Chilly reception for Icelandic venture

PUBLISHED : Tuesday, 13 September, 2011, 12:00am
UPDATED : Tuesday, 13 September, 2011, 12:00am


In an icy, windswept corner of northern Europe, remote farming communities are puzzling over the appearance of the most unlikely of visitors - a Chinese tycoon offering millions of dollars to buy up a vast chunk of wilderness and build an eco-tourism resort and golf course.

With its volcanic rock and mercilessly short summers, the plan by former Communist Party official Huang Nubo to turn a 300-square kilometre stretch of barren, snow-blasted land in northeast Iceland into a tourist resort seems foolhardy and eccentric at best.

After all, can he really expect up to 10,000 guests a year to make a 21/2-hour journey by small plane from Reykjavik to northern Iceland, which is followed by a drive over rugged roads to visit Grimsstadir a Fjollum - a destination that can, not unfairly, be described as forbidding and desolate?

Huang's plan - described by one ecologist as 'lacking all sense and logic' - involves paying nearly US$9 million for the land and investing more than US$150 million more to develop a hotel and resort with attractions including horse riding and hot air balloon rides.

In a country desperate for foreign investment after being left cruelly exposed by the 2008 financial crisis, Huang might have felt justified in expecting his bizarre but lavish proposal to be viewed as a welcome ray of sunshine in glum economic times.

Instead, the response to the idea of a Chinese multimillionaire buying up what amounts to 0.3 per cent of Iceland has been decidedly chilly in parts of Reykjavik, where suspicions are rife that the project is in fact a cover for Chinese strategic development.

Some politicians, pointing to a series of unlikely recent investments in Iceland by China, believe it may be part of a bigger move by Beijing to get access to trans-Arctic shipping lanes that could soon open as polar ice caps melt.

And rather than a white knight helping the battered country of 320,000 people get back on its feet, Huang has instead found himself pilloried and jokingly compared by one commentator to Dr No - the James Bond villain who tried to plot world domination from a secret island lair.

For the past fortnight, Huang - listed by Forbes as the mainland's 161st richest man with a fortune estimated at US$890 million - has been battling to save his project amid mounting concern in Iceland's capital where, as a non-EU resident, his application to buy land must be approved by the government.

In interviews aimed at shoring up support, the flamboyant Huang - a self-proclaimed poet and explorer who has climbed Mount Everest and trekked to both the North and South Poles - laughed off suggestions that there might be some ulterior motive for his project.

He told one newspaper that he fell in love with Grimsstadir a Fjollum when he went there last year to judge a poetry competition. 'I love wild, barren places,' he said.

Asked about the suspicions of Beijing involvement, he said: 'I'm just a businessman. Why does everyone think I have the government at my back? It's true I have a government background but I didn't want to be a bureaucrat.'

In another interview, Huang said he feared officials in Beijing rather than Iceland might pull the plug on his project.

'The government may say, 'Please do not go, do not make trouble',' he told Reuters. 'Maybe they will think, 'Do not arouse any unhappiness for Sino-Iceland relations.' Then I will just give it up.'

Huang's motives for investing in Iceland may well be innocent. But inquiries show he has close ties to a senior Icelandic diplomat who believes that melting polar ice caps will soon open a vital new shipping route linking China with the North Atlantic.

Ragnar Baldursson, who was Iceland's official representative on the Arctic Council for four years and is now deputy head of mission at the Icelandic embassy in Beijing, has been friends with Huang since they went to Peking University together in the 1970s.

In April, they went on an expedition to the North Pole, shortly after Baldursson appeared at a forum in Beijing where he talked about the possibility of a new trans-Arctic shipping route from China to the North Atlantic.

The timing of Baldursson's remarks will only heighten suspicions that the tycoon is buying the site on behalf of Beijing as a first step towards establishing a foothold in Iceland to support commercial and military shipping.

China last month put its first aircraft carrier to sea and has invested heavily in submarines.

