The Rest Is Politics: Leading - 199. Is Trump's Chaos Pushing Iceland Towards the EU? (Prime Minister of Iceland, Kristrún Frostadóttir)

Episode Date: July 26, 2026

What are the real reasons Iceland has brought forward its vote on restarting accession talks with the EU? What lessons did the Prime Minister learn from watching Brexit unfold while living in the UK, and how have those experiences shaped her government's approach to Iceland's EU campaign? How did the Social Democrats go from three MPs to running the country? Alastair and Rory are joined by Kristrún Frostadóttir, Prime Minister of Iceland, to discuss all these questions and more. __________ Search IG.com to find out more and/or Look for IG in your app store. __________ Social Producer: Celine Charles Video Editor: Josh Smith Assistant Producer: Daisy Alston-Horne Senior Producer: Nicole Maslen General Manager: Tom Whiter Learn more about your ad choices. Visit podcastchoices.com/adchoices

Thanks for listening to The Restis Politics. Sign up to the Restis Politics Plus. To enjoy ad-free listening, receive a weekly newsletter, join our members chat room and gain early access to live show tickets. Just go to therestispolities.com. That's therestispoletics.com. All of this Greenland matter concerns people. It's a huge problem. The fact that we have leaders in the free world talking like this is an issue. And I know Icelanders are very concerned about it. I think this is a great time for Iceland to join the EU. because of the geopolitical situation we're in. This is not a referendum about joining the European Union.

No, it's a referendum on getting a deal. Do you want us to reopen talks, finish the negotiations? Then once we have an agreement, we will have another referendum, and you will say yes or no. It's not a given in today's world that we have a voice and that people listen to us. It's not a given that you're an independent country, even in today's world. This episode is presented by IG. Now, as a listener of this podcast, you're no doubt acutely aware of the world's unstable political landscape and how it can affect your money.

Exactly. It can be incredibly frustrating to feel like yet another maddening decision made in Westminster or Brussels or, dare I say Washington, can directly affect your finances. But IG can be a real help, something at least which might help you avoid losing sleep when we lose yet another British Prime Minister. With access to global stock shares and ETFs, IG gives investment. like you, the tools to build a portfolio that reaches beyond the realm of political instability, all with zero commission on investments and no annual fees. Backed by over 50 years of heritage, IG is built for investors who think beyond the current new cycle. Search IG.com to find out more. IG, trade, invest, progress. Capital at risk, other fees may apply.

Welcome to the rest of the policy leading with me, Alice Campbell. And with me, Rory Stewart. And I am in Reykjavik with Khrush. Mron Frostadotter, Prime Minister of Iceland, where on August the 29th, the people here will have a referendum on whether to reopen EU accession negotiations. The decision which has implications well beyond Iceland touches Arctic security, EU enlargement strategy, and indeed the Transatlantic Alliance. She's one of the youngest prime ministers in the world. She is a left-of-centre leader who once lived in Manchester, and not a lot of people know that. And on the day that Andy Burnham takes over from Kier Stama, I in particular, I'm very, very keen to talk about how social democracy wins and thrives in the Trumpian populist age. So thank you for being here.

Thanks for having me. That was quite the introduction. There you go. There you go. Thank you so much. I would love to start you, partly because of British trauma from the Brexit referendum, talking a little bit about this referendum on considering. negotiating with the EU and what the history of this is and what this means to Iceland? I suppose this is quite unusual, the fact that we're having a referendum on opening talks. But I think it's important that people know the backdrop of this. I mean, Iceland is, I mean, it's very close to the EU. Some would say we're even 75% in the EU. We're in the economic area.

We were part of EFTA. We have very close-knit ties to the European Union. A lot of the Nordics, except for Norway like us, are in the EU. And we are, I want to say, maybe there are technical aspects to this, but, you know, we're one of the only countries or few countries that has never actually seen an agreement to join the EU. We've never had a vote on this. The people have never gotten to have a say on whether they want to fully join the EU or not. We went down this route in 2010 after the financial crisis. And then at that point, the government started these negotiations. or these talks with the EU. And it was during a very difficult time for Iceland.

We were, I want to say, sort of on our knees. We were financially insecure. Our identity was broken. This was seen as a way to sort of fix every issue that we had in a short term. And then we had a new government come in in 2013, and the talks sort of just withered out. And at the time, there was always a talk about, okay, if we reopen these talks, we will get a mandate to do it.

because for any nation, especially for a small country, this takes a lot of energy. It takes oxygen out of the governing system to do this. And so this has been the idea for probably like 10 to 15 years that if we go down this route again, we will ask people, do you want us to spend time on this or not? So this is not a referendum about joining the European Union? No. That would follow if you win this one. It's a referendum on getting a deal.

Do you want us to reopen talks, finish the negotiations, then once we have an agreement, we will have another referendum and you will say yes or no. And, Prime Minister, what roughly are the arguments on each side? And it's an unfair question to us, but if you were going to characterize what the yes argument is and what the no argument is, how would you explain it? Well, first of all, obviously, like with all these campaigns, and I'm sure you have an experience from this from Brexit, is, you know, people tend to define what this referendum is about differently. So there are people on the no side that want this to be a referendum about joining the EU. Like this is a final say on the EU, which is it's not. It's preserving option. So do you want the option of seeing what an agreement looks like, going down that route?

And I mean, the yes argument is going to be, like I said, preserve optionality. See what's in there. We've had these arguments about what it means for Isola to join the EU. for decades. They've had these sort of could or woulda, shoulda, shoulda, arguments in a way. Like, they will take all our fish, or we will get unemployment, or everything will be safe financially, or we will have a huge culture shock. I mean, these negative and these hyper-positive sides to it. And the biggest single reason why you would say, yes, is just, let's just get this on the table. But the no is obviously going to be very pushed towards the side of just,

not wanting to be part of the European family or not. And my point is, I mean, you can be a maybe person on the EU and still say yes, because you want to see what this looks like. I'll tell you what feels really different to Brexit. And I've only been here 24 hours, but correct me if I'm wrong. Brexit felt like a lot of people were voting leave because they felt their lives were really crap and they wanted to kick the government. Here, it's sort of feels the very small number of people that I've talked to other than you.

it feels like people are saying, our lives are actually really good. They are. Why are you messing with this? I do think that's an important point for people to keep in mind. Because if you look at EU enlargement for the past few decades, or at least, I mean, it's been a while, right? Yeah. But I mean, you have the eastern enlargement.

