Why Iceland? (2009)

 Why Iceland?: How One of the World’s Smallest Countries became the Meltdown’s Biggest Casualty (2009) is a book by Asgeir Jonsson, head of research and chief economist at Kaupthing Bank in Iceland. As the title suggests, the book deals with the collapse of Iceland in the face of the latest economic crisis. Accordimng to Jonsson, the impact of the crisis on Iceland has led to a “quiet transformation” of the society- a “Scandinavian-model economy” has replaced “free-wheeling Anglo Saxonian capitalism”, a “state-owned banking system” has been installed, and “capital controls” have been reinstated. Socially, “the consumption of Icelandic food is up, the birthrate is up, the sale of books has skyrocketed, theater tickets are selling in record numbers, and so on”. Iceland’s relationship with foreign countries has also changed, with Britain invoking terrorist laws against Icelandic banks, US not helping Iceland in the way some expected, and the (potential) role of the European Union being questioned within the country. (Click here to read a Business Week story about “the stunning collapse of Iceland“).
How did Iceland get into such a mess in the first place? After all, even until the 1980s, “Iceland’s economy revolved around little else than a semi-robust cod-fishing industry”. In the 1990s, however, Iceland turned its attention “from fish to finance”, adopted “Thatcherite, free-market reforms of Britain”, and became a “banking country”. By the time the global financial crisis started, Iceland’s banking system was more than 10 times its GDP. Then, as Jonsson describes it, “Iceland’s banks were taken down by a systemwide bank run that was touched off when the financial system lost the confidence of foreign creditors and analysts”, the central bank “could not serve a lender of last resort”, and “the state’s taxing power was also insufficient to provide bank support by recapitalizing the banks or guaranteeing their deposits abroad.” The result was that “a developed country…utterly collapse[d]”. [Click here to watch a video about “why Iceland is going broke” made in 2007 before the country actually collapsed!]

Jonsson’s book provides an in-depth analysis of how things in Iceland went from okay to boom to bust. His position at the Kaupthing Bank provided him an insider perspective of events and incidents. The fact that Jonsson is a native Icelander writing about his own country provides refreshingly different  insights into why and how things happened. Though it is tough to keep up with Icelandic names (!), I thoroughly enjoyed reading the book and recommend it to those interested in better understanding the dynamics and impact of the financial crisis.  As Jonsson warns us, “Iceland is not the anomaly that many would like it to be” and many countries that are “small” in size, with “large, internationally exposed banking sectors”, a currency “that is not a global reserve”, and “limited fiscal capacity” (think, Britain and Switzerland) may be vulnerable to “the twin menance of a currency and banking crisis, and the subsequent loss of confidence”.

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22 Comments

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22 responses to “Why Iceland? (2009)

  1. Drew Hanessian

    I have begun to read Asgeir Jonsson’s book Why Iceland? as per our management class assignment. I haven’t gotten very far in the book as of yet, with Jonsson basically describing the founding of the island nation, the power struggles among European nations about it over the centuries, and how all of that plays into the foundation of the Icelandic psyche. Jonsson describes the national character as “relentless, sometimes crazed assurance today that a nation of 300,000 people can triumph over other nations in any sport competition, no matter how large the opponent looms.” He attributes part of the banking boom and bust to this breakneck confidence, and it will be interesting to see how this theme plays out in his explanations throughout the book.

  2. Nicholas Caputo

    “Why Iceland?” starts off by describing Iceland’s background and struggles from its very beginnings. While it is interesting to learn about I feel that this history lesson could have been shortened, as after reading the first chapter I feel I have just started to touch upon the issue at hand, the downfall of Iceland’s economy. It is interesting to read how such a small economy with an extremely small population was able to turn its focus to the “international finance sector”. After overcoming a recession this was going to be one if not the most important factor for growth in this small country. At this point in the reading it seems that Iceland has landed on its feet and is heading in the right direction for a sustainable and lucrative future. While always known as a fishing hub its new banking system seems as if it will be primed to impress the world.

