Iceland As Icarus

How international media covered the island nation’s fiscal nosedive.

In the early days of the financial earthquake that swept the world in 2008, Iceland was at the forefront, unlikely as it might have seemed. This small country on the rim of the North Atlantic and the edge of awareness for most people in the industrial world had run up a far-too-remarkable record of economic growth in the early 2000s. It was based on an utterly unsustainable banking expansion and the inevitable crash was both shocking in its magnitude—the Reykjavik stock exchange lost 94 percent of its value, the Icelandic krona 60 percent—and devastating in its economic impact. It inflicted enormous damage on Iceland’s reputation and Icelanders’ view of themselves.

The aftershocks are still being felt. In an April referendum, Icelanders rejected for a second time a government plan to repay $5 billion in loans extended by Britain and the Netherlands during the worst of the crisis. The margin this time was 60–40—decisive, but not as lopsided as the 98–2 result in the 2010 referendum.

Aside from the Eyjafjallajökull volcano that disrupted air traffic last year, this is how Iceland has been making news for the past three years, although the stories these days are short and relegated to inside pages. Iceland’s financial troubles have long since been pushed off the front pages by the woes of Greece, Ireland and Portugal, which needed European Union rescues, not to mention Spain, which could be next, and Italy, whose finances are rather grim as well. Those five became known as the PIIGS and Iceland’s one bit of good fortune is that the derisive acronym included only countries already in the EU.

To the extent that Iceland had impinged on the consciousness of the world, it was the land of fire and ice, source of an extensive literature and home to an ancient democracy, magnificent scenery, volcanoes, dreadful weather and high prices for tourists. That changed in the 2000s when a band of Icelandic entrepreneurs set out to conquer the business world. Their early success naturally led the media to brand them the New Vikings and Iceland the Viking Tiger, to follow in the footsteps of the Asian and Celtic Tigers.

When the crash came, the media turned on Iceland with all the ferocity that journalists usually reserve for those who fly too close to the sun and especially for those whose reputations the media have credulously inflated in the first place.

Daniel Chartier’s The End of Iceland’s Innocence: The Image of Iceland in the Foreign Media during the Financial Crisis chronicles media coverage of Iceland’s fall primarily through the pages of nine newspapers, with other clippings tossed in along the way.1 The subtitle lays out the goal of his effort. Chartier is a professor of literature at the Université du Québec à Montréal, where he runs the International Laboratory for the Comparative Multidisiplinary Study of Representations of the North.

His specialty is something of a barrier for the reader who is unfamiliar with the academic foundations of the book. He is “not concerned with reviewing the facts of the crisis or explaining them, but rather with determining, through a dialectic approach, the main themes and topics of the articles written about Iceland during this period.” He is interested in image making—“through the process of accumulation and concurrence”—and says that his study also “relies on the hermeneutics of reception (Hans Robert Jauss and Wolfgang Iser, in particular), an ideological and sociological analysis of discourse (Marc Angenot and Pierre Bourdieu), and applications of such an analysis in a ‘national’ context (Micheline Cambron, Dominique Perron and Régine Robin).”

This is daunting stuff for the uninitiated, but we hear no more of it. Doubtless these are interesting theories, particularly to academics well versed in media studies, but a few pages of explanation would have helped the reader figure out what exactly the subsequent 200 pages of the book are driving at. A summary of Iceland’s crisis, even a brief economic and financial history of the years leading up to 2008 and the unfolding of the crash, would have served well as a guide to the events being reported and commented on in the hundreds of articles cited.

In the absence of any attempt to link theory and events, one is left with a collection of press clippings strung together (with much repetition) under a variety of headings. And unless one is deeply familiar with the storyline of the crisis itself, one is repeatedly driven to the internet to get a few basic facts to keep the narrative straight. This is not the story of Iceland’s rise and fall as a financial power, or of how it compares with Greece and Ireland, or of how Iceland is attempting to recover from its crash—there is fodder there for plenty of books—but merely of how the international media covered the story.

As a result, the reader is often left confused as institutions and people appear scattered throughout the book, with no sense of exactly what or who they are and where exactly they fit in what was a jumbled story of financial excess, miscommunication among key players when the crisis hit, truly awful policy decisions throughout and no small measure of international intrigue. The lack of an index, an unforgivable omission in an academic text, compounds the reader’s problem.

Clearly a fan of Iceland, Chartier is upset that the country’s generally favourable reputation in the world was overturned in a matter of weeks. From the beginning, however, he describes the crisis as a media event, which he explains thus: “the tone and style adopted by newspapers can magnify the facts, giving them a dramatic or tragic aspect, creating an ethos to make the news more appealing to readers.” It was an event that seized media attention, to be sure, especially since it was widely viewed as symptomatic of wider problems (Washington’s decision to let Lehman Brothers fail in September 2008 may very well have hastened Iceland’s collapse). But it was not—in a standard definition—an event created solely to attract the attention of the media.