Now you have the Balkans knocking on the door, other eastern European countries, Ukraine, even. I mean, this type of enlargement is completely different. It's to the northwest. It's also with an economy and with a country that has high GDP per capita, low unemployment, high welfare standards. Like we're doing very well on all, you know, matters. It would be probably an expedited process, I would assume, because we have so much of the

EU regulations already in order here. But, I mean, the issue is still always in the back of people's minds. The single biggest issue here is currency. We have our own independent currency. It's been associated with massive fluctuations throughout the past, even though it's contained now, but it's costing us a ton. It's a fortune because we have our own reserves. And also it's an hindrance when it comes to businesses.

So competition matters are a big factor here. So why a business are against? That's a long story. Well, tell us the short version. I mean, I have my theories. I mean, these businesses or, I mean, businesses in general are, I mean, you can have small and medium-sized companies that might have their opinions, then you might have mega-companies that might have their opinions. But a big portion of the companies here are sort of medium-sized

and they do okay in a closed system. You know, they might do okay with inflation going up because there's limited competition, so they just run things into the prices. Or they have their market share and if they get outside competition, maybe that's not so great for them, right? But 10, 15 years ago when they were in capital controls. They wanted to join the EU. The business associations were pro-EU, but now that things have been going great, for example, for them, they're not so positive about it. From the European Union's point of view, what is the big strategic vision? Why would they like Iceland in? And might that mean that they're a little bit more flexible in the terms that they offer you? I think this is a great time for Iceland to join because of the geopolitical

situation we're in. I mean, I am very much aware that this is a huge project for the government. It will take up quite some time. It doesn't mean it's the only thing that we're doing. But the reason why we decided to do this now, because initially we said when we formed this government, we will do this vote before in 2027. But a lot of things happened in 25 and 26. And you can just see the way that EU is behaving now. They're finished. deals with Mercosur, they're finishing deals with India, they're looking strategically around. They're aware that the world is changing. The Arctic is increased focus now. And I think a lot of European countries and also just the European bureaucracy in Brussels is aware that they

need increased flexibility for Europe to stay more modern. And this is where Iceland comes in, right? I think we have a good story to tell because we are a good addition to that project, but at the same time, it also gives us a stronger position, I think, in accession talks. And this is something that I need the EU to hear, another European countries to hear, but the Icelandic public also needs to hear that. Do you think that they see you as a – I'm not saying that you're not a very important country in your own right. I know what you're going to say. That's all right.

What I'm going to say? You're going to talk about Norway. Yeah. Yeah. So is it partly about Norway being a kind of bit of a holy grail for the EU? is there a little bit of kind of trying to hope that you get in in the way that the Norwegians then think, well, we should be part of this too? I think Iceland would be enough on its own, but I'm sure there are people that do think what would this mean for other countries, right?

I mean, Greenland left the EU at a time. Now they're thinking about things differently. I mean, these discussions have taken place in the Faroe Islands as well. I mean, they've taken place in Norway as well. This region as a whole, this Western, West Nordic region, if you would, call it that. I mean, I think this would be a positive turn of events for the European Union if they have the flexibility, if the union has the flexibility to understand that way of life is also different here. I mean, things that might seem obvious, but maybe aren't in sort of real day terms, obvious,

like we are an island, right? You can't take a train to Iceland. So if you change the way you have flight systems or how you pay for carbon or pollution, you have to take that into account. Like there's a lot of matters on the EU level that are very mainland focused. Maybe this is something that you can relate to in the UK, right? And we need the EU to understand that if they're enlarging or getting a group that's bigger that's not mainland Europe, that you need to respect the culture and the geography of those countries. You were in the UK, June the 23rd, 2016, working as an economist at a bank.

Yeah. What was your sense of why Brexit happened? And what have you learned from that experience and the process since that you're going to try and apply? What failings did you see that you're going to try and apply to this campaign and beyond? It's always very dangerous to take the feelings of another nation and try to sort of juxtapose it to another country. But I mean, I have sort of polarized experience from Brexit. Because like you said in the beginning, my first experience of the UK was living in Manchester. As a child.

Yeah, I went to grammar school in Manchester. I have friends from that area. I was very close with, you know, my teachers from that area. This was in 97, 98. This was like proper UK, northern part of England. And then I go to the United States for graduate school. I start working, I get transferred to London, and I'm working in Canary Wharf when Brexit was. And working in Canary Wharf, London is not the same as living in the UK.

I mean, that was very obvious to me, like the moment I moved there, it wasn't like being in Britain, right? In Manchester. And I mean, my experience, you know, during that day, I mean, we had this brief conversation yesterday. I remember people just like crying in the streets because they were so shocked. Like, they could not believe it. It was so outside their thought system.

But, you know, a couple of months later, I had a conversation with one of my teachers from Manchester. I went to visit her. And to her, this was a completely natural thing. This is a very smart lady, like, well-educated. But to her, like, her surroundings had changed massively over the past few decades. In some cases, not because of the EU, but from, like, outside EU immigration. and she associated those things together.

And I think these two worldviews, they just completely clashed, right? And so that's why I've always been so aware as a politician, even before we put EU on the table on all matters because we have rural and urban in this small country as well, how can you bring these two sides together and how you make sure that you're not closed off in your own little echo chamber of ideas and thoughts,

keeping those conversations open. and understanding what people are coming from. So that's the biggest danger, that you're just sitting in an office in London, Canary Wharf, and you don't know what other people are thinking. That's maybe a route into the different types of Iceland. So there's you and there's Recovic and you've had an incredibly international experience. I teach at the Yale Jackson School and we're very proud to have you as an alumni. But there are other bits of Iceland too.

