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19 Oct, 2008 00:46

Icelanders hope for Russian cash

The past week has been a tough one for Iceland. The island of 300,000 people has so far been the most serious state victim of the global credit crunch. Its economy has nosedived after years of prosperity, with its banks virtually collapsed.

Money has stopped flowing in and out of the country, leaving local exporters starved of foreign currency and desperate for help. With banking debts several times its gross domestic product, Iceland has turned to Russia for help.

Arni Baldursson runs an angling company in Reykjavik. Fishermen don't have ready cash to spend.

“It’s a strange situation for me. Two weeks ago I had the brightest future I could ever dream of,” Arni says. “We had the best season ever in Iceland, all the rivers were full of fish, every river was fully booked, every angler was going home smiling with plenty of fish, everything was absolutely fantastic, the best view for 20 years”.

The boom has turned to bust with shocking speed. Arni’s been wise enough to expand his business into foreign markets, but his customers from abroad are growing wary. They say they want to book fishing trips, but they don’t want to send him the money because they don’t trust where the money will go.

They’re fully aware Iceland’s banking system has collapsed. Arni hopes Russia will come to the rescue, and bolster trust in the Icelandic currency.

“It might give a good message to the rest of the world that Russia opened up the door for us in a few hours when other nations didn’t really listen to us,” he believes.

Arni’s wife, Valgerdur Beldursson, keeps tight control of the finances. She says some people are suspicious of Russia’s motivation in helping Iceland, while acknowledging the loan might save them.

“Russia has a lot of money so in a time of crisis there are lots of opportunities and they definitely need to invest money somewhere. And we need the money,” she says.

So pushing doubts to one side, the Icelandic people are hoping that with Russia’s help, the economy can improve, and their lives can return to normal.

Related links

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