angling tour operators:

Hvalaskodun, Hauganes

Siglo Travel, Siglufjördur

FA Travel, Egilsstadir

Malarhorn, Drangsnes

Vesturferdir, Ísafjördur

Fisherman, Sudureyri

Seatours, Stykkishólmur

Eygló Svala Arnarsdóttir.

Also consult the marketing offices of each region:

I&I 13


Picture This A year into the economic crisis and Icelandic creativity is not about to go bankrupt.


he Icelandic film industry is in bloom. Reykjavík played host to two film festivals in September: the annual Reykjavík International Film Festival (RIFF) and Nordisk Panorama, a Nordic traveling festival highlighting docs and shorts. This year double Oscar-winning Czech director Milos Forman was RIFF’s guest of honor. In an interview on news magazine Kastljós, the director revealed that he was blown away by the efficiency of the Icelandic film scene. “I’m very surprised that this year you made ten full-length feature films in Iceland. Which



is wonderful. Which is a lot for a country of 300,000 people,” he said. Indeed, a host of films from different genres have premiered in Iceland this year, including Iceland’s first full-length horror film, a children’s adventure film and a documentary about the crisis. Icelandic movies are receiving international attention as Oscar-winning actress Kate Winslet did the English commentary for Fridrik Thór Fridriksson’s autism documentary The Sunshine Boy, which was screened at the Toronto International Film Festival in September, and American actor

Mark Wahlberg agreed to play the lead in the English-language version of Óskar Jónasson’s 2008 thriller Reykjavík-Rotterdam. The Icelandic film scene has more in store for movie-lovers in the coming months, most notably Mamma Gógó by the aforementioned Oscar-nominated director Fridriksson, which premieres on January 1, 2010. The film is based on the director’s experience from when his mother was diagnosed with Alzheimer’s. “It’s not completely autobiographical; it’s only based on his experience,” emphasizes Gudrún Edda Thórhannesdóttir, who runs produc-

Photo Courtesy this spread of Spellbound Productions.

The pictures in this article are all from Mamma Gógó.

tion company Spellbound with Fridriksson. “Similarly, the Mamma Gógó of the movie is not an exact portrait of the actual Mamma Gógó. Kristbjörg Kjeld gives the character a life of her own.” Thórhannesdóttir describes Mamma Gógó as a tragic comedy. “It’s a drama, but with sensitive and beautiful humor. […] In spite of the tragedy— which this disease certainly is—Fridrik makes fun of himself and these circumstances.” Thórhannesdóttir says people are waiting for the premiere with much anticipation both in Iceland and abroad. “Distributors are fighting for it and we have Norwegian and German co-producers. We are hoping for good turnout in Iceland and Fridrik has his regular customers overseas.” Spellbound Productions have many projects in store, including the shooting of a new crime series for national broadcaster RÚV, based on the 2005 novel Tími nornarinnar (‘Season of the Witch’) by Árni Thórarinsson.

“We will start shooting in Akureyri next year,” Thórhannesdóttir reveals. Foreign television stations have already secured the broadcasting rights to the series; Thórarinsson’s books have become vastly popular in Europe. Yes, Iceland’s film industry is in bloom. However, filmmakers now fear the fun might be over as the 2010 budget bill calls for a 25 percent cut in funding to the Icelandic Film Center. The planned cuts prompted Ari Kristinsson, chairman of the Association of Icelandic Film Producers, and renowned actordirector Baltasar Kormákur to pay Minister of Education and Culture Katrín Jakobsdóttir a visit in October to try to soften the blow. The duo demonstrated that if the planned cuts are realized, the industry’s annual turnover will drop by ISK 2.3 billion (USD 18 million, EUR 12 million) and up to 100 jobs will be lost. Kristinsson explained that through foreign funding four to five full-length movies can be made in Iceland every year and four televi-

sion series. If the state cuts its contribution to the Icelandic Film Center it might compromise the opportunities to obtain further funding. “And, what is more, it will make it almost impossible for young directors to promote their work,” Kristinsson stated on While the planned cut won’t affect Spellbound’s crime series project, it might cause future difficulties in obtaining foreign funding. However, Thórhannesdóttir is hopeful that Kristinsson’s efforts will deliver results. “The cut will never be as high as 25 percent,” she states. “It’s an expensive industry,” she admits, “but we can make low-budget movies too.” The cut is up for discussion in parliament in mid-December. Perhaps, once caught up in the new trend of saving and armed with the renowned Icelandic creativity, Icelandic filmmakers will face the crisis head-on and do just that. c Eygló Svala Arnarsdóttir.