There are deep rural bits of Iceland. There's fishing Iceland. So tell us a little bit about the different shapes of Iceland, and the different experiences of people. Yeah, I mean, Iceland is an interesting country on that end because population-wise, it's almost like a city-state. Like, there is around 400,000 people that live here, and, you know, 80% of the country lives in the southwestern corner.

And then you have these coastal towns around the country that have seen a dramatic change in their way of life over the past 30, 40 years, like you would see in coastal towns in the UK and in other countries, right? because of, you know, a big reason is just common modernity, right? Things have changed. Way of life has changed. But also because there have been governmental policies that have changed the way these places operate. There was a change in the fisheries law here that made it easier

for these companies to basically condense, grow bigger, become more productive. And this really increased resource rents and how much we got out of fisheries here. But it met these like small, little companies around the country and in these coastal towns, they went under. I mean, agriculture has changed here for policy reasons, but also just for global reasons. And we've also just seen more centralization because things become more specialized, right? And so there's this sense among the rural population that power has been moving increasingly to Rakejewik, away from them, services moving away from them. And for a big portion of those people, for understandable reasons, they're afraid of moving more power to Brussels because they feel like this deeply changed our lives when you took power to Reykivik, you're going to take it even further from us.

And understanding that sort of sentiment is really important in this debate that it's just a different emotional matter for people that live outside of this urban area. But the flip site to that as well is that there's a lot of positivities that have come with EU. participation. I mean, there are grants associated with Nordic or Arctic agriculture. I mean, there's proper loans that are associated with better infrastructure, which is our biggest issue here in like a massive geographic place with a low population. So the feeling that the Icelandic population needs to feel for someone like me is that I just understand where they're coming from and that I'm going to protect their interest. So it's not, it's an understandable feeling that they have. On your bookshelf, you have a book I wrote many, many years ago.

Yeah, I do. Which you told me helped you become Prime Minister. Thank you for that. But what it said was because of my mantra, objective strategy tactics. You need that to win the campaign. Yeah. What is your objective strategy tactic for this campaign? I mean, the objective is to get a yes.

That is obviously the objective. When you decide to do a referendum like this, people need to feel that you will respect the outcome no matter. what it is. And it is important that people feel that you're listening to them. This cannot be a referendum just about the government. Because as soon as it becomes a referendum about the government, people stop doing referendums. Like, why would you have a vote midterm, you know, if this becomes something about the government? So you need this to be a yes, but sort of a yes outside of party politics, if you can, because there are different. It is tough, but there are yes and

knows in all parties. You mean, the flares are different, but this is an opportunity for people to have an opinion on this, especially because it's not like a yes, I'm joining. It's a yes, I'm preserving the option. Yes, I want to see what this might look like. The strategy is be honest with people. Don't tell them that this is an either or option, black and white, that, you know, if we join the EU, everything will be fixed. You know, every issue we have will be fixed. You know, every issue we have will be fixed. At the same time, you know, those that are on the no site that they said, if we go down this route, everything will be horrible.

Like, people aren't stupid. People might be, I don't know, sucked into social media at times, but the overwhelming majority of people, they understand how the world works. They know it's complicated. Be honest with them. Be calm. Be reassuring. Don't talk over people's heads.

Have a conversation with them. Because at the end of the day, people just want you to. respect them. Somebody said to me this morning, you're not evangelizing. No. Do you not feel to win a referendum, you have to kind of be a little bit evangelical? You can speak with conviction without preaching to people. I don't think people in general like to be preached to. They want to be listened to. And I think it's important that if I and the government, we get this mandate, that we haven't oversold this, but also that people understand that I am critical myself of the EU. I know there's certain things that we need to get. There are red lines and people need to feel confident that if

they give me a yes, that I will keep their concerns in my back pocket and I will fight for them. And so that's why it's important. Tactics is obviously going to be a wide range of things. You need to get through to people. But I mean, my way throughout my career as a politician, both when I was in opposition, but I've also done this as prime minister, is I do these open meetings with people, these listening meetings with people, where you don't go and just hold huge speeches and tell people how they should feel, what they are really feeling,

and let me just explain to you how the world works. But you listen to them, and you get their excitements, their aspirations, what they hope that this can be, but you also get their concerns. And so I will be having these types of conversations in August. I have conviction for this. I just need people to understand.

that, you know, like I said, I have my own red lines on this regard. I am, you know, at heart, just an Icelander that wants my country the best possible situation. And, you know, getting those types of concerns, but also positive vibes from people, is helping. I guess I love this. This is such a wonderful way of talking about politics. But some people listening might be afraid that in an age which is, in many ways, an age of populism, this very reasonable, moderate, well, you know, it's not going to be perfect, but on balance, I think this is good, is very, very vulnerable to the Icelandic equivalent of Dominic Cummings or Boris Johnson coming in and hitting you with a very hard, keep control message. Or if you,

if you don't know, just say no, which was the great Australian slogan. Listen, I mean, obviously we will have slogans. There are slogans, you know, when I ran my political campaign. We had lines. You know, I have lines. My team has lines. But you also just need credibility in a situation like this. And I don't know, maybe it's a naive point of view, but this is the way I've run our politics and, you know, the social Democrats came to power after a long time. A lot of people also just want someone that they can relate to, right? I mean, being bombarded with these, like, aggressive slogans all the time is also tiresome. That is my view on it.

That might sound like, you know, if you lose, then playing the long game doesn't matter. But I am playing the long game for the country. Because I think it's a bad thing. If you oversell something and then it ends up not being what it is, people are going to be disappointed about it, right? If they think this will solve everything that we can just stop working on other things, that's not right, right? We're 75% in the EU. Obviously, joining it is not going to sink the country. and joining it is also not fundamentally going to change every aspect of Icelandic, you know, economy.

But there are parts of it, which I can speak with great conviction of, which is like, where do you want to belong? Where do you want to do business? I mean, we're going to continue doing business with other countries, but this is our biggest share. Do you not want to be in a customs union with your biggest market share when it comes to business? Do you not want the optionality when it comes to competition? Do you not want interest rates to get to a lower level where it's easier for the general consumer here to afford housing? Is there another side to that, which is that low interest rate, they can, you know, inflate equity prices? Yes.

