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Story Publication logo August 7, 2013

Iceland: Money from China

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All around the Arctic Ocean, the impact of climate change is spectacular:Icecaps melt, glaciers...

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This article, in French, appeared in the print version of Le Monde. It is part 1 of a special 6-part summer series. See the full multi-media feature online.

Grimmstadir, in the northeast of Iceland, covers an area of 300 square kilometers, has nine residents and sits among the highlands that are blanketed in snow for eight months of the year. The nearest village is 45 kilometers away.

Of the five houses in Grimmstadir, two are occupied year round. The smallest one is home to a family of seven: Anna Jonsdottir, 38, her husband, Elvar Gudjonsson, 39, and their five daughters, aged between one and six years. During the winter, Elvar drives a snowplow, a harsh job in this part of the world. To keep himself busy throughout the summer months he refurbished two old homes in the hamlet and rents them to tourists seeking solitude.

Two hundred meters down the road sits the prettiest house in the village. It is owned by an elderly couple: Bragi Benediktsson, a 76-year-old retired sheep farmer, and his wife, Siggridur. Commercial sheep herding in the highlands was banned by the government several years ago to slow down erosion. Bragi kept 60 sheep for his own use.

Over the years, Bragi and Elvar, who are distant cousins, have gotten along well together, but then everything changed one day in 2011. They heard that a Chinese billionaire, Huang Nubo, wanted to buy the territory to build a luxury hotel with golf course, riding club, and a landing strip.

Bragi was interested, but Elvar refused to hand over his property to anyone, and certainly not to a Chinese tycoon. In point of fact, Grimmstadir land is jointly owned by seven heirs. Bragi owns a 6.94 percent share, while Elvar only has 0.35 percent. The majority landowners are wealthy families who live in the city. They are ready to sell but if even one of the co-owners opposes the sale, the situation gets complicated, ad infinitum. Dissension has come to the highlands and before long will spread across the country.

Everything began in Beijing, a long way from Grimmstadir. In 1976, China offered scholarships to Icelanders interested in studying Chinese literature. Hjorleifur Sveinbjornsson, 26 at the time, decided to apply.

"I got a scholarship without any problems," he says with a laugh. "There were very few candidates."

Before long, Horleifur found himself in a Beijing university, sharing a room with Huang Nubo, a poetry-loving Chinese student. They became fast friends. Twenty years later, Hjorleifur returned to Beijing, and met up with his old friend, who had become a very wealthy businessman. In 2007, it was Huang's turn to come to Iceland to visit Hjorleifur. Meanwhile, Hjorleifur had also been climbing the social ladder; his wife, Ingibjorg Gisladottir is Iceland's new foreign affairs minister.

When he arrived in Reykjavik, Nubo established a China-Iceland cultural exchange center to increase trade fairs and other events between the two countries. Then he announced his intention to build a hotel and golf course up north, in the countryside. Hearing about Grimmstadir from local businessmen, he went to visit the site. He was immediately smitten and signed an agreement in principle with a group of landowners for one billion ISK ($8.4 million).

However, under Icelandic law, only nationals of countries within the European Economic Area are permitted to own land. The majority Social Democratic Party and the Industry Ministry were in favor of applying a special waiver to support Huang's request, but Interior Minister Ogmundur Jonasson, a member of the leftist Green Party, rejected the request.

"I welcome foreign investments," he says, "but not if it means losing control over our natural resources. Ownership has to remain in the hands of the community, otherwise we could be swallowed up. There are only 350,000 of us in this country."

In his opinion, the hotel project is just a front. "Huang Nubo is close to the government in his country. For a number of years now, the Chinese have been snapping up land all over the world. I don't know what their plans are but they are strategically planning for future decades."

In 2012, the industry minister decided to stir things up by granting tax benefits to the Chinese project, but the Greens responded with a countermove, and the project got bogged down in committee. Opponents of the project formed an informal work group to investigate Huang Nubo's global activities. They also came up with the theory that the Chinese were developing a strategy with major geographic consequences. According to them, global warming is changing the face of maritime transport between Asia and the North Atlantic. Before long, Chinese cargo ships could be sailing through the Arctic Ocean, at least during the summer months, a faster, cheaper and safer route than the long journey through the south seas. Iceland would find itself at the very center of a region vitally important to global commerce.

Jon Thorisson, one of the leaders of the opposition movement, and a renowned architect, believes that the Chinese have already met with the local authorities at Landanensbyggd, a small fishing port near Grimmstadir, to establish a support base. Thorisson also points out that the Chinese just finished building a new, four-floor, ultra-modern embassy in Reykjavik.

"It is by far the largest embassy ever built in Iceland. It could accommodate hundreds of personnel."

Despite this setback, the influential residents in the Grimmstadir region still support the construction of a hotel that would create new jobs and generate tax revenues. To bypass the holdup created by the Green Party, they are thinking about a legal-financial package whereby seven neighboring townships would create a private company that would purchase the land with a loan from the Chinese. Then, a section of the property would be leased to an Icelandic company owned by Huang Nubo, who, in turn would pay an annual rent, and then build his hotel. The remaining land would be turned into a national park.

