Published May 24, 2013
After the election, we see the old parties of economic mass destruction are coming back to power. Giving enormous promises of easy money to be wrestled from evil vulture funds, debt relief and tax reduction, The Progressive Party doubled in size after a few years of hardship. There is a jolly good feeling between the two young new leaders of a brave new Iceland, and when a radio host called them up and offered to play them a request, they asked for Duran Duran’s ‘Wild Boys.’ I Googled the lyrics, not quite remembering the lines, and got a nice chill down my back:
Wild boys fallen far from glory
Reckless and so hungered
On the razors edge you trail
Because there’s murder by the roadside
In a sore afraid new world
They tried to break us,
Looks like they’ll try again
Sounds quite grim. This, coupled with the new government’s announcement that it would be effectively dismantling the Ministry for the Environment and Natural Resources and that there will be no Minister for the Environment, gave me a strange flashback feeling. I decided to revisit the state of mind that we used to call normal in 2006. When the economic policy, the energy policy, the expansion of our towns, the mortgages on our homes—almost all aspects of our daily life had become totally mad. This is not my own diagnosis; if you search the homepage of the IMF for the phrase “Collective Madness,” you’ll find this:
“’Iceland, in the decade and a half leading up to the crisis, was an example of collective madness,’ said Willem Buiter, chief economist at Citigroup, a remark that elicited spontaneous applause from the more than 300 participants, many of them Icelandic policymakers, academics, and members of the public.”
In our daily lives, we usually sense what is normal and what is over the top. Sometimes the discourse will blind us; PR and propaganda can create a kind of newspeak. It can be a good exercise to try to talk about things in a foreign language, to view them in a new light. As an Icelander, you could for instance try to tell someone from another country that Iceland’s government sold one state bank and received payment in the form of a loan from another state bank—and vice versa. That the state banks were thereby handed to men that were closely connected to the then-reigning political parties. The manager of one of the parties became head of one of the banks’ board of directors, while the other party’s former Minister of Trade belonged to the group that was given the other bank. That man had access to every bit of inside information about the bank’s standing.
In the meantime, this former Minister of Trade became Central Bank Manager. He went to the US and made Alcoa an offer that the company could not refuse. He had thus set in motion the largest-scale construction project in Icelandic history, greatly increasing economic activity in Iceland—a grand boon for the bank he just finished selling to himself.
If you tell this story in a foreign language, people shake their heads. They gape in disbelief. They use words like “corruption” and “mafia.” They exclaim, full of disbelief and even disappointment, “no, not in Scandinavia!”
THE ACCEPTED INSANITY
It is insane to expand a banking system by tenfold in eight years. We know that now. It isn’t technically possible to grow all the knowledge and experience needed to build up and manage such a contraption in such a short time. Not even by shoving an entire generation through business school. It is impossible.
But the megalomania was not just confined to the banking sector. Energy production in Iceland was doubled from 2002–2007, when the huge Kárahnjúkar dam was built in the eastern part of the highlands—to serve one single Alcoa smelting plant. The energy it produces, about 650MW annually, is enough to power a city of one million people. Doubling the energy production in a developed country over a five-year period is not only unheard of, but it would also be considered ridiculous in all of our neighbouring nations. Most industrialised states increase their energy production by around 2–3% annually. Doubling it would be unthinkable. It has been proven again and again that gargantuan investments generally destroy more than they create.
In Iceland, however, the goal was to double the nation’s energy production AGAIN by building aluminium smelters in Helguvík, Húsavík and enlarging the Straumsvík smelter by more than threefold. The period of insanity was to be succeeded by a total and complete madness. This was to be funded by 4–5 billion dollar 100% loans to Icelandic energy companies from foreign banks. Nearly 20,000 dollars for every single Icelander—every loan directly connected to aluminium prices and secret energy prices. The media reported this as your everyday act of government job-creation. It was regarded extremist to ask critical questions. Many regarded it unthinkable for the survival of the nation NOT to do this.