  3. Allison Timpson

    In starting to read “Why Iceland” I have found a little bit of the history unnecessary, because I personally am not a big fan of history. The one thing that jumped out to me, as small as it may seem, was that the real Vikings didn’t wear helmets with horns, but the tradition came from Wagnerian opera because I am also a music major and just went through the section on Wagnerian opera in my music history class. On another note, I thought the part in Chapter 1 where Iceland is paralleled to the America in how it was founded, etc. to be quite interesting considering how different America and Iceland are now from the outside. In the second chapter, I found it interesting that in 1900 about 70% of people’s savings were kept at home and not in a bank or invested anywhere and by 1910 that had to decreased to somewhere between 20-30% is a crazy change for just a decade. The assault in 1930 on Inslandsbanki which almost caused a complete government takeover of the financial system shows some similarities to what has been happening in the past few years with all the bank failures and closings with the government having to bail them out. In reading about the six stages of banking development described in the book, it was interesting that Iceland never made it to that sixth stage of securitization, but maybe it was for the best because some of those market tools such as subprime loans, CDOs, etc. are what got our country into so much trouble.

  4. Kattyuska Stamenovic

    The book Why Iceland? starts with a brief history of the country. At the beginning the book points out that most people living in Iceland saved their money at home showing that if a trusted bank was opened it will certainly have a lot of customers. As the book goes on it talks about how the banks owner changes a couple of times and how that change affected the bank. Chapter 4 talks about the crisis the bank is going through and why that’s happening. For example, there were 2 points of origin for the crisis. The origins were “aggressive international expansion by the banks and overheating of the nation’s economy along with a ballooning carry trade” (59).

  5. Jeffery Walburger

    I have started to read “Why Iceland by Assgeir Jonsson. The book has started off kinda of slow, it first begins talking about how Iceland was attempting to be settled by a Norwegian named Floki Vilgerdarson. Also how Iceland has swapped between different countries, and through the ages it has swung between the extremes of isolation and openness. After explaining how Iceland was formed as a nation it begins to talk about the birth of their banking system and how the great depression had brought Islandsbanki to its knees. They legislators debated the fate of Islandsbanki because they felt the taxpayers should no be responsible for countries abroad taking out large risks. Ultimately the bank had change hands many different times before the present day bank appeared. Then it discusses the evaluation of banking and the six steps to be considered a developed bank. Lastly the book begins to discuss about how Iceland became a banking country.

  6. Samantha Geasey

    I have recently started reading “Why Iceland?” by Asgeir Jonsson, but I haven’t gotten very far. I’ve only gotten through learning about how the island of Iceland came about as a nation and how they struggled against Christianity for a while but then most people continued to worship the pagan gods in private anyways and they avoided being attacked by Norway.

  7. Jennifer Morton

    Beginning to read “Why Iceland?” there was a significant emphasis on Iceland’s history; of course a necessary emphasis because in order to explain the present it is often helpful to dive into the history of how one managed to get there. The explanation of the manner in which certain aspects of Iceland, such as its banking system, changed hands was intriguing. There was a clear alteration in the focus of the people, gradually moving toward becoming more financially focused (which did not always seem for the better, an example being the surprising change in the saving rate). Despite the growing changes, as I continued to read, there was a sense of foreshadowing when it came to the great depression that could not be ignored, especially when taking into consideration the status of Iceland at this particular point in history. Iceland seemingly made it through the great depression from what I have read thus far but what comes next after doing well when a depression ends?

  8. Steven Goldman

    When I first bought “Why Iceland” I expected the book to instantly jump into the current financial crisis. However I enjoyed the introductory background of the country as it provided me with a basis for understanding its later problems. I found it very interesting how Iceland is similar to the United States; it was founded on similar ideals of law and they both share a similar mindset of achieving high standards. Even though the country is no larger than the state of Kentucky, it was interesting to learn the effect it has had on European trade and its influence with England. After learning about the background I found it fascinated how the first banks started to materialize in Iceland. I was surprised to learn how the first bank was a foreign entity, and it wasn’t until much later that it was finally nationalized. I also found it interesting to learn that the early Icelandic banking system was very conservative, and had very low interest rates. It stayed this way until the late 20th century, and it until only the past 30 years or so that the banking system has changed to parallel those in other industrialized countries.

  9. Sean Galloway February Post

    Although I purchased “Why Iceland by Assgeir Jonsson about a month ago I found myself reading a page and then becoming extremely board thus leading me to put the book down. I now understand your requirement to post each month as it has proved to be my motivation to continue to turn the pages. Up to this point I have gotten through the history of Iceland. I feel as though this was drawn out way longer than it needed to be. Things such as how Iceland was formed as a nation and how the depression affected the country’s banking system were unnecessary in my mind. It is my hope that that from this point on the book with become more interesting in terms of the business world and less of a history lesson.

