In the heart of Reykjavik, the Skreið restaurant offers cocktails like Marianito (2,800 Icelandic krona, or 19.91 euros), with vermouth, or Butano (18.49 euros), with pacharán. Desserts include Catalan cream with melted orange (2,600 krona, which is 18.49 euros) and tapas, such as patatas bravas with alioli (12.45 euros) or bread with tomato (7.82 euros, although the bill rises to 12.50 if Manchego cheese is added).
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These are relatively affordable prices for Iceland, where a half-hour taxi ride from Keflavik airport to Reykjavik with a night rate costs 26,000 krona (183 euros), and the price of a two-bedroom apartment in the city center “is worth a million krona, that is, 7,000 euros per square meter,” according to the former CEO of Microsoft in the country, Hälldor Jorgen. Add to that a mortgage interest rate of 10%, a consequence of inflation that reached 5.3% in August, and the average Icelander ends up paying four times – three of them to the bank – the price of the home.
Balancing those figures to make life easier in the country was one of the promises of the potential entry into the European Union. But, at Skreið, despite being in the presumed center of the favorable vote in today’s referendum on starting negotiations with Brussels, things were far from clear on Thursday.
And the restaurant’s name refers to a historic process of opening the Icelandic economy, which was forced by the skill of the Spanish government of Eduardo Dato in 1921. The incident even has a name in Icelandic: the “affair Spanarvin,” or “the case of Spanish wine.”
It was a move that would provoke a fit of jealousy in Donald Trump. It had started in 1915, when Icelanders, in other referendums, had decided, as strict Protestants, to prohibit alcohol. The problem was that the country was economically isolated, and one of its few exports was dried and salted cod, according to the technique known precisely as ‘Skreið’. Iceland exported very little. And one of the main markets for its cod was, precisely, Spain.
And that is where Madrid saw the opportunity. In 1921, it threatened to impose a prohibitive tariff on Icelandic cod if Reykjavik did not lift its dry law for beverages with less than 21% alcohol. Among which, coincidentally, is Spanish wine. So the Icelanders, caught between the need for foreign currency and the strict Lutheran morality approved in a plebiscite, chose the former. Parliament reversed the referendum. And on June 29, 1923, Reykjavik opened the first store with the sign Spanaevun, or Spanish wine.
Today, 105 years later, Iceland is also considering opening up to the European Union, in an operation that would have economic consequences infinitely greater than the opening to Spanish wine. But at Skreið, they don’t seem to be on board.
An informal survey at a noisy table of Icelanders dining on tapas on Thursday night gave eight ‘no’s and one undecided. Six hours earlier, just after the lunch shift, one of the waiters, Ingi, 31 years old, said he was not clear about what he was going to vote. But as he spoke, while collecting cutlery and napkins, he became increasingly critical of the EU, until he reached a phrase generally reserved for those who vote in favor of opponents of supranational integration processes, such as the American Donald Trump, the British Nigel Farage, or the Hungarian Viktor Orban: “Those who say ‘yes’ are motivated by resentment.” That day the first Gallup poll since the referendum was called last January was published, and the ‘no’ seems to have prevailed over the ‘yes’.
Resentment towards whom? Towards the banks, which benefit from intermediation margins that are out of this world thanks to official interest rates that last week rose to 8%? Or towards the sacred fishing sector, in which six families control 50% of the licenses to fish and, if another 19 are added, a total of 25 clans take 75% of the fishing permits in some of the best fishing grounds in the world, not only in quantity and quality but also in terms of conservation and sustainability?
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The Icelandic economy is, like the country, an isolated case. A cynic might say it is an example of management based on the parameters of 21st-century identity left. Iceland has levels of tolerance possibly unmatched in the world, especially concerning sexual identity and gender. And it has a sustainable economy – although the whaling still practiced by businessman Kristján Lofftsson causes dizziness to many environmentalists worldwide -, based on innovation, especially in the energy sector, as shown by the Reykjavik Geothermal plant on the slopes of Teide, on the island of Tenerife.
But it is also a country of high taxes and huge subsidies, especially to the sacred sectors of agriculture – mainly sheep farming and, in recent years, greenhouses – and fishing. According to the Organization for Economic Cooperation and Development (OECD), 52% of Icelandic farmers’ income comes from the state. With such a pumping of public money, it is no surprise that rural areas do not even consider the mere possibility of voting ‘yes’ to negotiate anything with the EU. For them, talking to Brussels would literally be putting a price on the throat of the goose that lays the golden eggs.
The ‘yes’ also clashes with the Icelandic character. Despite the image of a cosmopolitan and ultra-modern country, with its Punk Museum in the center of Reykjavik (and also in the capital, the best-known penis museum), Icelanders are, according to those who know them, much more from the countryside than the image projected by singer Björk dressed as a swan to receive the Oscar in 2001.
Many young people work in summer in agriculture or the fishing sector, either on boats or in processing plants for the catches, which generates a kind of link to traditional jobs. Added to this is a huge dropout rate. One in five students who start secondary school does not finish it, a figure practically identical to Spain’s, which is one of the industrialized countries with the worst figures in this regard. And 18% of those who enter university do not graduate. The result is a society stratified by educational levels, in which differences have become entrenched from generation to generation.
Opening Iceland to the EU would mean a transformation of its economy. The country would have to cut subsidies and face a harsh adjustment that would clash with the opposition of the unions, which are another factual power with unimaginable influence in, for example, Spain. Icelandic unions control most of the country’s pension system, which allows them to force the government and companies to index all price increases, perpetuating inflation. If the country joins the euro, it would have to accept a cut in real wages to contain prices. The Spanish industrial reconversion of the eighties would be a birthday party compared to the lifestyle change this would mean for the 403,800 Icelanders living in the country.
Iceland has traditionally lived isolated from the world. As explained by the international relations expert from the University of Iceland Vilborg Ása Guðjónsdótttir, “we have never wanted to be part of any international organization, partly because of our colonial past and also because of our isolationism.” In her opinion, something similar has happened to her country as to its neighbor Greenland.
“What traumatized both of us was Danish colonization. But afterwards, our isolationism has benefited us because it has essentially kept us out of conflicts. World War II, in fact, was a period of tremendous prosperity, despite being invaded and occupied by the United Kingdom,” she concludes. In an Arctic melting due to the ‘greenhouse effect’ and with the USA, Russia, and China disputing the region, Icelanders seem to want to stay out of the world. Joining the EU would mean a Spanarvin much greater than that of 1922.