Arctic inroads

Why Iceland killed a Chinese investor’s theme park dreams

Arctic inroads

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Iceland couldn’t make up its mind on China last year. Its politicians have eagerly welcomed heavy doses of Chinese investment to remedy economic woes. But the small island country in the North Atlantic has balked at a Chinese investor’s large-scale land buyout on the grounds of a national security threat.

Huang Nubo, chairman of tourism property company Zhongkun Investment Group, proposed in August 2011 to invest US$200 million into Iceland’s tourism sector. The bid sounded harmless enough. The entrepreneur planned to build more than 100 villas on a 300-square-kilometer parcel of land and eventually a “Nordic holiday resort platform” that would include a Hans Christian Anderson theme park in Denmark. Huang pitched himself as poet and longtime friend of Iceland, having roomed with an Icelander in college. His proponents said he could do no harm.

But the dream for the Scandinavian getaway ended early last month, according to an Icelandic newspaper interview with the country’s interior minister. The letdown was a gradual process. The government in Reykjavik first denied Huang’s purchase in 2011. The two parties then struck a leasing deal last summer, but the government has since rejected that as well. “I don’t know how clearly this has to be said in order for the man to understand,” Minister Ogmundur Jonasson told DV, a local newspaper.

Iceland was surely paying attention to other so-called China security risks as Huang attempted to buy 0.29% of the nation. A US congressional committee found Chinese telecom companies ZTE and Huawei to be security risks due in part due to their executives’ connections to the Chinese military. The Canadian government deliberated for months on whether China National Overseas Oil Corporation’s (CNOOC) takeover of Nexen posed a threat to resource security before approving the more than US$15 billion deal. 

Icelandic politicians cited similar concerns for Huang’s massive land purchase. Although he had no military ties, critics cited the tycoon’s former position as a section head in the Communist Party’s Propaganda Department. The remoteness of the parcel, coupled with the abundant natural resources in the region, alarmed some critics, as did its access to deep-water ports. Experts have clearly noted China’s growing interest in Arctic oil, minerals and shipping lanes.

“[Iceland] is seen by some as a future hub for Chinese shipping activity in the region,” said Damien Degeorges, a researcher at the University of Greenland. China has focused on establishing good relations with  smaller Scandinavian countries, namely Iceland and Denmark, he said. This is in part aimed at circumnavigating Norway on its inroads to the Arctic, after the Norwegian-sponsored Nobel Committee awarded a jailed Chinese dissident the Nobel Peace Prize in 2010.

Huang said he would renounce access to the parcel’s water resources in response to the criticism, but in the end that wasn’t enough to sway politicians. He finally seems to have given up on the remote volcanic island. His last word on the matter was that Iceland discriminates against Chinese investors.

One Icelandic blogger keenly noted that all entities from outside the European Economic Area, which bundles Iceland and Norway with the EU, will face harsh investment laws when trying to purchase large swaths of land in the country. Perhaps Huang’s dramatic failure will teach future Chinese investors that their proposals should be more modest if they are to make inroads into foreign lands.