not sit easily with people in Iceland, one of the world’s
richest countries, which has been hit hard by the global
“We are preparing to serve new groups of beneficiaries
who have never sought help from the Red Cross before,” says
Helga G. Halldorsdottir, director of Icelandic Red Cross
domestic programmes. “We are also looking towards recruiting
new volunteers — to respond to the arising need but
also as a way for people to continue contributing to society
although they find themselves out of work.”
After years of full employment, growth and wealth, unemployment rates
in the North Atlantic country ofjust 320,000 people soared
500 per cent in four months. One in ten is expected to be
jobless by the end of 2009. Companies reduced working hours
and many employees suffered severe salary cuts.
The value of the Icelandic krona fell drastically. Inflation
stood at an unheard-of 20 per cent at the start of 2009.
This was expected to be disastrous for many people with foreign
currency mortgages on their homes.
Iceland, a nation that was one of the most affluent in the
world, reeled from the financial crisis in early 2009, sparking
demonstrations. It was a nation in crisis.
New Red Cross role
The situation triggered emergency response mode in the Icelandic
Red Cross. In October 2008, the Red Cross scaled up its psychosocial
programmes, embarking on providing large-scale psychological
support for people suffering from the economic crash.
“The experience of our Nordic sister National Societies
that suffered sharp financial crisis in the early 1990s shows
that it is important to attend to the psychological needs
of the people as soon as possible after the shock,” says
Kristjan Sturluson, the secretary general of the Icelandic
Red Cross, who holds a psychology degree. “The Icelandic
Red Cross provides psychological support in the aftermath
of natural disasters, and we feel there is just as much need
for it now although this is a man-made crisis.”
Sturluson points out that most people go through a very
similar emotional pattern when affected by a shock. But unlike
sudden-onset disasters, the crisis in Iceland unfolded over
months, leaving people confused and angry, desperately trying
to find their way in a society turned upside down.
“We notice that people have now come out of their
disbelief, and they are outraged. Every ordinary home in
Iceland has been affected by the crisis in some way, and
many people are facing difficulties in making ends meet,” says
In the first six months of 2009, the Icelandic Red Cross
plans to run a trauma centre open to the public, where people
can gather, share lunch, attend workshops and seek individual
support from members of the Red Cross psychosocial team.
The need is evident, reflected in a 40 per cent increase
of phone calls to the Red Cross 24-hour helpline after October — most
of which were linked to people’s changed circumstances
due to the ongoing crisis.
“People find comfort in being able to call a service
where there is full confidentiality,” explains Sturluson. “We
feel that this is also true for face-to-face psychological
support, and it is important that the Red Cross is able to
provide anonymity for those seeking help.”
The Red Cross also increased individual support such as
clothing and food distribution, and worked with national
social welfare institutions to respond to the crisis. The
National Society is prepared to step up its assistance even
further in the months to come.
“We expect much more need for assistance in the coming
months as the financial crisis deepens and the consequences
are more widely felt and more people lose their jobs,” says
The Icelandic government swiftly acted on Red Cross recommendations
to include a clause in new labour laws passed in January,
where people seeking unemployment benefits through the national
unemployment agency could sign up to become Red Cross volunteers
while looking for a job.
The changed financial landscape also affected the international
work of the Icelandic Red Cross. Severe deflation of the
krona made it difficult for the National Society to keep
its commitments in other parts of the world. Last year’s
international budget of 350 million Icelandic krona yielded
some US$ 5.7 million at the beginning of 2008, but a year
later the same amount would only give a total of US$ 3.1
The Icelandic Red Cross nonetheless managed to honour all
long-term agreements made to its main partners in Africa
and the Middle East through reorganization of plans and budgets.
In an example of Nordic solidarity, the Norwegian, Swedish,
Finnish and Danish Red Cross Societies pledged to assist
the Icelandic Red Cross to meet its international obligations.
People gather in Reykjavik, the capital of Iceland, to protest against the
©REUTERS / Ints Kalnins, COURTESY www.alertnet.org
A man takes money from an automatic teller machine outside
the Icelandic bank Kaupthing.
The value of the Icelandic krona has plummeted, leaving thousands
of people in need.
©OLIVIER MORIN / AFP PHOTO
Isabella Theodorsdottir, 30, lost her job in a dental
clinic in October 2008 due to the economical crisis.
She had been wanting to become a volunteer for a while,
but when she found herself suddenly unemployed she
decided it was time to join the Red Cross. She now
visits a young woman with an intellectual disability. “I
am very outgoing and I need to be around other people,
so this also works for my own benefit.”
The crisis hits home
Even before the crisis hit, many countries were already suffering
a food and fuel crisis in which 130 to 155 million people
fell into extreme poverty, according to World Bank estimates.
• Many developing countries face much tighter credit and higher interest
• Gross domestic product growth in 2009 in developing countries is expected
to fall to 4.5 per cent from 7.9 per cent in 2007.
• Remittances that workers send to home countries are projected to decline.
• Foreign investment and short-term credit are drying up.
• Developing country exports are falling; large amounts of capital have
been withdrawn (source: www.worldbank.org).
• Unemployment could increase by 20 million people.
• The number of working poor living on less than a dollar a day could
rise by 40 million, those at US$ 2 dollars a day by more than 100 million (source: www.ilo.org).
The members of the International
Red Cross Red Crescent Movement share concern about the humanitarian
consequences of the global financial crisis.
• Natural disasters, conflict and the global economic crisis have left
the world’s most vulnerable populations exposed as never before. We are
extremely concerned that the poorest of the poor will be the ones to pay the
real costs of the current financial crisis.
• We are closely observing the impact of the crisis on livelihoods, savings,
pensions, employment, food prices, etc.
• We might have to increase humanitarian assistance because of deepening
poverty, pay more for food aid to feed hungry people and ask donors for more