Now we know that we did not only sacrifice our nature for the economy, we sacrificed nature and the economy. Again, we do not have to seek out the websites of activists or environmental groups for this information. We just go to the IMF reports:
“Executive Directors observed that the Icelandic economy is at a difficult turning point. The long economic expansion, initiated by aluminium sector investments, sustained by a boom in private consumption, and fuelled by ready access to external financing, contributed to a build-up of macroeconomic imbalances and financial vulnerabilities.”
COCAINE IN THE HOT WATER?
The madness made itself clear in the business of geothermal energy, making itself known in the form of financial troubles and enormous debt of the energy companies. The geothermal field had enjoyed an even and stable development since it got started in the early twentieth century. During the great depression, the City of Reykjavík created the world’s largest geothermal heating system by pumping hot ground water into the homes in the city. Later they started producing a small amount of electricity by harnessing steam through turbines. But one day it seemed as if someone drilled into a cocaine vein. Out of the twenty high temperature geothermal areas in Iceland, plans suddenly emerged to harness sixteen right away, all for the sake of the aluminium industry. The energy companies applied for permits to do research drilling in most of the remaining ones. In an instant, the field went from a very slow, conservative development to becoming a geothermal wild west.
In the south, a major development of all the geothermal areas from the Reykjanes Peninsula to Þingvellir was planned—a chain of power plants in pristine and delicate areas—to serve a Century Aluminium smelter in Helguvík. But the geothermal plants would not have sufficed—the remaining power would be squeezed from hydro electricity in the Þjórsá river—potentially threatening the greatest stock of North Atlantic Salmon in Iceland—and up in the highlands—threatening the Pink-footed Geese of Þjórsárver.
So what was referred to as “moderate development” when the parties of The Wild Boys were last in charge of our energy sector? Their plans went like this: A new Alcoa smelter in the east, a new Alcoa smelter in Húsavík, a new Rio Tinto Straumsvík smelter beside the old one, an expansion of the Century smelter in Hvalfjörður and a new Century smelter in Helguvík. Amounting to a total of 1.4 million tons of aluminium. Each one of them needing energy that could serve one million people in their daily lives. Each one of them demanding sacrifice of great natural wonders, wild rivers and pristine geothermal areas.
How did they fare? The Alcoa Smelter in the East has been built, with the destruction of two glacial rivers, Lagarfljót and 50 km2 of highland beauty. The expansion of the Rio Tinto smelter was stopped and the Húsavík smelter did not go through, however, a skeleton of the Helguvík smelter is currently rising—with no power in sight.
The Alcoa smelter in the north would have required all the harnessable power in the northern part of Iceland, only excluding Jökulsá á Fjöllum. Close to Mývatn, we have the Krafla geothermal area. After a long and often struggling forty-year development period, the available power from the area reached about 60 MW. Now, the goal was suddenly to quadruple the area’s energy production—expanding it by 150 MW in just a few years, and harnessing the beautiful Þeistareykir area to its utmost capacity—up to 200 MW. They also had their eyes set on Bjarnarflag and Gjástykki, delicate areas that should be regarded as national heritage sites. All this was to serve a new Alcoa factory they wanted to build close to Húsavík, the famous whale watching and fishing village in North Iceland. Having done all that, however, the energy production would still not reach the 600 MW that Alcoa really needed—the harnessing of two more glacial rivers would have been necessary: Skjálfandafljót with the waterfall Aldeyjarfoss and the glacial rivers running from Hofsjökull.
The interesting thing is not how crazy this seems in hindsight, how extreme, how mad this reality was — but that outsiders did not see this plan as collective madness. The scheme was praised in international media as being a progressive plan for “clean” energy, and we still have members of parliament that regret that this did not happen. And the fact that our labour unions and politicians have referred to this when they say that “nothing is happening” in terms of business and job creation in Iceland. Or that they refer to this when they say “we have still only harnessed X% of our energy.” They are talking about this as a normal feasible future state of Iceland.