Do you not talk about that? No. I think people want to be talked to in an honest matter. They want confidence in their leader. I think overselling things can also be an issue. Does it alarm you that, one that Donald Trump keeps banging on about Greenland, but also occasionally confuses Greenland, in Iceland as well. Yeah.

Have you guys seen the Mighty Ducks? I always get that Mighty Ducks comment. Actually, I got it from someone, I'm not going to name any names, which was the first thing that they said to me. Remember that Mighty Ducks film where people were confusing Iceland with Greenland and Greenland with Iceland? Obviously, all of this Greenland matter concerns people, right? It's a huge problem.

The fact that we have leaders in the free world talking like this is an issue. It's a massive issue. And I know Icelanders are very concerned about it. I don't think, I mean, it's seeping in in some shape or form. But I mean, Icelanders also have somewhat of a strange relationship when it comes to these mega countries or big powers around them because our history isn't war-torn, right? We don't have a history of being at war. You have an army. We don't have a military. I mean, we are a NATO country. we joined NATO with the United States of America, with a bilateral defense agreement with them.

I mean, we don't have grandmothers or grandfathers or ancestors that have, you know, fought in this way for their lives. So people have sort of a different feeling towards these types of basically, I don't want to say, border issues, right? But it is concerning. And you've also got the Russians sort of, you're writing the GIUK.

Yeah. You've got the Russian subs kind of around the place. I mean, and it's a reason for why we are, you know, staunch supporters of Ukraine. Even though they are far away, they're going through something that for a lot of Icelanders is not relatable at all. Icelanders understand that, you know, how Russia comes out of this war is going to affect the way, you know, Russia is going to deal with the rest of us, which in the Arctic and in our nearest region is just very relevant because this is where they're building up

their resources as well. So people are aware of it, even though it might not be in their DNA how to respond to it in a way. Can I bring you back to you as a person? You're a relatively recent politician and a relatively recent prime minister. And I'd love to get a sense with your fresh pair of eyes of what it's like. I mean, what surprised you about this job, how it's different from what you've done before, both suddenly being prime minister, but also the international. stuff and you've just turned up in NATO and become a kind of social media star in Turkey. What do you notice about this job? How would you explain it to your grandmother if she said, how's it different to what you were doing 10 years ago? The biggest culture shock for me when I went

into politics was just going into parliament, to be honest. Because I came from the private sector. I wasn't raised in the political setting. I mean, I am who I am because of my family and my parents and they were leaning in certain political ways, right? But I wasn't sort of raised as a young professional in that setting. And I found it difficult how slowly everything happened, right? I felt people were wasting a lot of time. Lots of very good people, smart people, doing good things. I don't want to be inappropriate about things.

But things took a lot of time. There was a lot of delaying. And I feel like once I became prime minister, you see it from a different setting, but at least you have more power to try to push things through, right? You have like the executive power to put things on the agenda.

So my, the frustration that, that may have come or arose with shifting into this type of job, it was more associated with being a general parliamentarian than being a prime minister. I think what surprised me the most, I mean, obviously I knew this, but when you're in this, in the setting yourself,

it's different, is how relevant and known Iceland is in the international world. And sort of feeling that on your own skin, you have this country of around 400,000 people in what some people might say, the middle of nowhere. And at least over the last decade, I know things have changed a lot with situational awareness, tourism, just how people are talking about the Arctic.

But a lot of people know about us, about the country, about the culture, and they respect us. And I think that's also a positive message for the Icelandic public that you can have a tremendous amount of impact, even though if you have a low population, because you have a seat at the table, because we are in NATO, because we were in the EEA. And that ties back to being part of the EU, having a seat at the table, that you can actually have a huge impact. And also people look up to us in certain ways. I mean, a big, because you were talking about NATO and social media, I mean, a big revelation. for me in a way, even though I lived in the U.S. and I'm an economist, and I know it's not very,

especially the economist or the economics profession isn't very female dominant. But just showing up to these meetings, and it's like you and two other women or three other women and the rest of it's male, how far we have come in a lot of ways in the international setting, but still in other settings,

like Iceland is far ahead when it comes to gender equality, for example. So your coalition is three women, the opposition, two of the parties led by women. Yes. Chief of police. A woman. Your bishop.

It's a woman. And the president's a woman. And the president's woman. He had the first female president before you were born. Yes. And we had the first democratically elected president in 1980. And I mean, this is a woman, Viritis Fimpoddote, that have impacted a lot of people in Iceland, a lot of young women. When I was growing up, she was president for ages.

I just assumed a president was a woman. it impacted people's identity. It definitely did, and it had a lot of effect internationally. And everywhere I go, I meet women that remember her or know her. Obviously, it makes us extremely proud. I mentioned at the start about social democracy. So there was a point where I think when you were living in London and living through the Brexit, you were down to three MPs in the parliament.

Yes. Before you entered politics, three MP. So that's kind of almost existential. 2016, the party got 5.6%. Yeah. So how did the party get from there to where you are now? And the question I put at the top, how does social democracy deal with this crazy Trumpian,

right-wing populist world that we're in? Obviously, there's a longer story than just me in this regard. It would be easy to just say, well, I stepped in and things just happened, right? But I mean, the Social Democratic Alliance was founded in 2000. It was a group of center-left and left parties that came together to try to form, like, basically a governable arm that would be an answer to the conservatives because the conservatives have always led here. A lot of people don't know this because they associate us with Scandinavia where the red block or social democrats have always been very strong.

But the conservatives were always a strong power here. Then we went into government or the party went into government post-financial crisis to clean up the mess of the conservatives of other parties. It's a very difficult time, cuts in welfare, cuts in and, social costs, and it was very difficult for the party. Just again, for internationalists, can you remind people this amazing story of the financial crisis and the Icelandic banking system and explain a little bit to people this incredible story about what proportion of GDP ended up in these banks and what it was you were having to emerge from?