I&I 15



Wild Thing, You Make My Heart Sing

With record growth in tourism last summer, the West Fjords may finally have claimed their spot on Iceland’s ‘hot destination’ map.

The End of the Road

Mjóifjördur is one of countless fjords my boyfriend and I encountered on the way to Ísafjördur, the capital of the West Fjords, where we had been invited to a wedding in early July. Instead of driving straight there, we decided to take a detour to Strandir on the eastern coast of the peninsula and camp one night “Where The Road Ends” (as one inhabitant, author Hrafn Jökulsson, dubbed the 16


region in his eponymous book). We were told that the drive from Hólmavík, the largest settlement in Strandir with its 369 inhabitants, to the end of the road would take around two hours… It did not. How fast do the locals drive on these impossible roads? While low-hanging clouds blocked the full view of the majestic landscape, they also added to the air of mysticism that has always surrounded Strandir. It has an eerie beauty like no other place in Iceland. Locals are reputed to have resorted to sorcery to survive in this hostile environment and, after having experienced it on my own skin, that didn’t seem entirely unreasonable. In celebration of that reputation, Hólmavík boasts a Museum of Icelandic Sorcery and Witchcraft (, its exhibitions reaching Bjarnarfjördur, where you can visit the Sorcerer’s Cottage, and Kistan in Trékyllisvík, a cleft where three convicted sorcerers were burned to death in 1654. In spite of its dark history, Trékyllisvík is a peaceful and green oasis in the desert. It is the largest place of settlement in Árneshreppur

in the northern part of Strandir—there are only around 50 inhabitants in the entire municipality. Other settlements are Djúpavík (, which used to be a thriving fishing village but has now been reduced to a ghost town where the only all-year inhabitants are the local hotel owners, and Gjögur, where, surprisingly enough, an airport is located ( The road to Árneshreppur is often closed in winter, so inhabitants rely on supplies being flown in. Taking a breather in Gjögur was a bizarre experience: first an airstrip in the middle of nowhere and then this cluster of houses and not a single person. The Arctic terns seem to have taken over the place, judging by their hostile welcome. Ah, the screams! And then they skydive to peck your head. I thought it best to seek shelter in the car and keep moving. Nordurfjördur, north of Trékyllisvík, has the region’s grocery store and offers scheduled boat trips to Hornstrandir, the northernmost part of the West Fjords, now only inhabited by wild creatures. Road number 643 continues to Eyri in Ingólfsfjördur, where abandoned fish

factories are reminiscent of a once blooming industry. Jeepers can move on to the next fjord, Ófeigsfjördur, but from there, travelers must rely on their own two feet to reach the desolate Hornstrandir. If you take a different turn by Nordurfjördur, the road leads you to the most extraordinary outdoor swimming pool at Krossnes. Located on the beach, you can feel your weariness melt away as you listen to the waves crash against the shore and watch the ocean merge with the sky far away on the horizon. Where the Wild Things Are

Photos this spread Páll Stefánsson


here are a lot of fjords in the West Fjords. So many that driving in and out one fjord after another on bumpy gravel roads, staring right up a rocky mountain slope or down a precipice into the treacherous waters below, while trying to get to a wedding in time, will make your head spin and stomach twirl. Finally, a bridge! Thank God, or rather, the Public Roads Administration … But, no! It hasn’t opened yet!* And now our kilometer count is all wrong. Oh dear, when does that wedding start again?

