Reykjavik at SunsetThe last time I visited Iceland, I spent almost no time in Reykjavik, the capital, and lots traveling around rural areas of the island. Recently, I traveled back to talk about the upcoming U.S. elections. I spent most of my time in Reykjavik and got a view of urban Iceland this time. Here are some random thoughts on one of Europe's most interesting countries:
Expensive
Reykjavik may be the most expensive capital city in the world, outpacing even its Nordic rival of Oslo, Norway. Remember that virtually everything has to be imported across the Nordic Sea and the country has a standard VAT rate of 24.5%.
The staggering prices make it hard for an American traveling on the weak dollar to drown their sorrows. I saw ordinary glasses of wine going for $32 per glass (not bottle) and a beer usually sold for around $10. It is far cheaper to buy hardcover editions of books by Icelandic authors in the United States than to buy paperback ones in Iceland.
Finding dinner for less than $50 was tough, though I did find a marvelous place by the harbor where you could point to the fresh catch, including whale, and they'd cook it for you. I had some of the largest and best scallops of my life for around $21--not a bad deal even in America.
Icelanders really love their cars--I can tell because the number of them had clearly increased since my last visit some 16 years ago and they are willing to fill up the tank at several multiples of the U.S. price for gas.
Declining US Influence
In retrospect, American influence could only decline from the period after World War II. We had established a military base at Keflavik, where the major international airport is located, and the presence of thousands of U.S. soldiers brought American culture and dollars in large dollops to the then-relatively isolated and poor Iceland.
Icelanders are no longer isolated or poor. No Icelander in 1940 or 1950 would have believe how wealthy Iceland--now home to two of the world's billionaires--would become by 2008. Despite the comparatively harsh conditions of their climate, they have built one of the most successful and connected countries on the planet. In addition to regular air connections via Icelandair, Icelanders are avid consumers of cell phones and the internet, easily outpacing Americans on both counts.
The base at Keflavik was always controversial in Iceland, NATO's only member without its own standing army. However, the Icelandic government never asked the Americans to leave. In the end, Iceland was surprised when the U.S. closed the base in 2006 and mourned the loss of jobs.
The former base location now serves as a source of cheaper housing (yup, it's expensive too), albeit with a longish and expensive commute (don't forget the price of gas) to Reykjavik. Icelanders also enjoy that they don't have to pass through a foreign military base to enter or to leave the country's major airport.
The U.S. still maintains the largest foreign embassy in Iceland. Nonetheless, the twelve Americans still constitute the smallest American embassy in Europe.
Rising EU Influence
Iceland falls increasingly within the orbit of the European Union. Iceland is a member of the European Economic Space (EES) so it already has adopted three-quarters of EU laws and regulations and already contributes to EU cohesion funds. It is also a member of the Schengen zone, permitting free movement among participating European nations.
Historically, the desire to protect its exclusive fishing rights around the island to continue to subsidize farmers heavily precluded serious consideration of an EU application. Moreover, it took Iceland until 1944 to achieve its independence from Denmark, so giving up sovereignty remains a sensitive topic.
Nonetheless, Iceland increasingly thinks about the advantages of joining the EU. The Icelandic krona is a small and volatile currency--it varied from 66 to 70 kronur to the U.S. dollar while I was there. Icelanders would like to adopt the Euro in the hopes of better containing currency fluctuations and inflation but have been told unequivocally that they would need to join the EU to do so.
Despite sitting astride North America and Europe, Iceland is culturally closer to Europe. Iceland retains close linguistic and cultural ties with the Nordic countries. Though the tie with Denmark was severed in 1944, all Icelanders continue to learn Danish is school and many still spend time studying in Copenhagen.
Just before my arrival in Iceland, a poll showed that 55 percent of Icelanders support joining the EU--the first time any poll showed majority support for the idea. However, the current government--as shotgun marriage between the right-wing Independence Party and the left-wing Social Democratic Alliance (SDA)--has agreed not to apply for EU membership during this parliament, so don't expect a quick application.
However, the SDA may choose to make joining the EU the center of its platform in the hopes of forming the anchor of the next government. It will be interesting to see if the SDA can use the EU question to overturn the usual dominance of the Independence Party which is divided over this question.