Yeah, we can live through this highly traumatic experience. I mean, this is like a huge trauma trigger for Icelanders talking about the financial crisis. But we had banks that were like 10fold Icelandic GDP, right? And so this is, I'm not saying things haven't gotten better since then, but in a way, this tells you a lot how the Icelandic system works, both because of our currency, our economy, our size. If you have a trend somewhere, it becomes a mega trend here, right? And so we just had a massive blow up and then basically build up and then crash of the financial crisis here. I mean, the government took over the backs.

We had massive foreign debt here. We had the IMF come in post-crisis. And we went through also just a socially very difficult time because people lost their houses. People felt like they had been lied to. They had taken loans that were in foreign currency. They had a very emotional reaction to everything that went on. And then you had a social democratic and left green government who was trying to deal with all of this, right? something that had built up prior to their time

and sort of didn't have a full mandate to do what they needed on their own because we had an IMF program. And this is really, it affected sort of the Icelandic soul for a really long time. But we have done tremendously well since then for a lot of reasons.

We've had, you know, good growth for about 10 years now. But the Social Democrats haven't really been in power then. We've basically haven't been in power since then. we had the leader before me, Loya Enerchon, I mean, he is someone who started all this, I want to say. I mean, I have tremendous respect for him. He is a minister in my government today, Minister of Culture.

He basically took over the party in 2016 when it was at this low and it was at this very brittle point where things could have just gone way down, but he was able to keep it together in a way. But he always said himself that he was sort of a leader that didn't want to be a leader, right? He was sort of put there without, you know, maybe wanting to be there for the, you know, the longer time. But when I joined, I mean, I became a member

of parliament in 2021. And it was sort of the youth arm that brought me in. I had been an economist here. I was a chief economist at one of the investment banks here. They'd seen me on TV talking about economics and they had approached me and said, do you want to run? And at that point, I thought, listen, like I want social Democrats to have a credible economic argument. I was sick and tired of center-left parties being associated with just like pure activism and asking for things that might not be pragmatic. I'm not saying that's a fair description of what it was. But when the Social Democratic Alliance was at its worst place, it was trying to be more

left green than the left creans, trying to be more parity than the pirate party. It was trying to be everything that they were not. And so we basically started this project of restructuring the party. And that is, for example, where your book came in, which I'm sure you're very happy to hear. Very. Yeah. And you learn a lot from new labor. We did learn from new labor.

I mean, in our own words, right? I mean, it was very important for us to start running after every news story, to start, you know, being on the polarized argument of everything. Remember what core social democracy is. Focus on economy, understanding the budget, people. can trust you as a safe pair of hands, but then also be like highly political on welfare matters, on housing, and don't get dragged into the trenches on every single matter that comes in, and then just be well prepared.

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Sometimes Spider-Man has to do the hard thing. That's my responsibility. Talk to Banner? I didn't know you could get that big. Spider-Man, brand-new day in theaters Thursday. Size and how it feels to do politics and Iceland. So your population is almost exactly the population of Cumbria, where I was a member of parliament. And 500,000 is the number of people in Cumbria County Council.

And of course, in Cumbria, what was very... striking is everybody knew each other. Everybody had been to school together. Everybody knew everybody's auntie. There was almost nobody that wasn't part of her. Presumably, a nice than that's true. So a lot of these great figures that you're talking about who formed your party or a prison, they're also kind of neighbors and people that you've known all your lives, aren't you? It must feel like that or not. Am I exaggerating that? I mean, yes and no. A lot of people are familiar with each other here, I would say. It helped me. I mean, obviously there's this going to be a personal preference for people how people it's it's good to have people with experience

and ties and also good to have fresh pair of eyes right it helped me coming in that i wasn't deep in that right i wasn't raised in the party i wasn't raised in the youth arm i'd always been a social democrat my parents i mean they're not active in the in the party but you know they met in sweden you know they were left leaning i mean i'm just raised in that type of household so it became or it was very natural to me. But I spent like a lot of my formative years in the U.S. I lived abroad. I came back home. I wasn't necessarily tied into like a clique. And it helped me come in because I wasn't, I didn't say yes to everything people said. And I asked critical questions, you know. I wanted Iceland to have a social democratic party like they had in the Nordics. And I didn't understand. And I, you know,

I'm still of this opinion that this should be the largest party here, which it still is. And it's been the largest party since I took over the party, which is a huge achievement for us. I mean, this was like a historical thing to bring social democracy to this place. Because at core, there's a lot of people here that have a social democratic nerve. But it did help me that I wasn't tied to everyone in the party. And so I didn't have to just feel bad for people when I said, this is a bad idea. Where are you doing things like they are? But being in a small place like this, it allows you to do things that are more difficult in

larger countries, which is one of the tactics that we used, which is just before I took over his leader, I did these meetings around the country where I would, I'd go to all these places, towns, didn't matter the size, and I would host these open meetings and bakeries and in coffee shops and people would just show up. And in some meetings, like two people would show up, and I would just have an excellent conversation with two people that I had never met. In other places where the population was maybe 100 people, like a quarter of the town, showed up. It was huge, right? And people, there would be these stories of me showing up at these random places and all types of weather. And you can do these types of things in a small community

like this. And I really feel like it's your duty to do that. If you have this type of closeness, why would you just put a post on social media? Like, why would you just use social media when you have the closeness that you have in this setting? But people weren't doing it. Anastair was very interesting this concept of social democracy and what it might mean in an age. How would you define social democracy? What does it mean economically? What does it mean politically? What is the vision of a social democratic country?

I mean, social democracy, I'm sure, is a lot of different things to a lot of different people. But for me, it's understanding that markets don't always work and that the government isn't in the way, but it's there to help people be free in their lives. I am a huge proponent in talking positively about the government. That does not mean you have to defend every system there is. And I've always said this to my people. We don't defend all the structures, right? You are not there to defend the system. You're there to work for the people.