Why are people so crazy? Is it or was it a good idea to indebt the nation by a total of 5 billion dollars to place two Alcoa smelting plants in the same constituency? To surround the Faxaflói bay, where 70% of Iceland’s population resides, with three smelters? The answer is simple: The mad men still think so. One of the new Independence Party MPs, Brynjar Níelsson, has no regrets for the death of the river Lagarfljót in service of Alcoa. He said it was apparent that protectionists loved a few fish more than they did people.
But you can still ask like a fool: Did Iceland really have enough accumulated knowledge and manpower to multiply all our energy companies in the space of ten years? Was there never a doubt in the geologist’s mind when he found himself in a magical place such as the Torfajökull area above Landmannalaugar, Kerlingarfjöll or the steam areas around Reykjavík? Did they really want to do drill, pipe and harness EVERYTHING, right away? And do it all for the sake of a single industry—the aluminium industry. Did it have to be the role of a marginalised group of a few activists to use their spare time to criticise this?
OF “REYKJAVÍK” KNOWLEDGE
I was once at a meeting in Húsavík, where I screened my film, ‘Dreamland.’ At that meeting, the local geothermal plant manager claimed he could easily harness 1,000 MW out of geothermal areas north of Mývatn. I asked if it wasn’t correct that scientists are concerned about overexploitation of the country’s geothermal areas. The scientists’ criticisms were quickly blown off the table as “Reykjavík knowledge,” and in that instant every alarm bell went off.
Now we understand that power is not as plenty as the hype promised, and now most Icelanders understand that energy production on the banks of Lake Mývatn in Bjarnarflag might just jeopardise the ecosystem in that wonderful lake. But you wonder if the people developing our most delicate areas possess good enough judgement to work close to natural wonders. It seems like they are ready to take the risk, to see what happens.
I found an interview with the aforementioned plant manager from 2002. At that time, he had drilled a big hole for 170 million ISK because a Russian company potentially wanted to build an aluminium oxide factory and a giant aluminium plant in Húsavík.
If one sets aside minor ethical facts, such as the Russian aluminium industry being run by the mafia at that time, one is still left to ponder the fact that almost no industry in the world produces as much and as toxic waste as aluminium oxide production (or alumina, as it is called). Those that followed the horrible events when a red slush toxic lake in Hungary broke should know what comes with an alumina refinery. But this local hard-working man had spent more than one and a half million dollars looking into the feasibility of such a plant in Húsavík. Things have been so good here that people think they are untouchable.
Even though the companies engage in malevolent practices in other countries, they would never do that here. Sure.
THE HOLY LOCAL
It seems that for some reason the most unbelievable hogwash gets promulgated without any critical thought. We enter a boom after boom and never learn from mistakes. We can look further back in history to see how madness is mixed up with ambition, how extreme and unrealistic views of the future are presented and taken seriously.
In an edition of Morgunblaðið from March 1987, one can read a prediction of the impending evolution of local fur farming until 1996. At that time, thirty fur farms were operated in Iceland. Morgunblaðið cites a report that predicts Iceland will foster 600 mink farms by 1996. They assume a twenty-fold growth in ten years, as if nothing were more natural. A month later, this optimistic story ran: “The mink stock will double this year.” Only three years later, in April of 1990, we find this dramatic headline in a copy of Morgunblaðið: “Fur farming: The industry is on its last legs. Many farmers on the edge of despair.”
In this country everything is considered normal if a “local” wants it. Nothing in Iceland is as crazy as the holy local is when he wants a smelter or an oil refinery, no matter how large or out of proportion. He has the sacred right to that, especially if he uses “job creation” as an argument. Numbers that would be considered sizeable in large nation’s economic statistics, energy resources and infrastructure that are earmarked by the world’s superpowers as being “strategically important” are subject to “the will of the locals.” The nation’s energy resources and nature are in the hands of a smattering of district councils that have no staff and no expertise while the majority of Icelanders that reside in the capital area seem by default “local” to nowhere.