One of the architects of this new project, Halldor Johansson, is an urban planner and businessman from Akureyri, a town 140 kilometers from Grimmstadir. He is also the manager of Huang Nubo's Icelandic company. At the same time, he runs the Arctic Portal, an association that promotes sustainable development in the far north. Arctic Portal was created by an Icelander who also benefitted from a scholarship to study in China.

Halldor Johansson freely acknowledges the importance of the northeast passage for the future of Chinese commerce. In his opinion, Iceland would benefit from this new geostrategic venture. Sitting in his office is a small model boat, the Chinare, the only icebreaker in the Chinese navy. That aside, he thinks the hotel project is nothing more than a simple business deal.

Meanwhile, Johansson launched another China-Iceland project: an observatory station to study the Aurora Borealis, to be co-managed by scientific teams from both countries. To house this project, Arctic Portal will buy an old farmhouse that was converted into a villa, 75 kilometers from Grimmstadir. It sits on the side of a hill and has a stunning view. The owner, Snaebjorn Benetiktsson, a well-to-do retiree is delighted. "I've been trying to sell this place for four years but there were no buyers. Then one day, these Chinese scientists turn up. They studied the terrain, observed the sky and decided to buy, without even discussing the price."

Huang Nubo can also count on the support of Bergur Agustsson, the mayor of Husavik, one of the townships that decided to buy the land. This investment is very important for him. "In 20 years, this region has lost 20 percent of its workforce, and 24 percent of the population aged between 18-40. If we want to survive, we have to diversify, even in the area of tourism."

The mayor, who admits that the Chinese are tough business people, has made four trips to China, and wants to reassure the local people that the townships will retain power over the land.

"Nubo would need our permission if he wants to start other projects in Grimmstadir."

The residents of Husavik don't all agree with their elected officials, even if most of them are being discreet about the project. Adelheidur Amundadottir, a 37-year-old lawyer freely expresses her disagreement.

"There are many beautiful spots in Iceland, but Grimmstadir is unique. It sits close to a glacier, breathtaking mountains, two national parks, lakes. The local people are emotionally attached to this land."

She adds that a luxury hotel planted in the middle of all this would kill the charm. "I'm sure if we hold a referendum the project will be defeated."

Speaking as a lawyer, Adalheidur says that if, in a few years, Huang Nubo decides to construct other buildings or exploit the area's natural resources, nothing will stop the mayors from agreeing to his demands. In theory, the tycoon could even buy shares in the company set up by the townships and become a co-owner. In other words, fulfill his original dream.

All the while in the hamlet, the misunderstanding between the two neighbors is intensifying. They no longer greet each other. Bragi is very annoyed and wants to sell as fast as possible before the billionaire changes his mind. His wife Siggridur agrees and is already imagining future possibilities.

"If they build a beautiful hotel, we could go there for dinner. Maybe there will even be a spa."

Still, she seems more resigned than thrilled.

"China is so big and we are so small, maybe they are going to take over the whole region." Adds Bragi, with a sigh, "Whenever a Chinese person appears, the next day there are a thousand of them." But come what may, their decision is made.

As far as that goes, Sigurdur, Bragi's brother, and his wife Olof Bjarnadottir, who left the area for a more comfortable life in a chic suburb of Rejkavik, hope the offer still stands. Olof is upset with the minister who blocked the sale.

"He created all these problems just so he could increase his popularity with the Greens. It's his fault that we are being attacked in the media, that people are inventing wild theories. On TV, strangers brazenly act as if they were landowners, saying, 'We won't sell.' We are quarreling with our close friends."

Nevertheless, things might soon get underway. In May 2013, the leftist government was beaten in the elections by a center-right coalition. The outgoing interior minister is now just a member of Parliament on the opposition side.

Faced with an alliance of local stakeholders, Elvar, the snowplow driver, feels a bit crushed.

"I've quarreled with my family, I've been insulted on the phone by strangers. It's crazy."

But he still won't give in. "I want my children to grow up on the land of our ancestors. Is that so strange?"

The other landowners have promised to let him continue to live here if he sells, but he doesn't trust them.

"Whatever the Chinese have planned, soon or later, we'll just be in their way. These people are very different from us. I won't get along with them."

He also doesn't want the land to be bought by the municipalities.

"That would be the worst of all, these politicians don't respect people like me."

He is discouraged and can't imagine an acceptable scenario.

His wife Anna, a former professional dancer, is less emphatic. She can imagine the Chinese hotel would bring some comfort to the region.

"It would be great if they brought electricity to us, we could get rid of our generators. They might even dig wells to look for warm subterranean water."

Nevertheless, she is certain this project won't create any new jobs for the local people.

"Even with all the unemployment here, not a single Icelander would bury themselves up here in Grimmstaddir just to clean toilets for the Chinese. The hotel will bring in their own Chinese staff who will work hard for small wages."

Then she reconsiders.

"Maybe I could teach dance to the tourists," she says, demonstrating a few tango steps. Elvar, standing on his front steps in the icy wind, a beer in his hand, prefers to laugh about it. "Enjoy the ride, have fun. Soon enough, we won't have any free time if we work for the Chinese. If we're lucky."

Translation by Anne Thurow

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