But I believe that there are aspects of our population, of our country, of our people that will never be able to get into the housing market in sort of the market system as it is. they're going to need some help in it. I also believe that, you know, I am where I am, not just because I'm a smart and good person and I did better than others and I just worked harder,

but because there is a system that raised me, right? I was, you know, part of a schooling system that was publicly founded. I was part of a healthcare system that was publicly founded. That doesn't mean I don't believe in hard work, but I believe in society. Then there are variants to like how much you should be spending

and how much you should be. putting in this and that, but I don't believe in every man for himself. And for me, that's the core of social democracy. And I believe in respecting people's situation in the sense that, you know, people are born not with different types of freedom, if I'm honest about it. And I know this from my own family and my own surroundings that you can have the same exact upbringing, but you're born with certain talents. And I think the government should be there to help you basically get the best out of people. Do you worry that, let's say you do win the referendum and that you do end up eventually during the European Union, I'm passionately anti-Brexit and still think that Britain's

made a terrible mistake and one day we've got to fix it. But even I kind of worry, look, Le Pen or Bardella could be president in France. The AFD are on the march in Germany. You've even got, you know, the Sweden Democrats, you've got the true Finns. You know, even in Scandinavia, you've got a kind of populist right that feels like it's on the march. We've got Trump in America. about the sort of Europe that might be being born, even as you here are winning with social democracy? Yeah, of course I do. I think it's concerning.

I mean, we see these, even in Iceland where politics has usually been on like a very tight spectrum. If I'm being honest and fair, it hasn't been that far between conservatives and the left side. On certain areas, yes, for sure. The way people talk about things, yes, for sure. in actuality, no. Obviously, I worry about this. Do I have a solution to it for all of Europe?

No, I don't. But I do think this means that also the European Union and the leaders within the European Union now, they need to understand that the European Union also needs to change the way it does its democracy, the way its policies work. Because if not, you just get this more pushback, for example, from these anti-EU parties, right? because I think there's a lot of what's going on in international politics today, or even, I mean, at the end of the day, these are domestic politics that are being pushed into the international arena. It's happening because domestic politicians didn't look or listen to the frustration of people. I mean, I truly believe as someone that lived for a while in the United States during the Obama years, and I mean, yes, I have friends in an elite university, but I also have friends outside of that spectrum and having not being raised in that system, like I, I,

I feel like I have some understanding of it. I mean, I do think that people, for example, in the Democratic Party in the U.S., they didn't listen to people's concerns. That's one of the biggest reasons why I drove politics in the Social Democratic Alliance like I did. Respect people. Don't just write them off. Don't just tell people like you're deplorable. Yes.

Don't use that word about people. Like you are in politics for other people, not for yourself, not to tell people how smart you are, not to just convey your best opinions and, you know, because you like listening to yourself. A lot of people that are upset in the U.S., in France, in Iceland as well, feel like the system hasn't worked for them. A lot of them are old labor or social democratic or welfare-oriented people that feel like the system isn't working. So the same goes for these European leaders and for the EU as a whole, that they have to watch

out that they don't become too basically detached from ordinary people. Why do you have this American accent, not a Manchester accent? That's a long story. Hey? Come here. It really bothers Alastair. I was talking about my mom yesterday and he was like,

my mom. Immigration has clearly become, I guess, one of the very biggest drivers of the rise to the far right in Europe and indeed in the US. How do you think the EU in particular should be thinking about immigration, given that it's so central to the debate in places like Germany and France.

Oh, that's a really big question. The EU as a whole. I mean, I can tell you how I'm thinking about it in Iceland, and then we can see if we can move that over to Europe. I think because I was just saying that one of the issues I think with politics is that you had parties on the center left that didn't want to listen to certain concerns. That doesn't mean you run into the far right or that you just follow the far right policies. But you have to understand that a lot of these frictions come up because people that are in low-income positions, they feel like they're being left behind, right? And they're just looking for someone to blame. We've had a huge change, for example, in immigration in Iceland over the past 10 years. And this could be tied to the EU vote or the Brexit vote, you know, the same way that you felt

about it because a lot of people, they associate immigration with this discussion of asylum seekers like they do in other parts of the world. But this is a very small proportion of foreign people that live here. Like, we went from under 10% in around 2016, 2015 of foreign-born population to just under 20%. So a doubling in seven years. And the majority of that population increase, which was driven by basically people coming from abroad, was EU immigration because we were running our economy so hot based on service sectors that we were just getting people from abroad to work these jobs. And so in modern life, and I'm sure that's what was happening in the UK as well, but I'm not going to put too much weight into that. There's this friction between

people wanting growth. They want easy access to all these things in modernity. they might not want those jobs themselves, but they want the services associated with them. You import labor to get these people in. A lot of the companies, even though they're good people working at them, they don't think about the social aspects. They just look at people like widgets. I want someone to do this job,

and then they don't think they drive on my roads. They're using our health care system. You know, they might have social issues or kids that might need extra help because they don't have the language. Yes, they're paying taxes, but for a small country that grows this fast, it complicates things, right?

And so people out there, they feel like things have changed massively, but they don't have control over it. And that is a big driver of the immigration debate here, even though people associated with asylum seekers, it's just that the economy is changing really fast. And, I mean, in the EU, obviously, you've had intra-EU immigration.

I mean, and people have... gotten accustomed to that, but that's also led to issues within the EU as well. My opinion on what you should do with immigration outside of EU, I mean, it's a complicated matter, I will say, but there's, it's just, there's friction between what type of life people want to live, and who does the job that allows them to do that, if I'm being honest about it. I know you don't want to talk about the politics of another country. I get that, but what is the sense of Britain at the moment? We're meeting at the time that we're changing our prime minister again, seven in a decade. It is insane. Seven in a decade. And Prime Minister,

none of us can really remember what Kirstama did wrong. Excuse me, Rory. You've criticized him a fair bit when he was there. But we've all forgotten now. We sort of drifted on. Now you just want him back. We can't even really remember. It's a very strange phenomenon. I mean, we're getting rid of these people, but we can't really put our finger on exactly what it is that they did wrong. And we just sort of drift off to someone else. I mean, this is yours to answer, really. But Britain generally, I mean, we do come across at the moment as a bit of a basket, seven in ten years. Yeah. Now, I think it's largely driven by Brexit, but not exclusively.