Back to Mjóifjördur. The clock was ticking away and yet we couldn’t move any faster along the gravel road. The weather was clearing with rays of sunlight peering through the gloomy clouds and sunny spells in between showers. There were rainbows everywhere and lots of greenery compared to Strandir, and it seemed impossible to be in a hurry amidst such beauty. Besides, drivers must be mindful of stubborn sheep on the road and cheerful

farm dogs that chase the car. Suddenly we spotted a seal lazing on a rock in the middle of the fjord—what an adorable and unexpected sight. Out of Mjóifjördur and we still had four fjords to go. They all lead out of the larger Ísafjardardjúp, which almost splits the West Fjords peninsula in half. The scenery is absolutely breathtaking. In sunny and calm weather, the steep mountains are reflected in the fjord’s smooth surface. Bubbling springs fall over cliffs and into the ocean and the islands Aedey and Vigur on Ísafjardardjúp are a delight to the eye. Boat trips to these islands are offered from Ísafjördur (isafjordur. is). Hamlets like Súdavík (pop. 181) nestle between the seashore and the steep mountains, their multicolored rooftops gleaming in the sun. Suddenly we noticed something ripple the ocean’s smooth surface from the car window. A reef? No, that’s not it. Could it be? Indeed, a whale had decided to surface right before our eyes. Amazed, we stared as the massive animal took a dive and then waved goodbye

with its gigantic tail. Excited, we waited to watch it resurface—and then all we needed was an eagle and a fox to complete our safari. Unfortunately, we had no time for safaris… we had a wedding to go to! Finally, we entered Ísafjördur (pop. 2,975). After all these tiny villages along the way, the capital of the West Fjords looked like a big bustling city. We made it just in time. What a day to get married! The sun shone brightly on the happy couple as they said their vows in a flowery garden up in the hills with a view of Ísafjördur and the mountainous backdrop mirrored in the ocean. On such bright summer days so close to the Arctic Circle night never falls, and so the party continued into the wee hours of the morning, when we finally crawled into our tent. c Eygló Svala Arnarsdóttir.

Note to self: Don’t be in a rush when visiting the West Fjords next time. * The bridge over Mjóifjördur opened on August 20, 2009.

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Viking Wisdom: Better gear than good sense A traveler cannot carry, A more tedious burden than too much drink A traveler cannot carry. Less good than belief would have it Is mead for the sons of men: A man knows less the more he drinks, Becomes a befuddled fool. (From Hávamál. Translation by W H Auden & P B Taylor.)

1913, two years before the alcohol ban took effect. As the name indicates, Ölgerdin was originally intended to be an ale brewery. However, with the alcohol ban in place, its founders had to come up with some nonalcoholic brews to survive. And so Maltextrakt was made, a sweet nonalcoholic brew from malt, which reached instant popularity. The beverage is still loved by Icelanders. At Christmas it is used to make jólaöl (‘Christmas ale’), mixed with Appelsín, an orange soda, introduced by Ölgerdin in the 1950s. The brewery’s second product was Egils Pilsner, a near non-alcoholic beer, which hit the market in 1917. In World War II, Ölgerdin proved its worth as a real brewery with Polar Beer. The brewery’s first strong beer made a comeback this year in celebration of Beer Day’s 20th anniversary. Another Ölgerdin classic is Egils Gull.

The Golden Brew Presenting the fascinating history of beer making in Iceland and the best of modern Icelandic breweries.



and light alcoholic beverages like port and sherry was permitted. In 1935, the import and production of spirits was permitted and the Icelandic brennivín schnapps, a.k.a. Black Death, arrived on the market. The occupation of Iceland first by the British and then the American military in World War II, prompted local authorities to allow the Icelandic brewery Ölgerdin Egill Skallagrímsson—which up until then was only permitted to brew light beer—to produce proper beer for the occupying forces. And so, Iceland’s first brand of beer, Polar Beer, was born. “When British troops were sent to Iceland in WWII, they expected hardship, but they did not anticipate a lack of beer,” described Ölgerdin. Yet beer remained banned for the general public. In rebellion against the beer ban, bjórlíki

or ‘artificial beer’ was invented, a mixture of light beer and spirits. The popularity of bjórlíki became so widespread that the Ministry of Justice saw reason to ban it in 1985. The main argument behind the ban on beer and bjórlíki was that alcohol consumption among Icelanders would increase and create various problems. However, with time counterarguments gained more weight and despite concerns of excessive drinking, the beer ban was finally lifted on March 1, 1989—since then known as Beer Day.


