Iceland: Britain's unlikely new enemy

Ingibjorg Thordardottir BBC News

Until a few days ago, Britain was admired and respected by the average Icelander. But the UK's moves to seize the assets of this isolated European state have provoked a backlash of feeling and escalating resentment.

"They treated us like terrorists."

You wouldn't like him when he's angry

Talk to the people, the government, the media, in fact anybody in Iceland, and that is the overwhelming feeling about Britain these days.

The collapse of Iceland's banking system - one in which many Britons had a stake - is the reason for this resentment.

In a bid to claw back some of the money, the British government seized Icelandic assets in the UK under the Anti-terrorism, Crime and Security Act 2001. The die was cast. Your average Icelander draws the line at being called a terrorist.

Within days the British have gone from being friends to arch foes. British folk may have been too preoccupied to notice but sharp words have been flying across the North Atlantic.

"It's really simple," says a lawyer in Iceland. "Those that I have spoken to are determined not to go to the UK any time soon, if ever."

Icy words

Public enemy number one is the UK Prime Minister himself. A few days ago, Iceland's health minister threw diplomatic convention to the wind when he attacked Gordon Brown on public radio.

Bemusement on the streets of Reykjavik last week

"Gordon Brown made the calculated decision that to raise his ratings in the polls, it would be ideal to attack Iceland. This has been made very clear," said the minister, Gudlaugur Thor Thordarson.

And in an echo of the cod wars that blighted relations between these two countries between the 1950s and the 70s, Icelanders have started fighting back.

"Ordinary Icelanders are no more responsible for the risk-seeking businessmen who happen to hold our passport than the people of north London are responsible for the destructive behaviour of the talented Amy Winehouse," said Icelandic professor Eirikur Bergmann Einarsson in the Guardian.

"And even though most of us still enjoy most things British, we are furious with the UK government."

For Icelanders, it is all about reputation. This small country of 300,000 people feels it has spent years building a name for itself and is finally being taken seriously by the rest of the world. It's even hoping to get a seat on the next UN Security Council.

Rebirth of cool

Many British people had been seduced by the charms of this exotic, distant Nordic neighbour.

The Blue Lagoon is a tourist magnet

As an Icelandic journalist working in the UK, I've become used to the mutual admiration that has grown between the two countries.

Icelanders liked Britain and flocked here for the culture, shopping, football and the people.

In turn, young Brits have developed a curiosity about this far-flung European nation. It has become a mini-break destination and British stag parties - often reviled by foreign host countries - were largely welcomed because Icelanders are known as party animals.

Icelandic music - with street cred stars such as Bjork and Sigur Ros - and culture is being exported to the UK like never before.

Now London, the once-popular destination for intrepid Icelanders, is bottom of the list.

Those who do make the journey will find British intrigue has turned to pity. Where once people were impressed to meet an Icelander (there are not that many of us), now we are greeted with a sorrowful "poor you".

In just a few days all the good in the relations between the two nations in three decades disappeared Blogger Stefan Fridrik Stefansson More reaction from Icelandic bloggers

But there's no chance of these compassionate sentiments being returned. To this self-declared peaceful nation it is incomprehensible that the UK government used anti-terrorism laws to freeze the assets of its banks in Britain. They even blame the British for precipitating the downfall of its biggest bank, Kaupthing, by their hasty and draconian actions.

Icelanders are not blind to the fact that this mess they find themselves in is largely of their own making. And there is sympathy for the British savers who have been locked out of their bank accounts.

But for Iceland it is about survival - many inhabitants have lost not just savings but jobs and pensions and now face years of paying back the banks' debts.

Gunboat fire

For those with long memories, there's a sense of deja vu about the fallout.

1976: Foreign Office minister Roy Hattersley meets Iceland's prime minister to talk about the cod war

The cod wars between the two countries that started in the 50s came to a head in the mid-70s when an Icelandic gunboat opened fire on a British ship after a clash of boats within Iceland's territorial waters.

Iceland eventually came out on top, winning the right to keep British fishing vessels outside its 200-mile exclusion zone.

Gudni Th Johannesson, a history professor at Reykjavik University, says there are parallels between the fishing and the financial crises.

The hostilities between the two nations dominated the agenda in Iceland then as it does now, and there is the same anger on the streets that this tiny nation is being attacked by the might of the British, he says.

THE COD WARS Series of confrontations between 1958 and 1976 over fishery rights Ships rammed in third and last cod war, Nov 75- June 76 Ended when UK accepted expansion of Iceland's territorial waters UK felt forced to accept after pressure from Nato

In the 70s, the UK embassy in Reykjavik received threats from angry Icelanders. Now it is the turn of the Icelandic embassy in London to be the recipient of rude and threatening phone calls from British savers and investors.

But there's a long way to go before any shots are fired. Mr Johannesson stresses the situation is a far cry from the anger of the cod wars.

"It is a miracle that the UK did not sink one of Iceland's ships and lives were not lost. Now of course it is all about the money."

While some seem to harbour resentment against Britain per se, he says most Icelanders are capable of making the distinction between the authorities and the man in the street.

"Anyone who gets to know the British people knows they are gentle souls with a great sense of humour."

It's an important distinction and many Icelanders are at pains to stress they do not bear any ill feelings towards the British public. In fact, with the economy in a critical condition, Icelanders will welcome Brits with pounds to spend.

The cost of flights has risen slightly but with the currency, the krona, in freefall this once cripplingly expensive destination has become more affordable. At £3 for a pint of beer, your average Londoner and Reykjaviker might even feel kindred spirits.