A Nordic revolution: The heroines of Reykjavik

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Iceland was the first place to suffer the fallout from over-zealous (male) bankers. Now the country is back on its feet. Why? Because women took over.

There's a great big, beautiful, black glass building on the shore in Reykjavik, on a spot where three years ago there was only empty space. I know because I was there three years ago, a time of despond in Iceland, a country ruined by testosterone-crazed bankers, the first to succumb to full-on recession, the one that fell hardest of all. Tiny, desperate, broken Iceland (pop 320,000) presented, as we saw it back then in those tender early months of crisis, a vision of Armageddon for the big nations of western Europe. Yet now, today, there stands that spanking new building, a vision of opulence and modernity as striking as the Guggenheim Museum in Bilbao, grandiosely out of place in this nordic Lilliput of brightly painted fishermen's houses. I could not take my eyes off the building, either by day or – especially – by night, when its multitude of asymmetric, irregularly framed windows continually changed colours, as if in liquid imitation of the aurora borealis.

What happened in Iceland? What happened in three years to warrant the emergence – from the ashes of economic disaster – of a construction so extravagant? Women took over the country and fixed it, that's what happened. And that building, the first national concert hall in Iceland's history, where the national opera company is staging right now to full houses a production of Puccini's La Bohème, just happens to capture it all. Because it tells you that Iceland did not go under, that the country is back on its feet; and because the person who decided to build it, or rather (somewhat more controversially) not to stop building it after the crash, was a woman.

I wanted to meet this woman. Not for the usual reasons that journalists find themselves writing about powerful women, because she had triumphed in a world of men, but for precisely the opposite reason. She symbolised a trend in Iceland, I suspected; or, more than a trend, a revolution, a coup d'état. For the facts show that since the crisis struck, and as a direct and deliberate response to it, women have seized power, and have done so where it matters most, where the influence on the nation is greatest: in government, in banking and, to an ever greater degree, in business.

Iceland's three main banks collapsed in October 2008, leaving debts more than 10 times the size of the country's GDP. The country, until then number one in the United Nations Human Development Index (ie, the best place to be a human being on planet Earth), was way beyond bankrupt. And men were blamed. Even men blamed men. The ruling party was overwhelmingly male, the bankers were practically all male and the rash, absurdly over-ambitious impulses that led a small nation of fishermen to believe they would all be swimming in champagne for the rest of their lives were clearly, categorically, exclusively male. So, as the Financial Times wrote at the time, the women stepped in to clean up the mess.

But this time, having cleaned it, they stayed. The male prime minister was replaced by the country's first female one, Johanna Sigurdardottir (gay and married, two children from a failed earlier marriage – to a male), who remains in place today. Women are in the majority in her cabinet, by five to four. The male CEOs of the collapsed banks were kicked out, the banks were renamed and nationalised and women installed as the new CEOs. Ever larger numbers of women are becoming entrepreneurs or have started appearing on the management boards of private businesses and, to choose among numerous examples, the CEO of Iceland's biggest insurance firm is now a woman, and so is the Icelandic head of Rio Tinto Alcan, big in the country's powerful aluminium industry.

The cliché, since Margaret Thatcher, is that women in power are of necessity iron maidens who triumph by thinking like men. The proposition I set out to explore in Iceland was whether change in the country had been so profound that men were now finding themselves with no choice but to think like women.

Everybody knows everybody in Iceland. They are all cousins, one way or another. So when I asked people if they could help me get in touch with the woman who built the concert hall, whose correct title, since February 2009, is Minister of Education, Science and Culture, everybody smiled in instant recognition. "Ah, Katrin!" they said.

"You'll be amazed when you see her," people told me. "She's got three children but you'd never believe it." "She's dead smart." "Terribly bright." "But she looks 12 years old!"

That was an exaggeration. The person who came up to me at eye level, hand outstretched, as I sat in a waiting room at the ministry, looked all of 16. Just as well, though, that I had been warned, otherwise I'd never have believed that she was who she said she was, Minister Katrin Jakobsdottir, vice-chairman of the ruling social democrat (officially known as the Left-Green) party. Doc Martens (or Doc Martens imitations), brown jeans, mousey hair, skinny, no make-up, she looked like an inappropriately dressed intern, or the gentler, softer younger sister of Stieg Larsson's girl with the dragon tattoo. The truth was that, utterly confident of herself in her ministerial role, she was a 36-year-old mother who had just come back from maternity leave following the birth of her third son. The first evidence of that brightness everyone had told me about was that she had figured out, hardly before I had opened my mouth, that the first thing I'd want to talk about was another of her offspring, the large black-and-glass one five minutes' walk from her ministry.

