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Posted December 2011

Icelandic males – Were the two twenty-something Icelandic investors, who went to Russia in the early 1990s to found the Bravo beer business, modern-day gold-diggers? Or were they typical Norseman who had dropped their battle axes in favour of the latest high tech gadgets and the most stunning arm candy?

This got me thinking.

If it’s true that you are what you eat, then Erlendur, the Icelandic detective in Arnaldur Indridason’s crime novels, is a case in point. Erlendur, a generally glum and withdrawn character, in the novel “Hypothermia” (2007) seems to live on a diet of porridge, cold Lifrarpylsa, a haggis-type of sausage made from lamb’s liver and preserved in whey, sour-lamb rolls, sheep’s head (plus eyes) in jelly and microwave dinners.

Mr Indridason did not make any of these dishes up. Except for the latter, they are the highlights of traditional Icelandic cuisine. Because of the harsh climate, Icelandic cooking used to be all about pickling and preserving. You could keep some of those disgusting-looking dishes for months behind a radiator or under your bed (this being autumn, Erlendur stores his sheep’s head in a pickling tub of whey out on his balcony) and they would still be safe to eat. Other dishes like the famous Rotted Shark needed to be fermented first (by burying it in sand for about six months) before they were ready to be turned into dinner.

As said, if it’s really true that you are what you eat, middle-aged Icelanders wolfing down their dreary “husmanskost” (“home-cooking”), must be veritable sourpusses.

Actually, Erlendur is a jolly kind of guy, even likeable compared with Indridason’s line-up of Icelandic baddies, who run the full gamut from taciturn alcoholics and depressive druggies to monosyllabic wife-beaters, having been brought up on a diet much like Erlendur’s.

Given Mr Indridason’s prolificacy – ten Erlendur novels have been published so far – and Iceland’s tiny population of only 300,000 people, you could be forgiven for getting the impression that every other Icelandic male must be a ticking time bomb seething with rage and resentment – much like the devious and murderous inhabitants of Ystad, the Swedish town in which ten Wallander thrillers are set.

Obviously, there is a narrative strategy behind Mr Indridason’s detailed description of Erlendur’s culinary hankerings which he treats as a symptom (rather than the cause) of deeper social upheavals.

Before its recent banking craze, when Iceland had little to export but fresh fish and needed to import everything except fish and energy, the country, which is the size of Kentucky, was one of Europe’s poorest states, whose inhabitants barely managed to scrape a living from fishing and farming.

In Mr Indridason’s Nordic Noir society, Erlendur is a representative of the “old” farming and fishing Iceland, constantly obsessing about his cultural roots and dysfunctional family. But on the whole (put it down to his diet) he seems much more grounded and settled than those whom he encounters in his line of work: the never-ending stream of life’s victims and losers who failed to adapt to the ways of the modern world (e.g. unskilled labourers, illegal immigrants, drug addicts, single mothers on the dole dumped by their partners).

Surprisingly, for such an astute social commentator, Mr Indridason does not deal with the “new Iceland” and the new breed of Icelanders who made the country notorious this past decade: investment bankers.

It was in the early Noughties, circa 2003, when Iceland’s fishermen decided to become bankers. Hundreds of students each year enrolled in Finance 101. Hedging won over haddock. And guess what. They were very good at it. Making huge amounts of money, that is. Suddenly filthy-rich, Icelanders decided that wining and dining now meant whale carpaccio with ginger- and chili-spiced pear compote at the “Perlan” restaurant washed down with a crazily expensive wine rather than having a coke and a hot dog on the hoof.

What led them to turn their tiny country into one gigantic hedge fund?

Michael Lewis, the financial disaster travel journalist, for his piece “Wall Street on the Tundra”, which was published in Vanity Fair in April 2009, had travelled to Iceland in December 2008 to find an answer. And saw: “An entire nation without immediate experience or even distant memory of high finance had gazed upon the example of Wall Street and said, “We can do that.” For a brief moment it appeared that they could. In 2003, Iceland’s three biggest banks had assets of only a few billion dollars, about 100 percent of its gross domestic product. Over the next three and a half years they grew to over USD 140 billion and were so much greater than Iceland’s GDP that it made no sense to calculate the percentage of it they accounted for.”

As male Icelanders were fleeing the economics of fishing for the economics of money, Iceland not only witnessed the most rapid expansion of a banking system in the history of mankind, it also saw a fundamental change of its gender relations.

