Iceland Facing Greatest Challenge Since Republic’s Founding

Prime Minister of Iceland Katrín Jakobsdóttir

Prime Minister Katrín Jakobsdóttir delivered an oral report to Parliament yesterday on the new challenges facing the Reykjanes Peninsula due to recent volcanic activity. She emphasised that, while Iceland was facing its most significant natural disaster challenges, the country was better prepared than ever. A comprehensive hazard assessment led by the Icelandic Meteorological Office is underway and is expected to be completed by 2025.

The luxury of relative calm

Taking the podium before Parliament yesterday, Prime Minister Katrín Jakobsdóttir delivered an oral report on the new reality facing residents of the Reykjanes peninsula. Katrín noted that the Icelanders had been no strangers to natural disasters since the settlement, although they had enjoyed “the luxury of a relatively calm environment” around the most densely populated area of the country over the past centuries. 

Geoscientists had, however, pointed out that the Reykjanes peninsula would awaken sooner or later, given that volcanic activity on the Reykjanes peninsula is cyclic, occurring every 800 to 1000 years.

Read More: In Focus (A Brief Chronology of the Recent Reykjanes Eruptions)

“As nearly 800 years have passed since the last known eruptions on the peninsula, and with eruptions starting almost four years ago, it should have been clear to everyone that events could unfold sooner or later,” Katrín continued. “This reality has become apparent to us and reminds us just how much our lives and existence are shaped by nature.” 

Greatest challenge in the history of the Republic

Katrín recalled visiting the area near the town of Grindavík on Monday and observing how new lava and protective barriers had altered the landscape, following the three eruptions that had occurred near Grindavík since December 18.

During the most recent event on February 8, the eruption initially seemed to pose little danger, but soon lava began flowing powerfully over Grindavík Road and the hot-water pipeline, known as the Njarðvíkur conduit, which transports hot water to all residents of the Suðurnes region from the Svartsengi power plant. This resulted in four days without hot water for residents of the Suðurnes region, representing one of the darkest scenarios we had anticipated.”

Given these recent events, the Minister went on to characterise the coming years on the Reykjanes peninsula as the greatest challenge facing the Republic since its founding: “I am confident in stating that our society is currently confronting the most significant natural disaster challenges in the history of our republic. However, I also assert that we are more prepared to address these challenges now than at any previous point in time,” Katrín stated. 

The Icelandic Republic was established on June 17, 1944, ending the union with Denmark.

Comprehensive hazard assessment to be finalised in 2025

Katrín concluded by emphasising that work had begun on the creation of a comprehensive hazard assessment for the Reykjanes Peninsula as led by the Icelandic Meteorological Office. 

“This is extremely important because there are many volcanic systems beneath the Reykjanes peninsula, and a great deal has been done to expedite this work because it takes considerable time. The aim is to publish the results in stages so that we receive interim reports on the work. We expect this project to be completed in 2025.” 

The assessment will cover the effects and impact areas of earthquakes and lava flow near populated areas, and it will also include a risk assessment on the effect of ash and gases in the atmosphere. Katrín noted that such a hazard assessment had already been conducted for the most active part of the Reykjanes Peninsula and that the rest of the assessment would be published in stages until the year 2025.

Conditions in the Cleaning Sector Unacceptable, Survey Finds

cleaning equipment

Living conditions for those in the cleaning sector are unacceptable, according to a new report from Varða, the Labour Research Institute. Women and immigrants dominate the sector, facing significantly worse health and financial conditions than other workers, RÚV reports.

Far worse conditions than other jobs

On Wednesday, Varða released a report on the status and living conditions of those working in the cleaning sector. The study covered members of ASÍ and BSRB unions, with unequivocal results.

In an interview with RÚV, Kristín Heba Gísladóttir, Varða’s director, stated that the situation of workers employed in the cleaning sector is worse, even much worse, than those in other ASÍ and BSRB jobs, based on all metrics used in the survey, whether financial status, mental health, or physical and job-related strain.

Kristín observed that this group often faces rights violations in the labour market, adding that international studies had shown that the outsourcing of jobs negatively impacts the workers themselves; although many respondents work for private companies, the jobs often take place in public institutions, yet the workers are not considered part of these workplaces.

