China came to Iceland’s aid after former President Ólafur Grímsson and former Prime Minister Geir Haarde sought help from them in the weeks after the 2008 financial collapse.
This is reported in an interview between Grímsson and journalist Logi Bergmann.
According to the former president, he and Haarde decided to seek aid from the leaders of China after it became clear that neither the United States nor European nations were going to come to the rescue.
High and Dry
Grímsson had originally asked a friend of his, an influential Wall Street figure, to contact Timothy Geithner, then-president of the New York Federal Reserve Bank, about whether any assistance could be rendered. Geithner’s response was two-pronged: firstly, he said, the United States had problems of their own, and secondly, Iceland was no longer within the sphere of U.S. interests.
This marked the first time in history, Grímsson says, that Iceland was left without any support from a single European country or the United States. According to him, it was an indicator of changed times in the international arena.
Following the abrupt refusal, Grímsson and Haarde decided to write a letter to Chinese President Hu Jintao, explaining the situation and respectfully requesting assistance.
An unusual process ensued over the course of the next months, where Haarde and Grímsson would write letters to either Hu or the Chinese premier, Wen Jiabao, and the Chinese would respond through verbal messages from the Chinese ambassador to Iceland.
The result of this process was that a currency rate swap was agreed upon between the People’s Bank of China and the Central Bank of Iceland. Influential figures from China, including Zhou Xiaochuan, governor of the People’s Bank, came to Iceland to sign the agreement, and Grímsson credits this powerful signal with bringing Iceland back into the purview of its peers: suddenly other nations stood up and took note.
In 2016, after his tenure as president, Grímsson was in China for a celebration of the 45th anniversary of Chinese-Icelandic relations, where he met Zhou. Zhou told him that Hu Jintao had given the explicit order that the Chinese representative of the International Monetary Fund would always give full-throated support to Iceland.
“Whether people like it or not,” said Grímsson in conclusion, “with all the discussion about China in this country today, it’s important for us to remember that when all the nations of Europe refused to help us, and the United States told us we no longer mattered, China stood ready, in a very sophisticated manner, to send a clear signal to the world that Iceland did, in fact, matter — and they never asked a thing in return.”