So, the locals of the east destroyed their highlands, the locals of the south want to dam the wonders of the Skaftá area, the lower part of the Þjórsá river and the locals of the southwest are ready to harness almost every single geothermal area. And this seems to be a global problem—rural communities losing their youth and talents to the cities of the world are willing to sell off their forests, their mountains, their rivers and valleys for some hope of development and a future.
It is strange to see that one of the major driving forces behind this development resides within our labour leaders, who have been demanding extreme leverage and risk on behalf of public energy companies. If there should be a hesitation in the risk taking, the responsible parties are “dragging their feet.” The labour unions’ “stability agreement” with the former government entails that “every obstacle be removed” that somehow hinders the proposed Helguvík aluminium plant. It is exactly this kind of thinking that lead to almost 200 foreign workers being left disabled and unemployable as a result of working on building the Kárahnjúkar dam. Conditions of workers were severely compromised to make the dam construction process cheap enough. Every obstacle was removed to provide Alcoa with energy prices that save them 200 million USD annually. That amounts to the combined yearly wages of more than 10,000 teachers.
The noble cause of creating jobs becomes quite grim if it involves harming the work capacity of so many. The PR people talk about a ‘multiplication effect’ of every job in a smelter—but wouldn’t it be polite to subtract the disabled workers? People will go so far to satisfy their prince charming that they behave like the ugly stepsister in the fairy tale, cutting their toes off to fit the glass shoe.
HOUSE OF CARDS
The Helguvík aluminium smelter close to Keflavík Airport is a symbol of how poorly run Iceland can be; the Helguvík aluminium smelter is already being built, even though nobody knows where we can scramble together its required 600 MW of energy. The Helguvík smelter is a symbol of how weak the nation’s administration can be, of how shattered professionalism and long-term thinking can become, and how the media all but encourages unlawful activities in their headlines, if job creation is at stake. They started to build the smelter without access to power sources, and without the necessary power lines planned or agreed upon by landowners.
Why start building, then? Because in 2006, the Wild Boys were in power, showing their ambition and “competence” by signing long term sales agreements for cheap energy before the energy sites had been researched, planned or developed. Now Reykjavík Energy and HS Orka are bound by agreements that neither company wants to fulfil due to foreseeable losses from selling the energy below its production costs.
The sharks were very aware that they were taking advantage of a country with mad politicians in a rare period in our history. When they were willing to sell almost everything, anything, anywhere to anyone. In a remarkable investor report called: “Harnessing unlimited power and profit from the world’s most progressive energy program,” an analyst made this great comment:
“It works out great for Iceland, too. It is very cheap for Iceland to deliver power to Century. The Icelandic power companies will make extraordinary profits on that power if aluminium prices stay strong. And if aluminium prices weaken, Iceland is not biting the hand that feeds it.”
This is how politicians build an elaborate house of cards that combine risk, debt and commitment that collapses if only one of the cards falls. Thus, the hands of future city governments have been tied and an insane construction binge in important areas has been commenced, all to benefit one company that’s lacking most of the needed permits.
Could anyone recount the details of the Century Aluminium Helguvík Smelter project at an international conference without being booed off the stage as a fraud? At an aluminium conference, however, such a man would actually bring more lust than an exotic dancer.
Despite being in the hands of extreme capitalists, the labour movement has not called for professionalism or long-term thinking in energy affairs. It simply demands that “every obstacle be removed.” Get the trucks rolling immediately.
In 2006 we were in the middle of a revolution, but the Wild Boys did not call themselves “The Aluminium Revolutionary Front”—they defined themselves as the norm, even though their scale was insane. If they were criticised, they started thinking of themselves as persecuted. Warlords are always persecuted moderates when they’re merely conquering neighbouring nations in the name of peace.