Women and immigrants dominate cleaning jobs

Kristín Heba also noted the high proportion of foreigners in this sector. “Cleaning is predominantly done by immigrants, with 78% being immigrants and 22% native-born.” Kirstín added that women composed a much higher percentage of workers in the cleaning sector: “Only about a quarter are men, meaning women and immigrants primarily sustain cleaning in our country.”

Varða presented the research results to the leadership of ASÍ and BSRB on Wednesday morning under the title “Take action.” Kristín Heba told RÚV that the title referred to those working in cleaning. “But it’s also a call from the labour movement to employers and authorities to take action and rectify this situation because the living conditions of those in cleaning are unacceptable.”

Inflation Erodes Real Value of Apartments in Capital Region

Reykjavík old historic centre

The housing market experienced a decline in transactions in July, with a notable drop in new apartments entering the market in August. Despite stable nominal apartment prices, inflation and other factors have led to a decrease in the real value of housing, especially in the capital region, Vísir reports.

Housing market sees a decline in transactions

In July, there was a decrease in residential property agreements from June, dropping from 709 to 615. On average, for the current year, there have been 614 agreements made each month, compared to an average of 825 agreements per month for the first seven months of the previous year.

This data is highlighted in the latest monthly report from the Housing and Construction Authority.

Real value of housing declines

While the nominal value of apartment prices has remained stable, the housing price index in the capital region increased by 0.7% in August. Over the past twelve months, apartment prices in the capital area have risen by 2%, resulting in a real price decrease of 5.3% (assuming that the inflation rate was 7.3% over the past 12 months). The inflation rate in Iceland was measured at 7.7% in August.

In the neighbouring municipalities of the capital region, prices decreased by 1.4% month-over-month, and in other parts of the country, they dropped by 1%. The real price of apartments has decreased by 5.8% in the vicinity of the capital region over the last twelve months but increased by 0.2% in other parts of the country.

Significant drop in new apartments entering the market

In August, 240 newly built apartments were introduced to the national market, a stark contrast to the 398 in July, marking a 39.7% decrease month-over-month. In total, 2,276 new apartments have been listed this year, as per the report.

Currently, approximately 3,200 apartments are available for sale nationwide, with 1,907 located in the capital region. Of these, 622 are brand new.

“In the areas surrounding the capital, 691 apartments are up for sale, 239 of which are new, accounting for about 35% of all available apartments. Elsewhere in the country, 568 apartments are on the market, with 73 being new, representing around 13% of all listed properties.”

A growing population

The report also briefly touches upon population growth, suggesting that if the current trend continues, the nation’s population might reach 400,000 by year-end. This growth will necessitate more housing.

“Last year, nearly 3,000 new apartments were listed during the same period, while the population increased by 11,510 individuals. The average household size in Iceland over the past decade has been 2.53 residents per apartment. However, it’s worth noting that this size varies by region and settlement. Based on this average, over 4,500 new apartments would have been needed last year to accommodate the population increase,” the report states.

A quick breakdown on how inflation erodes the real value of apartments despite nominal prices increasing

Inflation refers to the general increase in prices of goods and services over time. When inflation occurs, each unit of currency buys fewer goods and services, leading to a decrease in the purchasing power of money. In other words, when inflation is high, the value of money decreases.

This means that even if the price of your apartment goes up, money buys less than it did before. In other words, the “real” value of what you own has gone down because your money doesn’t stretch as far.

Furthermore, say the nominal price of an apartment increases by 2%, but inflation for the year is 7%. This means that while your apartment’s price has gone up a little, the cost of everything else (like food, transportation, utilities) has gone up even more. So, in terms of what you can exchange your apartment for, its value has actually decreased.

“We Must Adapt” – Authors of Iceland’s New Climate Report

Waves crashing over Reykjavík lighthouse

Altered weather patterns, increased landslides, and heightened flood risks are among the challenges Icelanders will face in the coming years, according to an expert from the Icelandic MET Office. A report entitled “Climate Resilient Iceland, which was unveiled yesterday, emphasises the urgent need for Icelandic society to adapt to the already evident impacts of climate change, Vísir reports.

“Humans have always adapted”

Yesterday, a report titled “Climate Resilient Iceland” (i.e. Loftslagsþolið Ísland in Icelandic) was unveiled. Commissioned by the Minister of the Environment, Energy, and Climate, a steering committee produced the report to assess the necessary measures for society to adapt to climate change, emphasising that the impacts of climate change are already evident.

