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Iceland is back in the spotlight – and this time it is enjoying the attention. The smallest Nordic nation, with a population of just 320,000, is bouncing back from the crash of 2008. Geothermal energy extracted with Icelandic expertise could help solve the world energy crisis, says president Ólafur Ragnar Grímsson. Tourism is up by 17 per cent a year. Icelandic crime writers are international bestsellers. The race is on for sustainable exploitation of the rich resources of the Arctic; Iceland is a strategic bridgehead.

President Grímsson is a wily veteran now in his fifth term of office. Born in 1943, he studied economics and political science at the University of Manchester before being appointed a professor of political science at the University of Iceland in 1973. A former newspaper editor and director of radio and television programmes, he also served as finance minister.

Grímsson remains Iceland’s most popular politician. The role of president is more than ceremonial: when bills are passed he must sign them within two weeks; if he refuses they will be subjected to a referendum. Twice, in 2010 and 2011, he refused to authorise a deal to repay billions of euros to the UK and the Netherlands after the collapse of Icesave, an online branch of commercial bank Landsbanki; the majority of voters seconded his decision.

Iceland has applied for EU membership but talks were put on hold in May 2013. The country with the world’s oldest parliament, established in 930, is unlikely to be willing to pool sovereignty with its neighbours. As the Arctic region enjoys a renaissance, independence has never looked more attractive.

Monocle: With competition for limited resources, how can we manage the Arctic?
Ólafur Ragnar Grímsson: For all of us this is a new challenge. For those of us who live in the Arctic region – small nations like Iceland and Greenland in the company of the leading economic powers – it’s among the biggest challenges that we have ever faced. The region harbours some of the most important resources. Through the Arctic Council we have turned the Arctic from being the centre of military confrontation in the Cold War into one of the most constructive examples of international co-operation in the first decades of the 21st century.

M: What impact does the melting of sea ice have on the northern shipping routes?
ÓRG: Once you look at the world from the top, distances become much shorter. Cosco, the Chinese shipping company, has sent a ship to Rotterdam on the northern route, along the coast of Russia, saving 10 days on the journey. Bremenports is examining the possibility of establishing a harbour in north-east Iceland. Singapore has also entered the discussion because if a big part of global container traffic moves north, its role as a hub will be transformed.

M: So there are benefits to climate change?
ÓRG: Climate change is one of the most dangerous threats that mankind faces. Although the melting of the Arctic sea ice does open up new sea routes, which we might look at as being positive, it also impacts fish stocks, people’s habitats and animals. But even if we marshalled all our forces to try to prevent irreversible climate change we would not succeed in turning it around until some time in the second half of this century. Meanwhile the ice would continue to melt.

M: What’s Iceland’s role in the Arctic debate?
ÓRG: Iceland can be the Switzerland of the Arctic. It must be a democratic dialogue where everybody can participate, whether they are indigenous people, environmentalists, ngos, big global corporations or governmental leaders.

M: Is the Arctic a model for other regions?
ÓRG: During the Cold War the Arctic was one of the militarised regions in the world. We are happy that our country is now in such a peaceful part of the world. If you had asked my generation when we entered politics whether such a change could happen in our lifetime I don’t think anyone would have said yes.

M: Iceland is in Nato but does not have an army and its police are unarmed. Why?
ÓRG: When Iceland joined Nato in 1949 it was one of the stated conditions that we would never establish armed forces. Our contribution was the geographical position of Iceland, which was of monumental strategic importance in the Cold War. We have been able to achieve our success, gain our independence, build up a modern state, engage in economic and social growth and prosperity without ever having to use any violence.

M: Should Iceland join the EU?
ÓRG: No. The EU is designed for countries of the European continent. Iceland is situated in the north Atlantic, with different economic and strategic interests. With the growing importance of the Arctic, Iceland is much better served as an independent player at that table.

M: How can a country of 320,000 people keep its own currency?
ÓRG: I do not believe that the stability of the currency is the test of economic success; the test is the record of prosperity and growth. We started as one of the poorest countries in Europe but over the last 60 or 70 years we have had an enormous economic success. Now, through the devaluation of the krona, we have been able to make our exports and energy, tourism, fishing and IT sectors much more profitable.

M: How important is geothermal energy?
ÓRG: Inside the Earth is a big fireball and we are working and living on a very thin layer on top; it’s only a question of engineering to get down there. It is an enormous advantage for us to heat houses through geothermal water instead of having to import oil or gas.

M: This is your fifth term – are you planning to run again?
ÓRG: No. I was not planning to run in 2012 but there was a petition calling for me to do so. But 20 years in this business is a long time.







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