By Nikki Pollo

Iceland, also called the land of fire and ice, is known for its diverse land features such as volcanoes, geysers, hot springs and waterfalls. The land promotes the use of clean energy, the drinking water is pure, and corporate chains are few and far between.

All this combined with a violent crime rate that is one of the lowest in the world has helped this small country make an economic comeback. Currently, tourism and other exports are replenishing the country’s once depleted monetary resources. The Icelandic economy, however, is in the process of revitalization after declaring bankruptcy twice since the early 2000s.

Similar to the crash of the American economy, Iceland’s economy took a turn for the worst in 2008, starting with the burst of the housing bubble. Three of Iceland’s largest banks –  Landsbanki, Glitnir and Kaupthing –  failed due mainly to massive growth in approving loans. Governmental authorities opted against a bailout of the banks and instead allowed them to collapse, borrow funds from the International Monetary Fund and other neighboring countries, and restructure in the following years. This decision ultimately led to the betterment of Iceland’s economy and the early repayment of loans to the IMF.

Iceland’s citizens will long remember the banks’ failures and their effects.

“The economic downfall victims were strictly families, due to the encouragement of [their] buying houses when [the] money wasn’t there,” Gudrun Helga Sigurdardottir said.

Gudrun Helga Sigurdardottir. Photo courtesy of Jan Getz.

Sigurdardottir is a freelance journalist and private tour guide who resides in Reykjavík, Iceland; she is originally from Hafnarfjörður, Iceland.

Sigurdardottir said that factors other than the failing banks contributed to Iceland’s economic downfall such as housing loans, the mixture of currencies used and exchanged, and multi-national corporations taking advantage of the land and economy.

“The recession hit us pretty hard,” Sveinn Birkir Björnsson said.

Björnsson specializes in marketing and advertising at Promote Iceland, and lives in Reykjaík, Iceland. He has worked on numerous campaigns targeting tourism, a necessity to restarting the economy and helping improve employment. .

After stabilizing and improving from the first hit to the economy, Iceland took another financial hit when money borrowed from other investors could not be returned in time.

“Iceland recently went bankrupt,” Sigurdardottir said. “U.S. and U.K. investors helped bring Iceland back, but they had to hold on to the money for [about] four years.”

Again, tourism helped to improve Iceland’s economy for a second time, among other exports such as regulated fishing, fishing equipment and energy. But then the volcanic eruptions at Eyjafjallajökull in Iceland put a hold on tourism and stunted air travel from Europe in 2010.

Björnsson and his team focused on crisis management in 2010 and developed campaigns such as “Inspired by Iceland” in order to clear the air that Iceland was safe despite the recent volcanic eruptions. This campaign proved to be beneficial as tourism numbers continued to increase after the natural disaster.

But it hasn’t all been easy for the tourism industry.

“If anyone asks what helped Iceland again, it’s luck,” Sigurdardottir said. “Luck is what helped us.”