When questioned by a Vísir journalist about whether emphasising adaptation to climate change signified a form of resignation, Anna Hulda Ólafsdóttir, Office Manager of Climate Services and Adaptation at the Icelandic Meteorological Office and a co-author of the report, replied, “Yes and no; this is the reality we are facing. It’s unfortunate, but it’s the truth. Humans have always adapted to changing circumstances.”

Anna Hulda emphasised that environmental changes are accelerating and becoming more evident through natural events. “We’re witnessing an increase in landslides, floods, and shifts in precipitation patterns, with intense rainfall in short durations followed by prolonged droughts,” she stated.

Data collection and dissemination

As noted by Vísir, the report delves into the consequences of these threats. Drought conditions elevate wildfire risks, which can jeopardise human lives and threaten infrastructure. The global warming phenomenon is reshaping ecosystems and heightening the risk of infectious diseases. Intense rainfalls escalate flood hazards, causing potential damage to infrastructure. The melting of glaciers is redirecting river courses, and the thawing of permafrost is triggering landslides, each with its inherent risks. Furthermore, marine ecosystems are changing due to ocean acidification and warming, affecting marine biodiversity.

The report recommends a comprehensive approach, suggesting an evaluation of the insurance system in light of these risks. It outlines four priority actions, with an emphasis on enhancing data collection and dissemination.

One of the highlighted actions, for example, is the development of a “Climate Atlas,” envisioned as a visual guide to the United Nations’ climate change projections. Canada’s existing model, which provides insights into shifts in precipitation, temperature, and other elements, serves as an inspiration for this initiative.

The report also advocates for a comprehensive monitoring strategy to assess the repercussions of climate change. It recommends the launch of a data portal, offering access to historical records of natural phenomena. This portal would also help pinpoint risks tied to global climate shifts, such as potential disruptions to supply chains and migration patterns of refugees.

A comprehensive approach is necessary

Guðlaugur Þór Þórðarson, the Minister of the Environment, Energy, and Climate, acknowledged that while some of these initiatives are funded, there’s potential to optimise the use of human resources: “To simplify, when implementing countermeasures and adaptation strategies, it’s crucial to have a comprehensive understanding to guide our actions. A consistent team should manage this effort. Furthermore, it’s essential to disseminate accurate information to all, particularly those involved in infrastructure planning and zoning.”

Reykjavík Municipal Archives to Be Closed Down

Yesterday, the City Council of Reykjavík approved the mayor’s proposal to close down the Reykjavík Municipal Archives. The operations of the Municipal Archives would be incorporated into the National Archives of Iceland. Historians and archivists have criticised the decision, RÚV reports.

Operations to be transferred to the National Archives

Yesterday, Reykjavík City Council approved Mayor Dagur B. Eggertsson’s proposal to close down the Reykjavík Municipal Archives. The mayor’s proposal was presented at a city council meeting six months ago, although its formal processing was postponed until yesterday.

The proposal was predicated on a summary authored by KPMG, which reviewed the operation of the Municipal Archives and assessed three possible options to cut down costs: one, to continue running the Municipal Archives in its current form; two, to increase cooperation with the National Archives of Iceland, which would imply the construction of a new archive; and three, to close down the Municipal Archives and transfer its operation to the National Archives. The last option was considered, by far, the cheapest.

Mayor Dagur told RÚV that the city council had made “a policy decision,” but that the matter would go before the city executive council. “The [path] that was chosen was to start discussions with the National Archives about joint digital preservation and, in effect, the merging of these institutions. That would mean that the Municipal Archives, in its current form, would no longer be an independent entity.”

According to available analyses, operational changes will not be felt over the next four years, Dagur noted. “It will depend on the progress made during discussions, on the outcome of those discussions, and the overall outcome regarding these preservation issues in the country as a whole.” On this latter point, Dagur referred to the global discussion concerning the digital preservation of documents. He hopes that museums in Iceland will unite to ensure safe and accessible document storage.

“Our discussions have solely been positive and constructive,” Dagur said of his relationship with the state. “The National Archives is, in many ways, facing the same challenges as the Municipal Archives and the city itself. If we look to other countries, we see that they’re facing similar challenges, as well.”

Dagur observed that there was no reason to believe that ensuring access to archives would not improve if matters were handled properly. The goal was to translate a lot of data into digital form so that individuals weren’t forced to look to a single place in order to access documents.