Chartier appears offended by the magnitude of the media coverage. His nine newspapers collectively published about 50 articles a month on Iceland in the months preceding the crisis, but more than 900 at its peak in October and November 2008. “For a country like Iceland whose role is said to be ‘negligible’ from a global standpoint, such numbers represent an excessive amount of discourse that battered the country’s image, which had been patiently polished over the years.” There are a few things wrong with this conclusion. By what metric is 900 articles excessive? Would 500 have been more appropriate? 300? 100? Iceland’s economy is tiny, to be sure, but by what measure can one regard as negligible the $5 billion lost by ordinary British and Dutch depositors in Icesave or the $80 billion in total owed by Icelandic banks to foreigners? And if Iceland’s image had been patiently polished over the years, by whom and for what purpose?

The next two dozen short chapters gather the quotations under a variety of headings, as if Chartier allocated each article he read to a chapter folder (some to more than one) and strung the lines together with bits of connecting text, but little analysis. While he opened with a statement that the book “does not judge the veracity of what was said in the foreign press,” he quickly asserts that “the media … disseminated a flood of true and false information,” without specifics as to what information is false. Running through the book is a wounded tone, rarely enunciated explicitly, that such a nice country could be the subject of such not-nice commentary. He laments the fact that “for the first time in its history, Iceland fell out of favour with its best of friends,” and cites as evidence a line from a financial analyst at BNP Paribas: “there is a general dislike of Iceland; every movement in the market gets magnified when it comes to Iceland.” Setting aside the question of whether or not BNP Paribas is one of Iceland’s “best of friends,” it is more likely that in the jargon of the financial markets, the analyst was really saying that no one wanted to invest in Iceland, much as a broker might tell a client that he or she likes/dislikes ABC Corp., so the client should buy/sell its stock. The BNP analyst may well like Iceland as a country very much.

To his credit, Chartier does not let Iceland off the hook entirely. He cites instances in which Iceland was portrayed as a victim in the whole affair, but also cites articles that described the country as a “‘toxic hedge fund’ built on debt that could be about to go spectacularly wrong,” a line written six months before Iceland’s three main banks—Glitnir, Kaupthing and Landsbanki—suspended operations in October. The “country that became a hedge fund” became an extremely popular line; it was a headline on a Fortune article in December 2008, albeit with the subhead “Okay, not really. But its main banks and business tycoons took huge risks and its citizens borrowed to the hilt. Now this island nation is paying the price.”

Few aspects of Iceland’s crisis escape Chartier’s clippings. There is even a chapter on humour (“What is the capital of Iceland? About five euros”) and another on gender issues, prompted by the fact that women emerged to take senior positions at the banks and in government, one becoming prime minister. He cites approvingly the singer Björk’s establishment of a small business start-up fund to incorporate “female values” into the world of finance. Whose female values, one wonders—Gro Harlem Brundtland’s or Margaret Thatcher’s? Hillary Clinton’s or Sarah Palin’s? Chartier passes over such difficulties with a particularly fatuous line. “The initiative has important symbolic value: that of reminding the world and especially Iceland that gender equality is a guarantee of wellness.”

Near the end, one chapter—“A Very Small Country”—is especially fascinating, not just for what it says, but what it leaves out. Chartier summarizes the problem succinctly; Iceland was “caught between the small size of the country and the weak power of its institutions relative to the enormous financial empire acquired by its new Viking bankers.” But he seizes on commentary in countries (Britain especially) that would deny parts of themselves (Scotland) a chance at independence of the kind Iceland enjoyed. Scottish nationalists, who saw Iceland as an example of what they could become, were embarrassed by the crisis, while their opponents jumped at the chance to note that London rescued the Royal Bank of Scotland, a clear advantage of being part of a larger country.

Intriguingly, Chartier did not extend this discussion to Quebec. Canada’s banks, of course, came nowhere close to the problems suffered by their counterparts in Europe and the United States, thanks in part to strong regulations and oversight by the federal government, so such comparisons are of little urgency. Even so, the Scottish debate could easily have warranted at least a short discussion of parallels for Canada and for Quebec independence. It could have been tied into the previous chapter on how much better Ireland—then facing problems, though not yet as dire as they eventually became—fared because it lived under the protective wings of the EU, a comment that in retrospect evokes a wry chuckle.

In the end, however, one is left with overarching unanswered questions. Does media coverage of one’s country in a time of crisis matter and, if so, why? How does it change the reality of what happened or what is likely to happen to Iceland as a result of the crisis? Icelanders may be embarrassed by their new reputation in the world, but its source surely is the events that led to the crisis and their own culpability, not the fleeting words of journalists and commentators who wrote on the fly as they tried to keep up with rapidly changing events.

If you want to understand Iceland’s flirtation with financial greatness, this is not the place to look. One is reminded of Plato’s allegory of the cave, in which chained prisoners can see only a blank wall on which are cast the shadows of people lit by a fire behind them. Just as those in chains can see only the shadows and not the people, we are left with the sense that we have seen only the media shadows of the crisis and not the crisis itself.

The newspapers have provided their specialty, the first rough draft of history. The real story—and the lessons to be learned from it—must await a more detailed examination of how a tiny nation paid the price for a venture it was ill equipped to carry out.


  1. The nine newspapers were the New York Times, Le Devoir, International Herald Tribune, Financial Times, Glasgow’s The Herald, The Globe and Mail, The Australian, Le Monde and the Guardian. (The International Herald Tribune is the global edition of the New York Times