  10. Zachary Blaze Buckter

    I have not started reading Why Iceland? yet because my copy has not yet arrived from Amazon, however I am very excited to start it. Iceland has always been a country I have admired and have always wished to travel too. Everyone seems to be complaining that their is too much history in the beginning however I, being quite the history buff, am looking forward to it. I apologize for not having much to say since I have not started buy I can assure a good detailed response at the end of March.

  11. James J. Kelly

    I found the opening of Why Iceland? to be a both fair and engaging with regard to the socio-cultural context surrounding the development of Iceland’s banking system. The history Jόnsson recounts tells of a people rooted in Norse tradition who have faced centuries of political jockeying from larger forces, particularly Catholicism by way of the Norwegians, a form of Republic developed in an environment of lax Danish-monarchical control, and the more recent mutually beneficial trade alliances with Britain and the U.S. All the while, Jόnsson characterizes the Icelandic people to be constantly reverberating between an isolationist outlook and a more international outlook. He then places the development of the banking system with this context. The original Islandsbanki and Landsbanki developed throughout the early 20th Century, but the reliance on the fishing industry meant that a single company’s failure could spell doom for the entire bank. This occurred in 1920 and again in the wake of the Great Depression, where periods of more openness to outside foreign investment would give way to more isolationist sentiment when the banks encountered liquidity issues. All these processes eventually led to the adoption of an American-style investment-brokerage banking system in 1989. Jόnsson places heavy blame in this adoption of brokerage system for the entire country spurred on by what he describes as the country’s lack of a “sophisticated banking tradtion [from which] to build on.” I am anxious to find out more of the intricacies surrounding Iceland’s economic meltdown in the coming months.

  12. Nicholas Caputo

    As I continued reading I started to find the material more interesting, however, the material is a little confusing as there is a great deal of jumping back and forth in time. Iceland seems to have encountered many obstacles throughout its history in its financial sector and I believe that this is mostly because it lacks a substantial background in the industry. Since it was so hard to receive foreign financing and their were extreme capital controls on the banking sector it made it almost impossible for a private party to enter the industry. Another problem I noticed is how the banks were reluctant to expand overseas and it wasn’t until almost the 21st Century that Iceland was able to complete all except for the last of the 6 stages of banking development. It wasn’t until the international investment bank Kaupthing, was developed that the country was on the verge to reach its full potential. By expanding overseas and merging with other firms this company was pursuing the belief that the bigger its balance sheet was the more opportunity there would be for profitability. Also after the current economic crisis in the United States it appeared that Kaupthing might have been in an even better position than most US banks as Iceland never reached the final stage of banking development which was securitization and the main cause for the collapse of the finance industry. My two final points of interest are how every country abandoned Iceland during its collapse in 2008 except for Germany which I am interested in reading more about as I know Iceland defaulted on billions of dollars in debt to them. Also the comparison of Iceland to the US banking system caught my attention because as the US was experiencing a great boom so was Iceland but in the same respect Iceland collapsed just like the US did after inflating their balance sheets and expanding too rapidly. It will be interesting to read the final cause of Iceland’s collapse in the upcoming chapters.

  13. Jeffery Walburger

    This book is beginning to start to come to a head now, as stated in the precious post it was very dry in the beginning because the author felt you needed to know everything about Iceland. It is now actually starting to talk about how the government of Iceland decided to give the banks back to the people instead of holding a stake in every back, whether this was a good or bad decision, well, you see where Iceland is today. Once the government gave the rains over to big corporations the banks began to start growing at an exponential rate, meaning they acquiring smaller banks over seas to be closer to the EU and have a foothold in London, exactly why China wants to do the same thing, gain access to the EU, today. Also this was the beginning of CEO’s making way to much money which in return led to many kids studying to be in this business then graduating, getting into the business of banking and not knowing a thing. Then the book discusses how there were really 2 crisis points that made the Iceland economy suffer a free fall; they were, aggressive international expansion by the banks and overheating of the nations economy along with a ballooning carry trade. In short they were trying to play the big boy game of high leveraging techniques, as the U.S. was doing, with a population of not nearly as large as the U.S. As the books says, you can pretty much bowl down Iceland’s glory years into 3 phases, the buildup (97-00), Internationalization of the stock market (02-05), and fixing on financials (05-07). But even in the greatest of economies every good thing comes to an end and it is just whether or not you can come out on top after the storm, but unfortunately Iceland’s economy was not as durable as the other stronger nations of the world…

