WHAT IS GOING ON IN ICELAND

The Country
Iceland is an island of 103,000 km2 (39,756 sq.miles), about one-third larger than Scotland or Ireland. Its highest peak, Hvannadalshnjúkur, rises to 2,119 m and over 11 per cent of the country is covered by glaciers, including Vatnajökull, the largest in Europe

People
Out of a population numbering more than 300,000, half live in the capital Reykjavík and its neighbouring towns in the southwest. Keflavík International Airport is located about 50 km from the capital. The highland interior is uninhabited (and uninhabitable), and most centres of population are situated on the coast.

Iceland has some of the world's highest levels of economic and civil freedoms. In 2007, Iceland was ranked as the most developed country in the world by the United Nations' Human Development Index. It is also the fourth most productive country per capita, and one of the most egalitarian, as rated by the Gini coefficient. Icelanders have a rich culture and heritage, such as cuisine and poetry, and the medieval Icelandic Sagas are internationally renowned. Iceland is a member of the UN, NATO, EFTA, EEA and OECD, but not of the European Union.

'What can we do? Its difficult times watching the news getting worse and worse. We had to go out and be with friends. Maybe it's like the party at the end of the world,

Iceland is on the brink of collapse. Inflation and interest rates are raging upwards. The krona, Iceland's currency, is in freefall and is rated just above those of Zimbabwe and Turkmenistan. One of the country's three independent banks has been nationalised, another is asking customers for money, and the discredited government and officials from the central bank have been huddled behind closed doors for three days with still no sign of a plan. International banks won't send any more money and supplies of foreign currency are running out.

People talk about whether a new emergency unity government is needed and if the EU would fast-track the country to membership. On Friday the queues at the banks were huge, as people moved savings into the most secure accounts. Yesterday people were buying up supplies of olive oil and pasta after a supermarket spokesman announced on Friday night that they had no means of paying the foreign currency advances needed to import more foodstuffs.

Foreign currency loans are a problem for homeowners, too. 'Loans have been very cheap, house prices rose and there was a lot of good-quality housebuilding. But the building has halted, nothing is being finished, nothing is selling. The interest rates are staggering. What people are doing now is swapping houses if they want to go bigger or smaller. That is what is keeping us afloat.'

Ashagre