Ölgerdin Egill Skallagrímsson

Iceland’s first brewery, Ölgerdin Egill Skallagrímsson (‘The Brewery of Egill Skallagrímsson’—named after the most barbaric of Saga protagonists), was founded in

Photo Áslaug Snorradóttir


he Vikings drank mead (mjödur) and ale (öl). Also known as mungát in Icelandic, ale was brewed from malt, sprouted barley. The grain is believed to have been grown in Iceland until the 1400s when the rapidly cooling climate made it impossible. While some barley may have been imported, when faced with a choice between ale and bread, even the hardiest drinkers must have felt compelled to give up their mungát until grain became more widely available in the 20th century. In a cruel twist of fate, just when it seemed as if the golden age of Icelandic ale had arrived, a universal alcohol ban took effect in Iceland in 1915. Seven years later the ban was relaxed with the establishment of the State Alcohol and Tobacco Company (ÁTVR) and consequently the import of wines

Not until 2005 did Icelanders discover their full potential in beer making. In December that year, Iceland’s first microbrewery, Bruggsmidjan, was established in the small community of Árskógssandur in northeast Iceland by husband and wife Ólafur Thröstur Ólafsson and Agnes Anna Sigurdardóttir. In August 2006, Bruggsmidjan’s debut product arrived on the market: Kaldi, brewed according to Czech tradition. Containing pure Icelandic water, no added sugars or preservatives, and being the only non-pasturized beer in Iceland, Kaldi was immediately met with much enthusiasm from consumers. The beer’s popularity made

it possible for Bruggsmidjan to expand its production capacity in 2007 and again in 2008, and now 500,000 liters of Kaldi are produced every year. It is available both light and dark and in a calorie ‘lite’ version, in addition to three seasonal beers. The brewery is also planning to export beer to Scandinavia. Ölvisholt Brugghús

Following Bruggsmidjan’s success, microbreweries started popping up in different locations around Iceland, presenting a range of creative beers with varied success. Among the more successful ones is Ölvisholt Brugghús outside Selfoss in south Iceland. Founded in 2007, the brewery presented its first product, Skjálfti, on Beer Day 2008. The name translates as ‘Quake’ as the region is often shaken by earthquakes. The epicenter of the large South Iceland Quake of June 21, 2000, was in fact at Ölvisholt. Containing five types of barley malt and one type of wheat malt, Skjálfti takes a unique position on the Icelandic beer market. The premium lager proved successful and soon Ölvisholt expanded into other brands. One of the brewery’s more interesting beers is Belgian-style wheat ale Fósturlandsins Freyja, named after the Viking goddess of love, beauty and fertility, containing orange bark and coriander. One doesn’t have to be in Iceland to enjoy Freyja’s caresses or Skjálfti’s vibes, since Ölvisholt is Iceland’s only exporting brewery. Its beers are available in Denmark, Sweden, Finland and Canada. c Eygló Svala Arnarsdóttir.

I&I 19


A Diary November 21: Prime Minister Jóhanna Sigurdardóttir announced that hindrances in relation to the Century Aluminum Helguvík smelter project will be pushed aside. CFO of Century Aluminum Mike Bless had announced a few days before that construction would fully resume in spring 2010.

of Business and Politics

October 15: Íslandsbanki, formerly Glitnir Bank, will go into 95 percent ownership of foreign claimants, as Glitnir’s resolution committee announced this day. The remaining five percent will be held by the Icelandic state, which will also have one board member on the bank’s five-person board.

November 20: The Icelandic bank Kaupthing, which was taken over by the state in October 2008, was re-branded as Arion Bank. The new name originates in Greek mythology and indicates resilience, cooperation and recurrence. It was chosen after an in-house competition was held, yielding more than 200 entries. November 18: Taxes will be raised at the beginning of next year, as the government announced this day. A three-step income tax will be adopted, requiring those who earn more than ISK 650,000 (USD 5,200, EUR 3,500) per month, for example, to pay 46.1 percent of their salaries in income tax. November 17: It was announced that deCODE Genetics and American company Saga Investments LLC had signed an agreement on the latter company’s acquisition of deCODE and its entire operations. The agreement was made in accordance with section 363 of the American insolvency law. November 11: It was announced that unemployment measured 7.6 percent in October, up from 7.2 percent in September. At the end of October, 12,682 workers were without a job. In October 2008, unemployment measured 1.9 percent and then increased rapidly, peaking at 9.1 percent in March 2009. November 11: International investors’ service Moody’s announced this day that it had lowered the credit rating for the Icelandic state by two levels. The credibility of Iceland’s foreign and local currency bonds are now rated at Baa3, down from Baa1. Baa3 is the lowest investment grade. November 16: The majority of the Althingi parliament’s Budget Committee completed their evaluation of the government’s bill on the state guarantee regarding Icesave, not proposing any changes to the bill.