A misguided decision based on limited understanding

As noted by RÚV, the proposal to close down the Reykjavík Municipal Archives surprised Svanhildur Bogadóttir, an archivist employed at the institution, when the media reported the proposal in the middle of last month. National Archivist Hrefna Róbertsdóttir further commented that, to the best of her knowledge, this would be the first time that a municipality’s archives were closed.

Sigurður Gylfi Magnússon, professor of history at the University of Iceland, told RÚV that the proposal was misguided and showed a limited understanding of museum issues.

Work Group to Submit Report on Reykjanesbraut Closure

Sigurður Ingi Jóhannsson

A work group appointed by Minister Sigurður Ingi Jóhannsson to review the closure of Reykjanesbraut in December is expected to submit a draft plan to the Ministry of Infrastructure next week, reports. The closure of Reykjanesbraut led to numerous flight cancellations and delays.

Reykjanesbraut closure leads to flight cancellations, delays

Following heavy snow in the capital area during the days leading up to Christmas, Reykjanesbraut – the road leading to Keflavík Airport – became impassable. The closure led to numerous flight delays and cancellations, with many travellers expressing their criticism of the Icelandic authorities.

Speaking to in December, Minister of Infrastructure Sigurður Ingi Jóhannson stated that the situation was unacceptable: “I have to say, right now, we have to get over this and ensure, as far as that’s possible, that Reykjanesbraut is not closed while the airport is open.”

Sigurður Ingi subsequently appointed a work group composed of representatives from the Icelandic Road and Coastal Administration, the National Police Commissioner, and the Suðurnes police chief. The work group was tasked with reviewing the events in December and drafting a plan on how best to deal with similar situations.

“We are working hard on the report in collaboration with these groups,” Hjördís Guðmundsdóttir, Director of Communications for the Department of Civil Protection and Emergency Management, told this morning. The work group is expected to submit its report on Tuesday, January 10.

“We scrutinise everything we do, so it’s natural for us to scrutinise this,” she added.

Treasury Lost Out on “Significant Funds” with Íslandsbanki Sale

A professor at the University of Iceland’s School of Business has told RÚV that the state treasury forfeited “significant funds” in its sale of Íslandsbanki shares last March. Minister of Finance Bjarni Benediktsson rejects the idea that a higher share price could have been secured without “sacrificing other interests.”

Losses “obvious” shortly after markets opened

Dr Ásgeir Brynjar Torfason is an assistant professor at the University of Iceland’s School of Business. He focuses on accounting and finance. In an interview with RÚV earlier today, Ásgeir stated that the government had lost out on “significant funds” in its sale of Íslandsbanki shares last March. The losses were obvious shortly after the markets opened on the following morning.

Yesterday, the National Audit Office released a report concerning the sale. The report reviewed, among other things, the dissemination of information prior to the sale, the determination of the share price, the selection process for determining qualified investors, and the reliance on outside consultants.

The report – focusing on the technical execution of the sale and valuation of shares – did not pass judgement on whether any laws had been broken; the opposition has demanded that a parliamentary committee be entrusted with such an investigation.

Concerning such an investigation, Ásgeir Brynjar stated that it was important for independent institutions – such as the parliamentary commissioner, the National Audit Office, and the Financial Council – to supervise such a process:

“These institutions play a hugely important role for parliament, and given that the National Audit Office has brought these facts – which we suspected or feared – to light, it’s clear, after a thorough review, that the execution of the sale wasn’t sufficiently well handled … it’s as if the sellers were trying to get rid of something that they didn’t want to own in the quickest possible way, which isn’t good when you’re handling publicly-owned entities and trying to secure the best possible price.”

Welcomes the publication of the report, constructive criticism

In a separate interview with RÚV, Minister of Finance Bjarni Benediktsson stated that he did not want to place himself on a high horse and mete out responsibility following the National Audit Office’s report. According to Bjarni, there wasn’t much in the report that suggested wrongdoing on behalf of his Ministry.

“There were, however, many things, which were asserted last spring – that buyers had been hand-picked or that the bank had been subject to a fire sale, for example – which have been rejected.”

Bjarni added that it was good that the report had finally been published and that the many considerations detailed in the report were “unsurprising” given that they had been discussed last spring: “Dissemination of information in the run-up to the sale could have been better.” Bjarni also stated that the report made many useful points and that he welcomed any constructive criticism.