  14. Steven Goldman

    As I read more, the book is now starting to go into more detail about the structure of the Iceland Bank System and less about the history of the country. I found it very interesting to learn that Einarsson’s (CEO of Kauppthing) grand image of a fast growing banking system was exceeded with the help of aggressive international ambitions on apart of the Iceland. In addition it was notable to see the privatization of Icelandic banks. I feel this move directly enabled the banks to pursue more aggressive financial options as the government sold its shares of Landsbanki and Bunadarbanki. However I liked how the book explained that this aggressive international expansion contributed to one of Iceland’s major banking problems, “The Geyser Crisis.” Because I am somewhat knowledgeable in Finance, I understand what mortgage backed securities and collateralized debt obligations are. However, it was interesting to learn how these things affected Iceland’s banking system since they were known to be highly leveraged in such securities. I enjoy how the book is now really starting to tell the story of the financial system by explaining how such derivates and securities affected the economy. The only thing I can say that I do find confusing is that the author tends to go back and forth in time a lot and it is hard to keep track of what time period he is focusing on. Besides that however I feel that he does a great job in showing how the world become focused on Iceland or as he puts it “a tiny dot on the financial map.”

  15. Kattyuska Stamenovic

    As I continued to read, the book started to get more interesting and started to give more detailed on how the banking system worked in Iceland. The problem with Iceland’s Banking system was that it grew too fast, it was too risky and it gave rates that were far beyond of what the market offered. Also, the government of Iceland did not have enough resources incase a crisis occurred. When the economic crisis hit, Iceland was cornered and they did not have enough resources to return all of the money people had invested in the banks. This caused all sort of problems, especially when Iceland said that it will definitely secure the debt the banks had to its citizens but they weren’t sure if they would have enough funds to return the security funds to people in other countries that invested in their banks.

  16. Jennifer Morton

    As I have continued to read “Why Iceland” it has become more interesting. Significant change continues as there is increasingly rapid change in Iceland’s banking system. There is a focus on Iceland’s international relations beginning with interests in the U.K. and then expanding. However, there does seem to be several pitfalls in Iceland’s international decisions (as well as the decisions of other nations) and it also seems as though there are many warning signs that are increasingly being overlooked. It was increasingly intriguing, the manner in which Jonsson ties together politics and the government into the bigger Icelandic picture and their influences. There are seemingly mistakes made by those who do not necessary have expertise primarily focused on business but in other fields as well, contributing to the downfall. I am holding my breath for the true downfall though when everything finally comes to a head.

  17. Nicholas Caputo

    After I finished reading Why Iceland? there were a few key factors that stood out to me. The government and other countries seemed to notice earlier on that Iceland was in over its head and that reforms were necessary to stabilize the country. However, instead of this other countries and investment products from hedge funds such as CDOs looked to destroy the economy and the country as a whole. In addition to this when times started to become increasingly hard for Iceland’s banks, its government seemed to only offer few words of encouragement and stated that it was the banks that were failing and not the government.

    Iceland was able to overcome many early struggles in 2006 and 2007 and the creation of Icesave accounts and Kaupthing Edge accounts enabled the banks to stay alive into 2008. However, with liabilities increasing to five times the GDP of the country a downfall seemed almost inevitable especially since its reserves were so minuscule to protect against a run on the banks.

    The country grew too quick, had an amateur knowledge of finances, was too interconnected, and volatile. Iceland’s banks took on more then they were ever capable of handling especially when they went international and this would lead to their demise. They also had a small population which meant that talent was limited and that it was necessary to look abroad. This showed how rapidly Iceland was growing as there were plenty of jobs and unemployment was near 1%. One final comment I have is how the credit agencies were able to convince themselves that they should continually upgrade the bank’s credit ratings which at times made them more appealing then they actually were. The fact that Iceland was able to create what appeared to be an amazing banking industry in only a few years is just as impressive and shocking as it was for the entire sector to collapse in 3 days.