November 4: Minister of Health Álfheidur Ingadóttir and chairman of the Icelandic Pension Funds Association (IPFA) Arnar Sigurmundsson signed a declaration of intent this day on constructing a new Landspítali hospital in Reykjavík. November 3: After a particularly good summer and fall, it appears that 2009 will be recordbreaking in terms of foreign tourists visiting Iceland’s capital, according to statistics published by the Reykjavík marketing office on this day. November 2: Minister for Foreign Affairs Össur Skarphédinsson announced his appointment of Ambassador Stefán Haukur Jóhannesson as Iceland’s chief negotiator in the upcoming membership talks with the European Union. November 1: The first step towards abolishing currency restrictions was taken by Iceland’s Central Bank by permitting the inflow of foreign currency for new investments and the outflow of foreign currency that can lead to future investments. October 28: The board of the International Monetary Fund accepted the first review of the economic stabilization program for Iceland. This enables the disbursement of loans from the IMF, Poland and the Nordic countries.

November 5: The Central Bank of Iceland decided this day to lower the policy rate from 12 to 11 percent. Interest rates on credit accounts for deposit institutions dropped from 9.5 to 9 percent, which are the rates that currently have the most impact.

October 22: Icelandic authorities handed in their answers to the European Commission’s questionnaire this day, which is part of the EU membership application process.

November 4: The Icelandic banking system was given an E, the lowest rating possible for a developed state at the international agency Fitch Ratings. Iceland and Vietnam are in the same category while Tunisia and Ecuador rank higher than Iceland.

October 20: Britain’s High Court ruled this day that the UK Treasury had operated within the frame of law when it used emergency powers to seize the UK assets of Icelandic bank Kaupthing last fall and transfer the bank’s online unit, Kaupthing Edge, to ING Direct.


October 18: The governments of Iceland, the UK and the Netherlands signed a new agreement on loans provided to the Depositors’ and Investors’ Guarantee Fund of Iceland, to compensate Landsbanki’s Icesave depositors in the UK and the Netherlands.

October 1: Minister of Finance Steingrímur J. Sigfússon presented the government’s budget bill for 2010, commenting that it was the most difficult budget an Icelandic finance minister has ever submitted. An ISK 95 billion (USD 755 million, EUR 475 million) cutback between years is imminent, he said. September 30: Minister of Health Ögmundur Jónasson resigned on this day due to disagreement with other cabinet ministers on how to approach the changes to the Icesave legislation preconditions, requested by the British and Dutch governments. Álfheidur Ingadóttir of the Left-Greens was appointed in his place. September 25: It was announced that energy company Reykjavík Geothermal (RG) is leading the search for geothermal energy for Masdar, a planned city in the principality Abu Dhabi in the United Arab Emirates. The project is worth ISK 200 million (USD 1.6 million, EUR 1 million) and will take eight months.

Photo: Páll Stefánsson

Emilíana’s Best Year Yet?

September 23: Both applicants for oil exploration rights in the so-called Dragon Zone off the northeast coast of Iceland have withdrawn their applications, as announced this day. Minister of Industry Katrín Júlíusdóttir said that she is eager to have other companies take over the project. September 22: IT giant Microsoft reached an agreement with Icelandic IT company LS Retail on the purchase of its software, as reported this day. The software, Dynamics AX, is used for retail computer systems in 140 countries around the world. September 11: Special Prosecutor Ólafur Thór Hauksson, his advisor Norwegian-French magistrate Eva Joly and two other officials met director of the Serious Fraud Office Richard Alderman in London on this day. The meeting’s purpose was to establish mutual assistance in the investigation of economic fraud. c Eygló Svala Arnardóttir

Emilíana Torrini had a number one single in Germany with this summer’s ‘Jungle Drum’. Success and gold-selling records are just the tip of a long and steady climb for one of Iceland’s most charming song writers.