THE CORE OF THE PROBLEM
Throughout the years, polls have shown that a large part of Icelandic males aged 40–70 have been in favour of the collective insanity seen in the energy policy of 2006. The biggest problem seems to be with male voters of The Independence Party, where a vast majority has even considered the most extreme energy policy as the sole basis for the continued survival of Icelanders. That explains the great emotional attachment they have to dams and smelters. To secure their survival, the majority of them wants to cut back on our environmental regulations, and they have no standards whatsoever on the ethical background of the corporations coming to Iceland.
Therein lies Iceland’s most serious political ill. If everything were normal, our males would be conservative, moderate, aversive to risk, frugal, orderly and even a bit boring. This is an important group of people in every society. It contains a lot of average household fathers; it contains pillars of society, company directors, influentials, MPs and even journalists and editors. These are men that have the power to define what is normal and what is abnormal and/or excessive.
OF RESPONSIBLE PUNKS AND SURREALISTS
It is harmful for communities when a critical mass of their important males starts adhering to revolutionary and completely reckless ideas, adopting a blind belief in them. This group is not fit for governing anything while the situation lasts, and it is therefore no coincidence that the city of Reykjavík is now governed by the punkers and surrealists of the Best Party. A moderate mixture of surrealism and punk rock is a down to Earth, conservative and responsible policy when compared to the delusions and anarchy of the crazed men. They have proved very moderate and responsible, and have now moved the policy of Reykjavík Energy, Reykjavík’s energy company, into a more sustainable and modest direction. And the Left Green Social Democrat government did the same with Landsvirkjun, the national energy company.
Those that are worst off in this group of mad men share a mutual admiration for Einar Benediktsson (1863-1945). The Icelandic National Myth is perhaps best embodied in the figure Einar Ben, our poet of progress. His most recent biography gives a good picture of the kind of man he was and the impulses that motivated his actions:
What drives Einar Benediktsson on to undertake this long journey [...] is his unshakeable belief in his own abilities to be of use to his impoverished fatherland in countries abroad. His dream is to furnish the money that will transform Iceland into a modern country, with towns, factories, railways, roads, harbours and large-scale farms. He carries nothing with him except his belief in himself…
Einar Benediktsson had great dreams for the future of Iceland, replete with hydroelectric dams, factories and railways. While his generation on both sides of the Atlantic saw their dreams become a reality, and sometimes a nightmare, Einar was to be disappointed in all his great hopes and ambitions. Henry Ford was born a year before Einar Benediktsson, and Sam Eyde, the founder of Norway’s Norsk Hydro was born three years after him. But Iceland failed to industrialize in the way Einar envisaged. Whether Iceland was fortunate or unfortunate to have missed out on the Industrial Revolution is something we can argue over. But the failure of Einar’s dreams left an unfilled space in the Icelandic soul. Iceland’s wealth came from fishing, but Einar’s ideas still hovered in the air, leaving a sense of a task left unfulfilled—the unfinished Icelandic dream. The Americans could move on from Ford to Gates. The Icelanders were still lacking a Ford.
One of the first bubbles in Iceland happened when businesspeople travelled the country buying rights to harness waterfalls in the beginning of the 20th century. Einar Ben had the Norwegian engineer Sætersemoen draw up a row of power plants spanning the entirety of Þjórsá. The drawings of the proposed power plants look magnificent and enticing and would without doubt be considered among Iceland’s most beautiful buildings had they been constructed. But how realistic were the plans? They had planned for harnessing Þjórsá to produce 600–800 MW—in 1918, nota bene. This does not include the rest of the water rights these men had secured for themselves, including Dettifoss and Gullfoss. In comparison one could note that today, one hundred years later, the City of Reykjavík uses 200 MW—on Christmas Eve, with every electric appliance running at full steam.
What did Einar plan on doing with all this energy in 1918? Aluminium production was barely on the horizon as a feasible industry, and televisions and freezers were but distant dreams. What were they planning to do with all the power? Produce fertiliser? The Gufunes fertiliser plant used around 20 MW when it was running at its peak. Who was to use all the energy and pay for the series of power plants? The answer is likely simple: No one. No one in the world could have found use for this energy.
