It has been a difficult three years for the small northern nation of Iceland. In fact as the country's president put it recently, if you were to try to create the perfect laboratory experiment to test the resilience of a nation you could hardly do better than what Iceland has experienced. The country was the first to be hit by the global financial upheaval, the failure of its banks led to a complete economic collapse one year later. A volcano with an almost unprecedented of eruption, as President Ólafur Grímsson put it. It was a sobering experience and that is an understatement so it is no small achievement that three years after it all began. Iceland appears to be emerging from the worst of the crisis, unemployment is down to levels that many other European nations would envy. Investment is returning and the economy is projected to grow by as much as three percent this year. What makes this all the more remarkable is the way Iceland has done it. Instead of following the standard formula of severe austerity and debt repayment Iceland did pretty much the opposite.

President Ólafur Grímsson is the president of Iceland and in the video, he's in a studio in Reykjavik.



Q: Mr President you said Iceland is s an integrated society. it is politically coherent and cohesive. it is a small nation. Do you think that what Iceland did in the crisis and coming out of it it’s applicable in places such as Greece, Italy, Ireland and Spain?

Would what you did work within the Eurozone?

A: “Well it depends how you look at it. Of course the differences we had, our own currency, we still have, whereas they are bound by the framework of the euro but in addition to that, as we have mentioned in our discussion we decided to go against many of the financial orthodoxies that are still prevailing within the euro zone.”

“It's right, Iceland is a small country we are not a big nation but we are a highly advanced Western society and I don't accept the argument that because Iceland is so small it was possible for us to recover. I'm sorry after the crisis earlier than others on the contrary you can look at Iceland as a kind of laboratory where some of these conflicts and the challenges and the measures and the recovery policies come out more clearly and in a more transparent way than in a more complicated society, so what has succeeded in Iceland should also be successful in other countries but I have consistently had the position that I am NOT going to offer other countries concrete advice.”

“What I can describe is what we have done in Iceland, what are the lessons we have drawn, what are the primary elements in our difficult journey and it has been difficult in normal thought about it. In the last three years and then other people have to draw conclusions for their own countries”.

Q: Let me ask you finally Mr. president we live in an era of as you said and certainly since the war market dominance where capital is preferred over labour, where financial workings are more important than productivity it seems, do you think that the world is going to turn around and come away from that way of thinking?

A: “Well I hope so we have learned many lessons from these difficult experiences here in Iceland and all these lessons point in a direction that you have just described but this crisis, as I have tried to describe to you has also brought out a fundamental dilemma for our Western societies and that is; democracy is more important for us than the financial markets and this is perhaps the core of the challenge that you're witnessing these very days in Europe. It's also a strong element in the difficult situation where the United States still finds itself. We somehow have to find a way where democracy can prevail even if we have to take our societies out of a profound financial crisis, if we start sacrificing democratic elements of our societies for financial expediency we have in my opinion entered the very dangerous turning.”