The Icemen Cometh ; Name Europe's latest 'tiger.' Hint: look toward the Arctic Circle. Underhill, WilliamNewsweek International 05-23-2005 The Icemen Cometh ; Name Europe's latest 'tiger.' Hint: look toward the Arctic Circle. Byline: Underhill, William ISSN: 01637053 Publication Date: 05-23-2005 Page: 27 Edition: International ed. Section: Iceland Type: Periodical Language: English It's beautiful, but the climate is vile. Resources are few and history books tell of dismal poverty. Yet tourism booms, the capital swarms with the international clubbing crowd, housing prices are soaring and economists talk of a new "tiger" of Europe. Ireland? Nope. Iceland. With 6 percent growth, the country outstrips most of Europe. Its stock market was the Continent's best in 2004. Just last week, the Swiss International Institute for Management Development rated Iceland the most competitive economy in Europe. Says Prof. Stephane Garelli of IMD, "They are doing just about everything right." As Icelanders see it, the recognition is overdue. Despite its diminutive population--293,000--Iceland has been busily shedding its cod-and-Viking image for more than a decade. Since the mid-' 90s, the country's center-right government has pushed free-market reforms- -privatizing banks, ditching price controls and slashing taxes. Companies now pay just 18 percent on profits, down from 50 percent. "The same economic laws apply whether a country is small or large," says Finance Minister Geir Haarde. "We are experiencing the fruits of a very determined and consistent policy." Like the Irish, the Icelanders play to their strengths. Heavy industry makes little sense for an island isolated in the mid- Atlantic, halfway to America. Instead, the country has focused on such sectors as high technology, where the brainpower of a highly educated work force compensates for distance. (How better to spend those long winter nights than surfing the Web?) Along the way, the capital of Reykjavik has become home to a slew of niche companies selling their expertise to the wider world in arenas from software and pharmaceuticals to prosthetic limbs. And if Iceland is short on conventional resources, it's rich in geothermal energy--think volcanoes--and untapped hydropower, a big draw for energy-hungry industries. Environmentalists may agonize, but the country's empty (and cheap) hinterland is a lure for companies like U.S. aluminum giant Alcoa, which recently sank more than $1 billion into an outsize smelter fueled by its very own hydroelectric plant in the island's volcanic northern wilderness. "Other aluminum companies are queuing up to take a look," says Ingi Ingason of the Invest in Iceland agency. Ireland built its success on membership in the European Union, with its subsidies and massive development aid. Iceland has not. (The prospect of sharing its fish, still a hefty export, with EU rivals has kept the country out of the union.) But that hasn't meant isolation. Iceland joined the European Economic Area in 1994, giving it easy access to the EU's internal market. "From a business point of view, we are already part of the EU," says Frederik Sigurdsson, founder and CEO of TM Software, which boasts 400 employees in Iceland, continental Europe and the United States. Fellow Europeans can testify to that. Loaded with cash that cannot be fully absorbed at home, Icelandic bankers and investors have been pushing abroad. The giant Baugur holding company, born out of a single discount store in 1989, has snapped up some of Britain's premier retailers, including the famous Hamleys toyshop. Iceland's largest bank, Kaupthing, has doubled in size every year since 1996 and now draws more than 60 percent of its income from abroad. Recently, it took aim at London's venerable investment bank Singer & Friedlander.
French translation: C'est beau, mais le climat est vil. Les ressources sont peu d'et les livres de l'histoire disent de pauvreté lugubre. Encore le tourisme tonne, les essaims capitaux avec la foule matraquant internationale, loger des prix monte et les économistes parlent d'un nouveau "tigre" d'Europe. Irlande? Non. Islande. Avec 6 pour cent augmentation, le pays devance la plupart d'Europe. Sa bourse était le Continent est meilleur dans 2004. La semaine juste dernière, l'Institut International suisse pour Développement de la Gestion a estimé l'Islande l'économie la plus compétitive en Europe. Dit le Prof. Stéphane Garelli d'IMD, "Ils font presque tout droit."
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