By Andrew White
Iceland president Olafur Grimsson believes that renewable energy can save his country's shattered economy.
Abu Dhabi might be leading the race for a clean energy future, but Iceland President Olafur Ragnar Grimsson believes that renewable energy can save his country's shattered economy.
We had to implement changes within our own economy, formulating new policy and a new basis for growth, and that takes time," says Olafur Ragnar Grimsson, president of Iceland. "Looking back on it I think it is quite remarkable how much has been done in a relatively short period. We have had constructive conversations with all countries."
In hindsight it appears that Grimsson's definition of ‘constructive' might differ from others'. Not long after we meet, Grimsson will shock his country's creditors in Europe, refusing to sign a controversial bill to repay $5bn to the UK and Netherlands over the 2008 collapse of Icesave bank.
Iceland will announce it is to hold a referendum on the bill, and reports suggest a large majority of Icelanders will vote ‘no' to legislation that would cost each citizen an average of $17,300, and has prompted public protests.
"It is the job of the president to make sure the nation's will is answered," Grimsson tells media. "The view being put forward that we will not honour our obligations is completely wrong. The only thing that I have decided is to allow the Icelandic people to have the final say."
And yet Icesave still represents the key to Iceland's ambitions for economic recovery in 2010 and 2011. Without a resolution to the dispute, the Northern European country will find itself unable to access $7bn of financing from the IMF and other Nordic countries.
That the two are intertwined is clearly a source of frustration for Grimsson. When we speak - the president settled into a plush, wood-paneled meeting room in a labyrinthine wing of Abu Dhabi's Emirates Palace hotel - there is a distinct edge in his voice.
"The loans were not forthcoming because so many of the countries that were providing the money, including the Nordic countries, had directly or indirectly conditioned their loans with respect to the agreement on the so-called Icesave accounts," he says. "Looking back on it, it was perhaps interesting that these loans were not forthcoming, but our economy all the same demonstrated considerable strength."
Such bullishness is a familiar feature of the president's patter. Three times he reminds me that Iceland's unemployment rate stands at just seven percent - compared to an EU average of 9.5 percent - and he mocks the detractors who predicted the country would crumble entirely under the weight of its debt.
Although disgruntled creditors in London and Amsterdam might disagree, the left wing leader, president of Iceland since 1996 and reelected for a fourth term in 2008, argues that his country is positioned for "strong" recovery.
"Of course it took us time to realise what was happening, and to go through the necessary measures," Grimsson says. "But I think now, about a year after [the collapse] happened, we are getting our act together. If you recall the predictions that were being made last winter, we have come out of this as a nation better than both we and others feared."
And in another prediction-defying sweep, Grimsson attributes this turnaround in large part to the green energy revolution that has taken place in Iceland over the last four decades.
"During my youth, Iceland was over 80 percent dependent on fossil fuels, imported oil and coal," he says. "But over the last 40 years we have transformed our energy economy so that all of our electricity is from clean energy resources."
The president has long been a fierce proponent of green energy technology, and argues that Iceland has demonstrated the benefits of establishing a clean energy economy for ordinary citizens, individuals and businesses.
"Producing all the energy for homes - electricity and heating - from domestic clean energy sources, means that each family has to pay only a small amount to keep their home warm," says Grimsson. "Elsewhere in Europe, in terms of gas and oil, this is very expensive and a lot of people suffer hardship because they can't really afford to keep heating their homes.
"For example, many people in the UK who have to pay an enormous amount to heat their homes are suffering great hardships, which the average person in Iceland is spared because of the clean energy transformation."
In addition to removing the need to pay foreign currency to import fossil fuels such as oil and coal, Grimsson says the country's green revolution has made Iceland a more attractive location for industrial companies who see the advantage of long-term access to a clean energy resource.
"To me it is absolutely clear that if a country has been through a clean energy transformation, its defence mechanisms against the effects of the financial crisis are much stronger," he says. "There are so many foreign companies that want to invest in Iceland due to the clean energy resources, that our problem is really to decide which of these offers to select. That's a paradoxical situation looking back at what was being said a year ago."The green theme dovetails nicely with Grimsson's work in the Middle East: he is in the UAE capital as a member of the judging panel for the Zayed Future Energy Prize 2010. The prize, which comes with a $1.5m cheque, is awarded each year to up to three individuals, companies, organisations or NGOs that have made significant contributions in the global response to the future of energy.
"If Abu Dhabi, which has based its wealth and its prosperity on fossil fuel, has decided that the future must lie elsewhere, I think that is a very strong message," Grimsson says. "It is a wakeup call for the rest of us; for Europe, for America, for the entire world.
"I think it is so important that it is a country from the Middle East, from the oil-rich world, that is today at the forefront of demonstrating how a clean energy future can be achieved," he continues. "It has already had a big impact on how the rest of the world views the Middle East, because frankly it's not easy for us in Europe or North America to have to acknowledge that Abu Dhabi is ahead of us in this respect."
That hasn't stopped Abu Dhabi from benefitting from the best technical advice that Iceland's clean energy experts have to offer. A delegation from Masdar City, the UAE capital's under-construction carbon-neutral zero waste city, travelled to Iceland three years ago to investigate the geothermal technologies the country had developed. And an Icelandic company called Reykjavik Geothermal is currently exploring using that same technology for air conditioning and cooling in Masdar City.
"Some people say it's a bit unfair of the Almighty after having given Abu Dhabi such an abundance of fossil fuel-based resources, if it has also given Abu Dhabi a lot of geothermal resources," laughs Grimsson, adding that Iceland's support of Abu Dhabi has extended beyond the laboratory, and into the political arena.
The European country campaigned vigorously in supporting Abu Dhabi in its bid to host the global headquarters of the International Renewable Energy Agency (IRENA), an intergovernmental organisation for promoting the adoption of renewable energy worldwide.
"There were countries like Denmark, Germany and Austria and our neighbours all campaigning to get the headquarters, but Iceland supported Abu Dhabi very actively," says Grimsson. "In addition in other countries like Djibouti, where we are planning to use geothermal resources to make it the first clean energy African country, there has been an active cooperation between Abu Dhabi and Iceland.
"With all due respect, if you had said five years ago that the headquarters of a global renewable energy organisation similar to the World Health Organisation or UNESCO, would be in the Middle East, everybody would have told you to forget it," he smiles. "But if Abu Dhabi builds on this with the same dedication and the same effort, and uses the foundations that have already been laid, it will be a remarkable demonstration of what a small country can do."
Nevertheless, what good can the smaller countries do, if the largest do nothing? Having spent much of the last 30 years working alongside US leaders and policymakers, Grimsson is aware that it can take a long time to change active policy within the American administration. For this reason, he suggests that president Barack Obama faces an uphill struggle on climate change, at least in the short term.
"I remember in my younger years, during the Clinton administration when I was campaigning to get US Congress people to change the US policy on nuclear testing," he recalls. "We were getting very impatient with the Clinton administration and one of the key people on the National Security Council told us ‘You have to realise that the US administration is not like a rowing boat which you can turn on a small spot. It's more like an ocean vessel, which takes a long time to turn'.
"Unfortunately for all of us, [Obama] has had his hands full with the economic crisis, Iraq, Afghanistan and the battle over healthcare," he adds. "I think he will need more time to really gather the different forces in America together with respect to a new clean energy policy, and to reverse the prevailing policies of the Bush administration."