Streets ripped open by a gaping fault, fractured sections of earth, houses cracked. The damage caused over the past ten days by hundreds of earthquakes in the small port of Grindavik, in southwest Iceland, is already spectacular. Although the town's 3,700 inhabitants were evacuated on November 11 (they represent 1 % of Iceland's population), their village, located on the Reykjanes peninsula, remains threatened by a volcanic eruption. On Sunday, November 19, the local Meteorological Office estimated that an eruption was likely in the next few days.

Icelanders are no strangers to such disasters: situated between the North American and Eurasian tectonic plates in the North Atlantic, their island boasts some 30 active volcanic systems. In March 2021, lava erupted on Reykjanes, near Mount Fagradalsfjall, followed by two further eruptions in August 2022 and July 2023. "But they occurred in remote areas without directly threatening a city, unlike today," explained Michel Sallé, Ph.D. in political science and co-author of "Histoire de l'Islande, des origines à nos hours" ("History of Iceland", Tallandier, 2018). "The greatest uncertainty is what consequences a new eruption could have: these would be very different, depending on the location and the trajectory followed by the lava."

Grindavik has already suffered its first damage. "The special disaster fund has 50 to 60 billion Icelandic kronor [€325-391 million] at its disposal, insured to provide a similar amount in addition, and the state will guarantee loans if further needs arise," explained Thorolfur Matthiasson, an economist at the University of Iceland. This will cover a large part of the reconstruction of homes and infrastructure, which will take months. The government has also submitted draft legislation to guarantee the wages of Grindavik workers for at least three months.

For Iceland, the situation of this fishing port brings back memories of January 23, 1973, when the Eldfell volcano erupted during the night on Heimaey, one of the Icelandic islands in the Vestmann archipelago. Lava flows threatened to block the harbor entrance and destroyed many houses. "The cost of repairs amounted to 5.5% of the country's gross domestic product," Matthiasson noted. Some 800 of the 5,300 inhabitants never returned to Heimaey. And Icelandic inflation soared from 25 % to 42 % between 1973 and 1974, fueled in part by pressure on the labor and construction markets due to rebuilding housing. "For the same reasons, the work in Grindavik could also create inflationary pressures in the months ahead," Matthiasson commented.

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