Of course Einar could easily have harnessed a small stream to light up a small village, maybe even a cowshed or two. But there is no glory in that. The act would not appease the deranged men’s need for conquest and magnitude. There’s much more spunk, gusto and vigour in lining all of Þjórsá with power plants, even if the energy produced is way beyond what the nation can use one hundred years later. To this day, a lot of people think that Iceland’s government at that time was backwards, afraid of foreigners and somehow prevented the founding of a great and profitable company and “foreign investment.” But it’s enough to look at the numbers to see that the whole thing was a sham.
It’s so weird to think that, ever since, a certain group of Icelandic males have harboured a strange sort of national grief. It’s as if Einar’s unrealistic ideas have been haunting later generations of Icelanders. Not as fantasy, but as real, attainable goals or lost opportunities: “The dreams of our turn of the century poets have finally come true.” Remarked former PM Geir Haarde as he signed a deal with Alcoa in 2002. Yes, finally, the nation was dragged into a century old illusion.
THE MAD MEN VS. THE WISE GIRLS
The mob seems tolerate nothing worse than young, educated women who that use words like “professional” or “process.” Even if aluminium production in Iceland has been tripled over the last ten years, a lot of the crazy guys think that Iceland’s economic problems stem first and foremost from a lack of aluminium smelters.
Supporters of a new Century Aluminium smelter in Helguvík spent millions in advertisements campaigning against departing Minister for the Environment Svandís Svavarsdóttir, who delayed the building process with demands of a sober overview of the energy demand and environmental impact. The blogosphere went wild when Left-Green MP Kolbrún Halldórsdóttir spoke up against deep-sea oil drilling in Icelandic waters. One sensed a lynch mob in the making as former-Minister for the Environment Þórunn Sveinbjarnardóttir met with locals in Húsavík advocating for a full environmental impact assessment for a new Alcoa smelter—the audience was only lacking the pitchforks. The decline of The Independence Party is very evident in the fact that Katrín Fjeldsted lost her seat in parliament. She is a well-educated, intelligent and logical doctor and the only party MP who questioned the insanity. Every obstacle shall be pushed out of the way.
Icelanders harvest 1% of the world’s fish. We receive more tourists per capita than most nations. Iceland has harnessed five times the amount of energy that the nation needs to function, and we currently operate three aluminium smelters. But we have ALREADY harnessed five times more energy than our neighbouring countries. We are already an energy superpower—if everything were normal, such an investment should yield a fair bit of profit to the nation, if we don’t blow the proceeds and resources in another round of debt. But the discourse is so crazy. People act as if “NOTHING IS PERMITTED” when the energy production is already five times more than the nation can consume. Of the energy we produce, 90% already goes to smelters.
We already have everything a modern society needs. We just need to tend to what we have already built, to reap some profit from the power plants we have already constructed and take better care of what we’re currently fishing. People get insecure when interest groups moan: “Who will support us in the future?!?” as if Iceland is a country without foundations. The fear that is purposely spread is resulting in Iceland acting like a man that demands radiotherapy, chemotherapy and surgery to fix his headache. The truth is that the treatment will never cure him—but it might kill him. He will in the best-case scenario grow addicted to the drugs.
THEY TRIED TO BREAK US…
We are a small community and we need peace and room to work. That Björk should need to take time off work to fight the insanity is just a small example of the disturbance that thousands of Icelanders suffer every day because of this crazy nonsense. Living here will become unbearable if something like the reckless policy from 2006 goes full speed again. It is maddening that we cannot seem to leave our most beautiful areas alone. We are a small community where co-dependency is the norm and people are polite.
The new leaders are young and nice guys; Sigmundur Davíð loves old buildings and has good ideas for city planning. But behind them is a crowd of mad men, “fallen far from glory, reckless and so hungered.” Were four years from power enough to sober up the mentality in terms of the energy policy? What will come out of the “rethinking” of the Energy Master Plan? Will we be strapped up into another rollercoaster, just to take another ride of boom and bust? “They tried to break us. Will they try again?”