"One of the first decisions I had to make in this job was whether to go on with the concert hall or not," she said. The foundations had been built, she explained, but there was nothing visible above ground when she took on the job three years ago. The problem was not only that the national economy was devastated; the billionaire whose brainchild the whole project had been, a man called Bjorgolfur Gudmundsson, who among other excesses had bought himself London's West Ham United Football Club, was now penniless. "So I met with the City of Reykjavik people to decide whether to go on with public funds, to suspend construction until better times came along or kill it off altogether. We decided to go for it."

Why? "Partly because there were 600 people involved in the construction, partly because we had been talking about building a concert hall for our philharmonic orchestra for 40 years and we thought if we did not do it now we never would, but also it was because we judged that not to go ahead with it would prolong the crisis in people's minds." So she saw a value in terms of national morale that went beyond considerations of price? "Yes. Exactly. We were obliged to make high budget cuts all over the public sector yet we decided to get this done. There was a lot of controversy at the time but I think now that is fading. The concert house opened in the spring of 2011 and since then more than 800,000 visitors have passed through. People love it. Iceland is a country with a great musical life and we are also a country with a lot of drive and ambition. The building has been both a symbol and an inspiration to Icelanders."

A symbol, among other things, of return to economic health. Jakobsdottir acknowledged that things could be better, that ordinary people's debt on house loans remained high, that investment was low, that there was now unemployment in Iceland (just below 7 per cent), where before there had been none. Living standards, previously the highest in the world, have fallen and people are working harder for fewer returns. Yet, as the Nobel Prize-winning economist Paul Krugman noted after a recent visit to Iceland, "things could have been a lot worse" and while that "may not be the most stirring of slogans... when everyone expected utter disaster, it amounts to a policy triumph".

The numbers are solid. The budget is almost balanced, exports exceed imports, the currency is stable and the IMF issued last year a glowing report. And as for things that you do not need to know anything about economics to understand, the new concert hall stands out as only the most visible of a long list of accomplishments. On my recent visit I attended Iceland's annual gastronomy festival, Food and Fun, which has been going since 2002 but was very nearly cancelled, for lack of funds, in 2009, 2010 and 2011. This year it was thriving again, with 30 chefs from three continents flown in and 25,000 Icelanders paying £35 a head at local restaurants (there are 50 per cent more eating places in Reykjavik than there were three years ago) to sample their cooking. Icelandair has doubled its routes since 2009 and increased the number of passengers it carries by 20 per cent each year. A new airline, WOW, has been created and tourism is booming too, with hotel accommodation for this coming July and August practically sold out. Property prices have just risen by 10 per cent and the sales of Mercedes-Benz cars, I was reliably told, are suddenly up. As for public health and education, so good that even the fleetingly filthy rich saw no need during the boom to go private, the quality remains high despite budget cuts. In a measure of the normality that has descended where once apocalypse threatened, the debate in parliament between parties of the right and left centres today on the eternally humdrum question of whether taxes should be cut or raised. Or whether to join the Euro.

But where all in parliament are agreed is that the days of macho capitalism are over. The key word now is sustainability, echoed by all parties in practically every public pronouncement these days. And sustainability, in minister Jakobsdottir's view, is more a female concept than a male one. She explained.

"A lot of people blamed the bankers' excesses that landed us in such trouble on a male culture," she said. "In 2009 the word was, 'We need less of this macho thinking; we need pragmatic, strategically-minded women in charge now'. What we have learnt since then is that if we want to stay out of crisis and build, we all know now we have to think in terms, not of the immediate future, but of the next 10 or 20 years. That is not the way a male-dominated government would be thinking; that is a female way of thinking."

I asked her in what concrete areas it was possible to detect this shift. "There are many examples. Overall you see the feminine influence in this emphasis on sustainable development, on building an economy over the long run, safely. Women think in such terms because it is more in their nature. A more specific example: our approach on taxes and budgets has changed. We call it 'gendered budget-making' and the idea is to analyse how the system affects men and women differently and how we can adjust that system to increase gender equality. You see the feminine influence, too, in the discussion over employment. Men focus on things like the aluminium industry. We talk about the creative industries. We've established that the arts – especially music and literature – bring in as much money for the country as aluminium mining does. I don't think it would have occurred to men to consider such a thing."