The country is also believed to be close to deploying the world's first 'carrier-killer' ballistic missile capable of sinking large enemy ships at a distance.

In Iceland, meanwhile, Chinese investment has surged since the economic collapse of 2008, resulting in a succession of surprising investments that some observers believe may together be attempts to gain a foothold in the country when polar shipping routes open.

One company, the Hisjang Group, has asked to export 100,000 tonnes of water a year from Langanes village, where there are plans to build a port to service trans-Arctic vessels.

A Chinese research institution has meanwhile approached the University of Akureyri in northern Iceland with a request to set up an unmanned research facility to study the Northern Lights.

And last year, China bought up an office block for a new embassy in Reykjavik which will be the biggest foreign embassy by far in the Icelandic capital when it opens later this year.

However strongly Huang protests, some commentators cannot bring themselves to believe that he is not somehow acting on Beijing's behalf.

While Iceland's Prime Minister Johanna Sigurdardottir said the country welcomed the proposal, Minister of Interior Ogmundur Jonasson was distinctly cooler, saying: 'I want to take care of Icelandic interests, to guard our country and not take anything at face value.'

Speaking from the Icelandic embassy in Beijing, Baldursson said he was convinced that his friend only wanted the land for eco-tourism.

'I have known Huang Nubo for 35 years and we have kept in touch throughout the years since graduating,' Baldursson said.

'He is quite romantic, and he values tradition. Above all, he is a man of his word.'

Suspicions about a government role in the purchase are partly rooted in Huang's own background and the fact that he worked for nine years in the propaganda department, rising to the position of section chief, before leaving to set up his Zhong Kun real estate empire in 1990.

In recent times, he appears to have built strong ties with some Icelandic officials.

His expedition to the North Pole with Baldursson in April included another well-connected Icelandic friend, Hjorleifur Sveinbjornsson, Huang's former room-mate at Peking University.

Sveinbjornsson is the husband of a former Iceland foreign minister and mayor of Reykjavik, and is said to be acting as Huang's informal representative over the land deal in Iceland.

The old university friends, along with the sons of Huang and Sveinbjornsson, were part of a successful eight-man expedition called the Arctic Fox Mission, which ended with a poetry competition in honour of team leader Huang at the North Pole.

A popular blog in the Icelandic capital called The Reykjavik Grapevine claims Huang was loaned a ministry car by Foreign Minister Ossur Skarphedinsson to tour the country during one of his visits last year.

But it was the words of Baldursson at the forum in Beijing on the subject of low-carbon cities held shortly before he went on his North Pole expedition with Huang that touch more keenly on the ulterior motive many sceptics fear lies behind Huang's proposed investment in Iceland.

There, Huang's friend spoke enthusiastically about the possibility of an Arctic shipping route and said there would be great changes because of decreasing ice and technology for sailing through ice.

'We believe that in the future there will be a new shipping route that will open between the Pacific Ocean and the North Atlantic, and that would shorten the distance between China and the old economies around the North Atlantic Ocean - the US and Europe,' he said.

'And for developing that shipping route, that would also mean the possibility of co-operation in the future. That is one field where we have already started discussions with China.'

However, another friend of Huang, who asked not to be named, insisted he had no interest in the idea of the Arctic shipping route.

'When this matter is discussed, he just closes his eyes,' the friend said. 'He has no interest in it whatsoever.'

Others are not convinced. One veteran Icelandic observer, Uffe Ellemann, wrote on his blog: 'It reminds me of the plot of a James Bond movie - a mysterious Chinese tycoon suddenly pops up and buys a huge piece of land in the middle of nowhere.'

The weeks ahead will determine whether the people of Iceland dare say 'yes' to the man some mischievously have portrayed as a modern-day Dr No - and whether Beijing allows him to continue with a quest that could inject an unwelcome chill into Sino-Icelandic ties.


The ranking for Iceland last year in the list of most developed countries in the world under the United Nations' Human Development Index