But also, I think it says, I just think if it says something about how demanding the public are that somebody can win a landslide election two years ago and is now gone. I do. I definitely think we are all living in a different environment. I mean, I think about this occasionally. I mean, the other day, one of our former prime minister has passed away. And because he was a prime minister, we did like an official funeral. And so I was a bit invested in that. And it made me think because there are these pictures on the wall of the government office's house that show like there's a picture of him and all these previous prime ministers and it shows how long they were in power.

And he was in power for 13 years. And I remember looking at that photo just before or around the funeral and I was like, 13 years. Like I've been in this job for 18 months. This like seems impossible. Not because I. I think so little of myself, but just because the environment is really demanding. And I was having this conversation with one of the people that that had been working in the government for a while.

And he had told me the story about how he had never really met this prime minister for one point. He, this person used to be a police officer. He had gone to his summer house to give him a message because he didn't have a phone at his summer house. And that was the point where it was like, this is why this guy was in power for 13 years, right? Because, Because today, I mean, you're constantly connected. You're constantly being pushed into a fresh new cycle. I mean, even international politics at like a very high level is being driven by tweets and like, you know, you have to respond right away.

And I do think that is a setting that is tiring. It's different to govern in. Can you fight back from that? I mean, I don't know. But at least my way of trying to do politics is trying to slow things down a bit, not to run my whole campaigns or the way I do business or govern through social media, but actually just going out and connecting with people, trying to have conversations with them. I do this still while in office because I do think it helps.

What is happening specifically in the UK? I cannot say, but I mean, obviously it's hard to see things moving forward if you have someone in the job for a year at a time. It takes probably about 12 months to just get affiliated with things. I mean, I am right now, like in the process of closing or we've closed our deficit, the deficit of the previous government, post-COVID deficit. And it was very difficult because in the last few months, we were just discovering things that we didn't know we're there. So it just takes time. Are there any things that you think that people don't understand about being a head of government or head of state?

I mean, something that you pick up when you go to NATO meetings and you're seeing prime ministers of Greece. or Cyprus or Spain or presence of France. What is it that strikes you as unusual about these jobs and these people? It's a very interesting question. To be honest, I don't think that much about it when I'm in this role. I mean, obviously you think about, oh, I'm a prime minister and I'm meeting other prime ministers, but they're also just people, right? I mean, what you do realize is that people want to work together,

but it's still also, you know, everyone is just working for their own. country at the end of the day, right? They're trying to get the best deal for themselves. And I think it's important also for people out there for Icelanders and other people in other countries to realize that, you know, it's, people might be nice to each other, but they're still just thinking about their own interests. So like getting people to come together and find a solid solution is not always an easy situation to be in. I don't know. I don't really know how to answer this question, Rory, honestly. To me, these are just people. I don't really think about them. Oh, this is like the prime minister of that. I mean, I am always just very proud when I go, not of myself,

but of my country, that you go to these things. And we have a seat at the table, to be honest. And it's not a given. It's not a given in today's world that we have a voice and that people listen to us in this situation. It's not a given that you are an independent country, even in today's world, right? And so I do think that is sort of an important message to bring to people. I mean, people are good friends, you know, they do okay together. But I mean, maybe also like a good, nice backstory to all of this is that a lot of the time, even people that are pretty aggressive towards each other publicly are quite nice in person, right? A lot of it's also just politics for their domestic crowd at the end of the day. We've got to understand why, I was

I went swimming this morning with one of your best-known journalists who's lived in Iceland, knows Iceland inside-out, did not know that you'd been to school in Manchester. Oh. So I think having raised it, we have to know why did you end up? In Manchester. My mom was a GP, a general practitioner. I mean, she just wanted to give us a language. She had already finished her studies.

She wanted to take a break from working in Iceland. So she applied to work at a clinic in Manchester. And she moved all of us to Manchester for 18 months. You were nine? I was nine at the time. And it was... So you were there for the election of the first election of New Labor and you were there for Brexit in our country.

Yeah, I remember this very vividly. I wasn't necessarily following politics at the time. I can, you know, if I'm being honest. But I remember this very vividly because Princess Diana passed away that summer when I first moved there. And this was on the news everywhere. And it was such a traumatic event for everyone and for myself as well. I remember this very well.

And obviously, these were the golden years. Yes, for New Labor, also for Manchester United at the time. I know you might not want me to tell you this, but this was a straw. Well, it was my team at the time at least. But it was one of the best things my parents did for me. And this is very descriptive of them, right? They did everything for us. they put all their money into a grammar school so we could go to a good school while we were there

and then we were sitting in these garden furniture for about a year because they were living in a shitty rental for 18 months so we could go to a good school. The state schools were very good as well. I'm sure they were great, but you know they didn't want to take any chances. They were taking us out of our comfort zone. You know, they did what they thought was best for us. Okay. But since then, I've been in a public school.

I know. Well, listen, thanks for all your time. It's been great to be here. It's just so nice being in a cold, wet country in the middle of our he wave. Yeah. Love of the weather. It's been drizzling quite a bit, but it's nice.

Thank you, Rory, as well. It's great to see you. Love it to see you. Thank you again. Bye-bye. Alice, tell us first what it's like being actually in Iceland. I mean, that's one bit we didn't really get out of this whole thing, is that you're there on the ground. And you went for a swim this morning.

I went for a swim. I mean, honestly, Roy, it was so nice getting off the plane, walking through the airport, and it was cold and drizzling. And it just felt like. It felt like Britain in the good old days before climate change. And tell me, listen, I'm obviously obsessed with this fact that basically the country's got a population smaller than Cumbria. So I keep thinking leader of Cumbria County Council. But it's not quite that because, of course, she's a much more sort of sophisticated international player than my dear friend, the leader of Cumbria County councillors. So it's interesting, isn't it?