  18. Jeffery Walburger

    I finished the book and finished my paper, while being a very irritating book starting off it started to get really good towards the end of the book. Unfortunately throughout the book he did nothing but blame the crisis on everyone but Iceland, this could possible be since he was a former employee of Kaupthing, which was arguable the bank that started the crisis. The greatest value of “Why Iceland?” is the window it may open on the country’s mind-set. Mr. Jónsson devotes page after page to the international culprits that allegedly helped to destroy the economy. In one chapter it is hedge funds. In another, rating agencies, aiming their malice at Iceland in particular. Finally, it is a cabal of central bankers who, it is claimed, froze Iceland out of the help they could offer and forced it into the arms of the IMF. None of this is convincing. Could Iceland been handled differently, of course; for instance, the world finally was able to see what would happen to a nation that was not financially well endowed enough to bail out there banks, collapse. If Iceland’s government would have had extremely deep pockets, for instance the United States, and was able to ensure the collapse wouldn’t happen, by stimulating the economy as the United States did, we most likely wouldn’t be reading this book, nor would it even exists. In the end, Icelanders who want to find someone to blame for their woes may want to look at themselves.

  19. Kattyuska Stamenovic

    Towards the end the book described what Iceland did to get out of the turmoil it was going through. Also, Iceland had accumulated so much debt and it did not have any liquid money when the crisis occurred. The reserves weren’t sufficient to return everyone their money and the pressure of foreign countries was putting Iceland’s officials under a lot of pressure. Fortunately, towards the end Iceland was able to get a loan from the IMF and that helped them resolved their banking problems. This experience taught Iceland a lesson and hopefully the same mistake would not happen again and hopefully other countries also learned from Iceland’s mistake.

  20. Jennifer Morton

    As I have finished the book “Why Iceland” I was taken by surprise at how fast the banking industry collapsed (essentially 3 days). I had a sense that the author placed responsibility of the crisis mostly internationally; but it was Iceland as well as the international community that was really responsible for the crisis. Iceland made several poor choices when it came to their banking industry from the point in which they decided to make it international to the point where even the government could not appropriatly assist the banking system (bail outs, etc.) in the time of its inevitable collapse. Although the international community should have aided Iceland more during this critical time, not just leave Iceland to rely on the IMF loan they eventually recieved, but serious aid early on when they foresaw strife. Iceland and the international community were all responsible for Iceland’s vulnerable state and with the knowledge they had there could have been better informed decisions, precautionary measures, or at least a Plan B; as oppose to watching it all as it was quickly compromised.

  21. Steven Goldman

    As I have now finished “Why Iceland” I can say the most interesting thing I have learned was how an entire economy can collapse in a matter of days. This proves a valuable lesson on how careful investors need to be in safeguarding their assets. I feel companies today often only look for yearend returns and often take up risky means in the form of leveraged equity in order to make their goals. While Iceland’s banks did see returns, when trouble hit they had no safeguards to protect them and they could not create capital and pay off their debts. Sure the act of leveraging will help a company increase their value in a bullish economy, but when the bear hits as it did in Iceland there were dire consequences. Some other things I learned from the book were the overall history of Iceland as I never really studied and their country before, and the process of foreign expansion for banks. I feel the author did use a lot of financial jargon in his book, and while I did have to research some of the terms he used such as holding companies, it forced me to learn more about the financial world. In conclusion, I feel a strong lesson can be learned from reading “Why Iceland” and that lesson is to always have a plan b while investing. Fortunately for Iceland, they received a loan from the IMF to bail the country out.

  22. abusinessprofessor

    The WSJ of April 30′ 2010 had an interesting article about how the collapse of the Icelandic economy has opened up tremendous job opportunities for translators who are needed to file bankruptcies. The article is titled “Icelandic Translators Enjoy Their Moment in the Sun: Masters of the Unpronounceable Shine; No Word for CDO? Make It Up”. The article is available on the WSJ website for subscribers. For others, you can find the text of the article copied-pasted here:

    Vantar þýðendur úr íslensku á ensku—næg vinna!

    If you know what that means, then Iceland has a job for you.

    Iceland’s banking system has collapsed, its economy is in turmoil and its volcano has blotted the sky with ash.

    As a result, things have never looked better for the small cadre of Icelandic translators who render the North Germanic tongue of 320,000 island-dwellers into something the rest of the world can understand.

    The remnants of Iceland’s three major banks conduct creditors’ meetings in Icelandic. Many of the creditors are foreign. Interpreters are needed.

    Among the assignments: bankruptcy cases, criminal probes, fraud suits and, earlier this month, a 2,000-plus-page report on the banking mess—solid gold for a translator—produced by a “truth committee” of the Alþingi (that’s parliament).

    “A big uptick for me,” says Daniel Teague, an American translator who has lived in Reykjavík for decades.

    “I don’t think I ever did bankruptcy before,” says Keneva Kunz, a Canadian-born translator working in Iceland for more than 20 years. “In the last year and a half, I don’t think I’ve done anything else.”