hen you learn that Emilíana Torrini performed with dance music perennials GusGus aged 20 in 1997 and subsequently co-wrote a hit song for Kylie Minogue (‘Slow’), for which she won a Best Dance Recording Grammy, it may also surprise you to learn that her earlier years were spent studying opera and winning college song-writing contests in the town of Kópavogur rather than rattling around bars in 101 Reykjavík, proving that creative flair and international success aren’t the exclusive domain of the cute generation. It’s clear that having a musical education dif-

ferent to the art you currently practice proves no hindrance (quite the opposite in this case, as it turns out) and, more recently, Torrini has collaborated with a who’s-who of international talent. But perhaps the moment that propelled her to stardom more than any other was being given the plum task of performing the closing song on 2002’s Lord of the Rings: The Two Towers—having the promo video for your song directed, essentially, by Peter Jackson would be a turning point in anybody’s career, as would having your music played to millions upon millions of thrilled cinema fans. Indeed, since 2002 the singer songwriter’s career has never

looked like being on any trajectory other than straight up. All-in-all, and taking into consideration the recent critical and commercial success of her new album Me And Armini, the 32-year-old has done a good job at making a name for herself. The year 2009 brought success to Emilíana Torrini—with a number one album, a hit single and a massively successful global tour taking up much of her time. She will hopefully look back on this year with some fondness and satisfying memories of the hard work that got her to this point. c

I&I 21


Icelandic Design Mundi label shakes conventional ideas of beauty.


Photo: Geir Ólafsson

“A big part of the fashion industry will never approve of me,” says Gudmundur Hallgrímsson, whose Mundi label shakes conventional ideas of beauty. Then again, a big part of it does. At 22, Mundi’s designs are sold in Paris, London, Hong Kong, Amsterdam, Barcelona, Los Angeles and at home in Iceland. Originally a graphic designer, Hallgrímsson’s route into fashion was something of an accident. Having entered a phone book cover competition with a printed knit from one of his drawings, Hallgrímsson decided to print a few extra onto sweaters. The design was an instant local success. In 2007, he showed his first space-themed collection ‘Too Cool For Gravity’ in Paris. Ten stores picked him—the next collection doubled the deal.

A Grandmaster in Charge Margeir Pétursson was well known in Iceland as one of the country’s strongest chess players. He is now Chairman of MP Bank.


fter Bobby Fischer and Boris Spassky played in Iceland in 1972 for the World Chess Championship, a new wave of interest in chess spread across the island. Fifteen years later four young Icelandic men had all attained the status of Grand Master, indicating that they were among the best players in the world. One of these four was Margeir Pétursson. A lawyer by training, he soon started his own business. In 1999 Pétursson founded MP Securities. The company developed into an investment bank in 2003, offering a full range of investment banking services. The bank was granted a full commercial banking license in 2008 and started accepting deposits and pension savings, in addition to its pre-existing services in Iceland. MP Bank’s headquarters are in Reykjavík, Iceland, and a branch office is operated in Vilnius, Lithuania. It is in some ways paradoxical that such a young company is now the oldest bank in Iceland, but it is the only commercial bank in Iceland that did not collapse last year when the worldwide economic crisis engulfed the country. Margeir Pétursson was known as a solid chess player, and spectators sometimes complained that he seemed to be risk averse. That quality seems to have followed him into business. In 2005, he already thought that



Iceland’s economy was growing too fast. So, instead of seeking business in Iceland, MP Bank looked overseas. “It was a natural reaction to diversify abroad and to not participate in lending for takeovers and for companies that wanted to expand,” Pétursson says. By 2007, fearing that things were getting worse, the bank began selling assets, mostly stocks, and buying Icelandic government bonds, which are now the bulk of its portfolio. It also started hoarding cash. “Of course, you could say that we were too conservative. We didn’t participate in the boom,” Mr. Pétursson says. “But we were doing sufficiently well.” So rather than losing everything MP Bank only had its profits cut in half between 2007 and 2008. The bank is still quite small, but has been growing rapidly in 2009. Many depositors want to be with a ‘private’ bank. Margeir Pétursson recognizes that his chess playing qualities have spilled over into his business transactions: “My friends make jokes that I was a contrarian as a chess player,” he says. “I was on the defensive, winning many long games, holding difficult positions.” Tactics that seem to be proving successful in the game of finance. c

I&I 23

Photo: Pรกll Stefรกnsson

. Trade Council of Iceland . . invest in iceland agency . . Ministry for Foreign Affairs . 24


Issues and Images of Iceland  

A magazine for those who want to follow what is going on in Iceland. The magazine has special emphasis on business and politics, but also lo...

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