Very small countries, which are also sort of international players. It's not quite right to think of it in terms of a British county. No, definitely not. And also because it is strategically so important as well. It is, you know, the American Russia, I can't quite get my head around the fact that they don't have any military at all. They have a Coast Guard, but they don't have a military. And it was interesting. I was talking to somebody yesterday who said, we don't feel threatened.

We've not had a history of this. You know, she was making the point, now we don't have parents and grandparents who talk about living through a war. Now, I wonder whether that makes them a little bit complacent about some of the geo-strategic stuff. I'd be terrified because I'm afraid, although nobody in the past has wanted to gobble up Iceland, it doesn't seem impossible that somebody in the future, whether a Trump administration or indeed Russia might think that this is a really important strategic base. I mean, presumably in all that stuff you were doing around the Arctic and geostrategic, Iceland does matter, just as Greenland does. Well, I was saying about, you know, Duke, the Greenland, Iceland, UK corridor. It's like, it's a big thing.

And when we did the series on the polar war, you know, Iceland does figure and all that. But they're very, they seem very, very relaxed about it. But the reason why, by the way, they brought, we didn't really get into this. Because although she was, I thought, you know, it's pretty obvious what she does think about Trumpism and Trump. But the reason they brought forward the referendum was actually in large part, I think, because of the Trump, Greenland threat. And so, but I think what's really interesting about being here, you feel the sense of it being an island very, very quickly, way more than you think you do with Britain. And that may be to do with the population, because it's just a big country. It's not as if it's his sort of tiny.

It's not like Singapore. She talked about it being sort of almost like a city state. It's a huge country. But with 400,000 people. The referendum thing is going to be interesting, though, because I think that the polling is very, very close. You know, she's the Prime Minister, she's leading a three-party coalition, all women. The second party is headed by the foreign minister, and that party basically exists to fight for European Union membership.

They were the ones that, you know, really pushing for this. And then the third party is a kind of left-wing populist party called the People's Party, which is led by this extraordinary woman who's, I think, registered blind, and has come from, came from a very, very poor background. So you've got these three women who are holding the government together. whilst having this referendum campaign. But I think you sense from the way she talked about the referendum campaign, it feels very different to Brexit.

One, she's not evangelising. She's basically saying, well, maybe, and there's a bit of this and there's a bit of that. And secondly, it's not to join. And I think their big worry is that the opposition, the no campaign do manage to sort of persuade people. It's about joining. And the last poll I saw, 14.6%. percent undecided.

That's quite high with... Well, it's amazing. I mean, I'd be fascinated to see what happens. I'm afraid I've got a slightly gloomy impression from that. I mean, if they don't win this referendum, if they don't go forward to exploration, I'm afraid I might be tempted to say that this style of very, very reasonable, moderate, centrist on the one hand, on the other hand, campaigning may not actually be the thing. I didn't really feel, I mean, I, you know, I get she doesn't want to evangelize, she doesn't

I'm a little worried. The only thing I say about that is I think genuinely she did become leader and win the election sufficient to put together the coalition by that style. And, you know, this sort of sense of just, I think she's going to have, I think she can have like two days holiday and then spend the whole of August doing that. And of course, the thing is, even though it's a big country, 400,000 people, you can get round, you can get round. She's clearly going to do an awful lot of meetings.

through the month of August. But I think she's really impressive. I spent some time with her last night, and she's just, she's very, very, I think, sharp. And I think actually the fact that she did have this fairly non-political, not apolitical, but not very political upbringing. And then working in a kind of, you know, investment bank

where I imagine most of the people were on the right and not of social Democrats at all. But I think that she came into politics with a really fresh eye. And I think she's still using that fresh eye. She's a little bit reminiscent. It's maybe a bit unfair, but of Maya Sandu,

the president of Moldova, who we interviewed, perhaps even the Prime Minister of Greece, all of whom spent quite a lot of time in the US, worked as economists from the financial industry, came in back to these relatively small countries with a big international hinterland. But what was your overall impression?

Well, I think she's wonderful. And I also wonder whether to reinforce, our new prime minister's vision of the world, whether she isn't really a clue to why devolution works that actually, interestingly, the theory in Britain is that unitary councils should be about the size of Iceland in population terms. We're aiming for kind of 450,000. And I can believe that. I mean, I absolutely, as a Cumbrian MP, can relate to going, you know, I try to get to every village in Hamlet in the constituency and sit in the pub and meet a dozen people. And that's where I feel democracy probably can beat populism. I mean, that's your one big chance. She probably is right

that she doesn't have to get totally caught up in social media campaigns if she can genuinely sit with people and be reasonable. Whether that suggests, I'm tempted to think it does suggest that maybe Andy Burnham's right that actually the saving of British democracy is to break it down into those smaller chunks much more, where people really can feel that they know their leader and relate to them. But of course, she's got this other advantage, which is she's it particularly international, high-quality, super-smart, sophisticated leader, which we often don't end up having at a local level in Britain. Yeah.

Your point is well about the, you know, she's, so Iceland is small population, but with all the infrastructure of a big government, the leader of the Renew Party that I mentioned, she's the foreign minister, so they have the foreign ministry. She, you know, she went, the Instagram thing you mentioned, when she went to the NATO summit in Ankara, when she led. here, she had 19,000 Instagram followers, and by the time she got back, she had 275,000. So she has to have all these relations. She was telling me last night about a panel that she did, and the panel was about future of social democracy, centrist politics, and the panel was her,

Kirstehrm and Mark Carney and Albanese. And I think she does want to be part of that debate about, you know, world social democracy, not just Iceland, but right now in the middle of a referendum campaign, obviously she's got to get the focus on here. But no, I think she's, I think she's super smart, really impressive. But I think the referendum will be tough. I think it'll be tough. Yeah. Well, let's watch his space. And thank you, Esther. Thank you for going to Iceland. And well done on writing the book that inspired her to come on the podcast. Winners and how they succeed. I'll have to put her in a future edition, I fear. No, I don't fear it. I think it was a very good thing to do. Knock out some of the people who maybe reputations are for the little bits.

What great winners they were. Yeah, she's definitely a winner. See you soon, bye. You know,