Iceland's Saga

A Conversation With Ólafur Ragnar Grímsson

Iceland's president in Davos, Switzerland, January 2011. (Getty Images / Bloomberg)

By all rights, Iceland -- a remote Arctic island inhabited by just 320,000 people -- should be a forgotten backwater. And for most of its history, it was. But in recent decades, the former Danish colony has begun to attract outsized attention from abroad. After its banks were fully privatized in 2003, foreign money poured into the financial sector, which grew to almost ten times the size of national GDP before bursting in a matter of days in October 2008. More lasting may be Iceland’s potential as a player in its Arctic backyard, where climate change is opening up new shipping routes and resource opportunities. As Iceland’s first political science professor, its finance minister from 1988 to 1991, and its president since 1996, Ólafur Ragnar Grímsson has studied and survived these shifts of fortune. He spoke with Foreign Affairs senior editor Stuart Reid outside Reykjavik in October.

As the Arctic opens up, is the region going to see increased geopolitical competition or a more peaceful path to shared development?
For over half a century, the Arctic was perhaps the most militarized region in the world, with vast nuclear arsenals on land and in the ocean. So it was understandable that people came to climate change in the Arctic with this Cold War model of confrontation. However, among the people who have lived in the Arctic for hundreds and even thousands of years, there is a different culture. There’s a culture of cooperation, an awareness that you cannot survive in this tough environment unless you rely on others and others rely on you.

Somehow, Russia, the United States, Canada, and the five Nordic countries -- Finland, Sweden, Norway, Denmark, Iceland -- developed through the Arctic Council a way of discussing and deciding. It also helped that among the Arctic states, the majority had a strong Nordic tradition of cooperation based on the rule of law, democratic dialogue, and formal arrangements. In addition, the Russian leadership realized early on that even Russia, with all its power, would not be able to succeed in the Arctic unless it engaged others.

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