Finally, the Minister of Finance rejected the idea that the report was an indictment on the execution of the sale and stated that he “remained focused on the big picture,” namely that they had been successful in selling shares in the bank, securing diverse ownership, and a reasonable share price. “The sale is not above criticism,” Bjarni added, “but I think that it was largely successful.”

As noted in the RÚV article, the authors of the report suggest that a higher share price could have been secured, a suggestion that Bjarni rejects without sacrificing other interests: “We had several aims, among them diverse ownership. We got a pretty good price, and the report indicates that the financial interests of the government were safeguarded.”

Bjarni added that after the sale the government continues to be the majority owner of the bank, which now enjoys a higher valuation: “The fact that we managed to sell of over ISK 100 billion ($693 million / €672 million) with this group of owners, I just say: ‘Well done.’”

Execution “Not Good Enough,” Minister of Business states

Vísir also published an interview with Minister of Culture and Business Affairs Lilja Alfreðsdóttir today. Lilja stated that it was clear that the execution of the sale was “not good enough” and that this was confirmed by the National Audit Office’s excellent report. Lilja added that it was disappointing that the experts had not handled the sale, which shouldn’t be overly complicated, in a better way.

“The execution wasn’t good enough. We can see that the valuation should have been better as well as the execution of the sale, for which the Icelandic State Financial Investments are responsible,” Lilja observed.

PM Katrín Jakobsdóttir has also weighed in on the Audit Office’s report: “First and foremost, I’m disappointed in the execution itself: one of it being the price, and the difference therein. But first and foremost I’m disappointed in how this could affect trust in Iceland.”

New Report: Football Association Urged to “Shoulder Responsibility”

Football fans in Iceland

A workgroup established by the Icelandic Football Association (KSÍ) has submitted proposals on how the association could better handle allegations of violence and sexual assault. The report, which tackles issues of “procedure, attitude, and culture,” encourages the association to shoulder increased responsibility.

To “take a clear stand” against all manner of violence

Following resignations by Director Guðni Bergsson and the board of directors earlier this year, the Icelandic Football Association established a workgroup to examine procedures relating to allegations of violence and sexual assault. The group’s mandate was to review responses to sexual and violent assaults within Icelandic football “in collaboration with outside professionals.”

A few days ago, the workgroup submitted its report, which was subsequently published on the association’s website. On the first page of the report, the authors urge the leadership to assert their opposition to all kinds of violence publicly:

“This summary report contains the workgroup’s proposals alongside an encouragement to the leadership to make good use of the present opportunity to take a clear stance against violence of any kind – especially sexual violence – and, thereby, improve the culture and attitude of individuals connected to the association.”

Betterment founded upon four pillars

The report is predicated on four proposals.

First, the workgroup advises that the association update its code of ethics, adding provisions relating to allegations of violence and creating channels for individuals to report misconduct and bring charges. The Icelandic Football Association is encouraged to sign contracts with members of national teams in which the code of conduct is explicitly referenced. Furthermore, the report advises that these contracts include provisions regarding violent misconduct, wherein – among other conditions – athletes commit to declaring any charges of violent or sexual misconduct. Finally, the authors counsel that employees who occupy positions of confidentiality within the association be made to confirm the code of ethics with their signatures.

Second, the workgroup stresses the need to create clear channels and response protocols for instances of violence within the Football Association and its member societies. The Director of the Football Association is to be designated as a “special liaison” to communication consultants within sports and youth clubs. Furthermore, instructions on how to report violence are to be made accessible on the association’s website and on all member societies’ websites.

Third, the association is encouraged to take a “clear stance” against violence and to coordinate the messaging of its member societies. The workgroup also advises that leadership attend seminars on equality and violence each year following the annual meeting.

Fourth, the workgroup advises that the association assume a leading role in equality within sports in Iceland, that it adopt an “equality plan,” and that it work to ensure gender balance within all of its internal committees and councils.

The association  should “welcome its responsibility”

The report concludes with further encouragement in which the association is urged to welcome its responsibility while at the same time taking it seriously:

“The association cannot, by itself, change society; however, it does occupy a unique position in terms of effecting significant and positive change. The association’s messaging and policies matter. By acting on these four proposals, and by leaning on the insights of professionals in the field of equality and violence, the association can become a role model and demonstrate that it is intent on shouldering responsibility.”