Contrary to Mr Indridason’s stereotypical female victims, Icelandic women are not exactly oppressed, generally speaking. “On paper”, argues Mr Lewis “they have it about as good as women anywhere: good public health care, high participation in the workforce, equal rights. What Icelandic women appear to lack is a genuine connection to Icelandic men. … Everyone knows everyone else, but when I ask Icelanders for leads, the men always refer me to other men, and the women to other women.”

Iceland may take pride in being an egalitarian society, but when it came to money and banking, women had little to do with it. “Women worked in the banks”, Mr Lewis points out, “but not in the risk-taking jobs.” Those who took the risks were incredibly young, tall, blond, Icelandic males whom you would unexpectedly bump into all over the place in Europe and the United States during Iceland’s boom years.

Like the young Russian oligarchs (think of Roman Abramovich, the 53rd richest person in the world, who is only 45 years old) several of them had become billionaires overnight. But, unlike the Russians, they were much better looking and their work-out regimes produced better results.

What got me interested in Icelandic males is the story of Thor Bjorgolfsson and Magnus Thorsteinsson, who were among the first to invest in the Russian beverage industry in the early 1990s when the two were barely of legal drinking age (see my report “From Russia with love”, November 2011).

They decided to take a dis-used soft drinks plant from Iceland to St Petersburg, the city regarded as the Russian mafia capital (says the Guardian newspaper). There in 1993 they formed the Baltic Bottling Plant, which in 1995 started to produce alcopops, i.e. flavoured alcoholic beverages, with great success. Think "bang for your buck" and you will immediately understand why.

Ownership of that company would later be challenged in the courts. But away from the legal battles and recriminations (spirits production in Russia then, as today, is largely controlled by the mafia), the Icelanders sold the plant to Pepsi and used the money to build another plant in St Petersburg with second-hand equipment which also produced alcopops before they moved into beer, with the launch of Bravo International in 1998.

Bravo's owners, two self-confessed naives - who weren't quite as naive as not to change the security system at their plant three times in about as many years - suddenly found themselves among Russia's leading brewers. Between 1998 and 2001 Bravo reportedly became the fastest-growing brewery in the country. Competitors today credit these Icelandic guys with the Midas touch. Investing as little as necessary and leaving the running of the brewery to mostly Russian staff, Bravo nevertheless secured a 17 percent market share in the St Petersburg region and 7 percent in the Moscow area because the Icelanders took control of marketing, where they did an excellent job. The Bravo brands sold 2.5 million hl in 2001 after which Heineken stepped in to buy the beer business (but not the alcopops business - for the above reasons) for USD 400 million in 2002.

The Icelanders' story is a classic exit-story, although it took them longer to get out than planned. At first they had intended to stay in Russia for only three to four years but in the end they spent almost a decade there. With cash in their pockets, it was time for the two men to return home and make their most daring bid: a 42 percent acquisition of Landsbanki, Iceland's second-largest commercial bank. Well, we all know how that story ended. Landsbanki is bust. Mr Thorsteinsson, according to media reports, has been declared legally bankrupt while Mr Bjorgolfsson, still only 45, appears to enjoy the high life in London, the Guardian newspaper reported in August 2011.

Their rags-to-riches story does not get written up in Mr Lewis’ article although he mentions Thor Bjorgolfsson in an aside.

Occasionally, Mr Lewis’ news article reads like fiction. He is certainly not averse to taking some artistic licence to portray Icelandic society post-boom. As he curls up in his solitary hotel bed one night to read an academic book on Icelandic economy, a couple next door engages in noisy sex while two expensive cars get blown up outside for their insurance. Coincidence or carefully made up? It does not matter.

Stuffed with facts and figures his piece remains the best analysis of the Icelandic financial bubble to date. Not least because he strives to uncover the psychological forces that drove it: namely men wanting to be real men. Cherishing conflict and heroism, the modern-day Icelanders resemble their Norsemen ancestors, those fearless sailors, merciless raiders and hardy settlers, who rowed to the heart of Russia and challenged the unknown Atlantic to sail to America over a thousand years ago.

True, there were plenty of women in Iceland’s recent and ancient histories. But as Mr Lewis concludes: they are both chiefly histories of men ... who left a trail of victims in their wake (my addition).

Detective Erlendur would probably agree.

Here’s the link to Michael Lewis’ article “Wall Street on the Tundra”: http://www.vanityfair.com/politics/features/2009/04/iceland200904

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