    Business erupted last fall when Iceland rushed its application to the European Union. The Icelandic currency had sunk with the banks, and the island’s leaders were suddenly anxious to ditch their króna for the euro.

    The EU application might have been devised by a sadistic college dean. It included 2,500 questions. (Chapter 24, question 69: “What is done in the field of crime prevention? How is this linked to the threat assessment model and identified priorities?”) Government officials answered them in Icelandic. Then the translators took over. The responses ran 8,870 pages.

    A decade ago, Iceland didn’t have much of a banking sector to speak of. A privatization campaign changed that. Add a bit of Viking derring-do, and soon the banks were wheeling and dealing in Britain, the U.S. and Asia. Eventually, assets of the three big banks reached 10 times Iceland’s annual economic output.

    The trend was great for practically everyone. Translators, too. The banks produced lush reports, which needed to be put in English for foreign investors.

    Jón Skaptason did a lot of that. After the banks collapsed in 2008, his translating gigs waned. But there was a bright side. “Many of the freelancers who formerly worked for the banks are now busy working for the people who are suing the banks,” he says.

    Icelandic students learn English in school, and a visitor to Reykjavík will find coffee-bar cashiers, hotel attendants and fishermen who speak like the British Queen. But Icelanders are fiercely proud of their language, which has changed little in 800 years. They’ve resisted the Anglicization of officialdom. Everything is done in Icelandic.

    To jobless Americans looking to break in: Good luck picking up Icelandic. There are three genders, four cases and a bewildering rubric of declensions. Not to mention two letters absent from the Latin alphabet.

    Even the best translators need special skills—especially in areas like finance. Icelanders may have imported their banking fervor, but they made up local words to reference the sector. Like skuldavafningur. (That’s a collateralized debt obligation, to Americans.) Occasionally several people made up words. That explains why some Icelanders call a CDO a skuldabréfavafningur.

    Translator Páll Hermannsson prefers the crisper-sounding skuldavafningur for CDO. Literally, he says, it means “debt wrap.”

    After the financial collapse, each bank got a skilanefnd and a slitastjórn. “Meaning what?” asked the Anglophones who lent gobs of money to the now-defunct banks. No one could agree. A few finance specialists huddled with the central bank’s translator and came up with English definitions: “resolution committee” and “winding-up board.”

    Messier still were the many ways Iceland bailed out its underwater homeowners. They might have gotten greiðsluaðlögun (payment mitigation), or greiðslujöfnun (payment smoothing), or skuldaaðlögun (debt adjustment), or skuldalækkun (debt reduction), or niðurfelling skulda (cancellation of debt). The list goes on.

    “The debt is not a problem,” says Ms. Kunz. “But what to call it is.”

    Native English speakers fluent in Icelandic command a premium. There aren’t many. It is an axiom of translation that the work is best done from a foreign language into one’s mother tongue.

    “For many years, I told people [learning Icelandic] was the most difficult thing I did, bar none,” says Mr. Teague, who was a New York lawyer before moving to Iceland in 1979.

    He fell into translation in the 1980s. Þorgeir Þorgeirson, an Icelandic film director and intellectual, had been convicted of defaming civil servants and fined 10,000 Icelandic krónur (then about $250). His crime was writing two newspaper articles about police brutality. (He called the cops “wild beasts in uniform.”) Mr. Þorgeirson wanted to appeal to the European Court of Human Rights in Strasbourg, which works in English and French. He needed a translator.

    “His English was a little patchy,” Mr. Teague recalls. Mr. Þorgeirson won. And the judges gave him 218,160 krónur for translation costs. Mr. Teague had a career.

    Gauti Kristmannsson, an associate professor of translation at the University of Iceland, trains the next generation. Fifty students take his two-year masters’ program. He’s expanding next fall, to meet the expected demand from the EU. If Iceland gets in, he says, the bloc will need 100 translators to shuttle between Icelandic and the 23 current official languages.

    To Mr. Kristmannsson, the world is lost without translation.

    “Why do people struggle with this Eyjafjallajökull?” he asked, on the topic of the misbehaving volcano.

    He patiently coached foreign journalists on its pronunciation, which requires a flutter of staccato gurgles and alveolar gymnastics beyond the ken of ordinary Anglophones.

    “They should have translated it!” he said. It means “island mountains glacier.”

    (The article is written by Charles Forelle who can be contacted at charles.forelle@wsj.com)

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