A staggering thing about Iceland is how a country of 320,000 people has such an abundance of artistic talent, especially in music, where apart from a national opera and a national symphony orchestra, you have any number of contemporary bands producing everything from the globally acclaimed Björk to the esoterically experimental work of Kria Brekkan, who plays in New York but who I ran into one afternoon outside the national concert hall. So I seized the chance to sound her out on whether women had really and truly changed Iceland. I wish I had taped her, she was so lucid, but the gist of it was that, yes, "the masculine force" that had defined the period when Icelanders tried to play bank roulette and become the richest people in the world had been replaced by a "female force that is of this earth, not of the stars, that is about planting roots and preparing for a secure future".

I spoke to lots of other women, all of whom offered variations on the same idea. Audur Bjork Gudmundsdottir, the managing director at an insurance company, said that Iceland's problems had come from people going way too fast and diving into things without looking at the details. "Today at the management boards of companies, where you see more and more women, the emphasis now is on responsibility, not on risk-taking or trying to make a lot of money quickly."

Birna Einarsdottir, one of the bank CEOs appointed to displace the male immediately after the crash of 2008, said that the big lesson Icelanders had learnt in emerging out of recession into growth had been "to stick to what we know; not to get too clever". "Who said Icelanders were the best bankers in the world? Where did that come from? So the rule now is, be humble, know your limitations and play to your strengths. And instead of thinking you know everything, ask questions; seek help." Which is what women do, not men.

What Icelanders are really good at, Einarsdottir said, was the fishing business, which today is making far bigger profits than before the crisis. Enter, here, the impossibly named Sjofn Sigurgisladottir, who quit her job in 2009 as the executive head of a state body concerned with food safety to start a fish-farming business with two other women partners. They reckon on creating 100 jobs and selling more than 2,000 tons annually of Nordic tilapia (originally an African fish) by 2014. "We are entering what has previously been an exclusively male industry," a smiling Sigurgisladottir told me, "and this is symptomatic of what we've seen in Iceland since the crisis. Women are taking a far more effective role in the economy, taking more responsibility and we are supporting each other more too, creating women's clubs, seizing opportunities like never before."

It helps, she said, that society is structured in such a way that women in Iceland do not have to choose between career and family. Both culturally (the Vikings were apparently relaxed about their womenfolk conceiving and reproducing at home while they were away raping and pillaging) and in terms of state legislation on child custody and maternity or paternity leave, Icelandic women have as good a deal as humanity has come up with so far. According to the latest World Economic Forum report on gender equality, Iceland comes first in the world. ("I live partly in Switzerland," Sigurgisladottir told me, "and the difference with women's place in society there is shocking!")

Iceland's women had attained these social gains, the envy of the rest of the female world, before the financial crisis struck. Since the crisis they have embellished the equality achieved in the home and in the workplace with a new influence and authority at the centre of political and economic power. As the mother of three children under the age of eight, the person in charge of the state portfolios of education, science and culture, and the number two in Iceland's ruling party – meaning she is a likely future prime minister – Katrin Jackobsdottir is the diminutive Amazon who embodies these changes.

It was she who gave me the answer to the question I had set myself on this trip to Iceland. The big change of recent years – the most significant one – was, yes indeed, that men had started to think more like women. "Having a cabinet of 50/50 men and women, and right now with more women, has really made a difference," she said. "The political focus changes when you have more women in government, by which I mean that there is a difference in what is discussed. A difference in emphasis. That is why I believe that in these past three years something important has happened in terms of the influence women have, something which I do not believe will be easily reversed. We have changed the nature of the conversation."

When Iceland went bust

6 October, 2008

Threatened with national bankruptcy, the government is given authority over the banks

7 October, 2008

The country's second largest bank, Landsbanki, is put into receivership

8 October, 2008

The government buys a 75 per cent stake, worth 600m euros (£495m), in the country's third-largest bank, Glitnir

9 October, 2008

The crisis worsens and the government takes control of the nation's biggest bank, Kaupthing

20 November, 2008

Iceland gets a £1.4bn loan from the IMF, the first western European nation to get one since the UK in 1976

26 November, 2008

Annual rate of inflation hits a record high of 17.1 per cent

20 January, 2009

The finance ministry predicts the economy will shrink by 9.6 per cent in 2009

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