Reykjavík, Iceland - On a cold, windy December afternoon in the southern Icelandic town of Reykjanesbaer, this former NATO airbase looked like nothing more than a huge warehouse from the outside.

But the barbed-wire fence surrounding it and surveillance cameras atop its gates betrayed its importance.

This facility, which began operating in February 2012, is one of several data centres in Iceland. It's run by Verne Global, a company that allows its customers to store data on servers here.





Tate Cantrell, the company's chief technical officer, explained why Verne Global favoured this tiny Nordic nation of all places. "In Iceland, you've got this ideal situation: energy, excellent connectivity for data, and a constant cool climate. So Iceland was an obvious choice."

Iceland's abundant renewable energy from geothermal and hydroelectric plants means the costs of running these data centres are low. And the Gulf Stream current keeps the temperature in Iceland more or less stable throughout the year, avoiding the need to provide cooling for the servers and computers. Former NSA contractor Edward Snowden in exile in Moscow [AP]

widespread surveillance by the United States' National Security Agency (NSA). Data centres based here have another advantage, too: Iceland is in the initial stage of implementing the most progressive data-privacy laws in the world, a major selling point especially after whistleblower Edward Snowden's revelations regardingby the United States' National Security Agency (NSA).

A recent paper published by Verne Global stated that Iceland was "uniquely positioned as a data privacy haven" because of the new regulations.

'Switzerland of information'

The International Modern Media Institute (IMMI), a non-profit organisation, has played an instrumental role in designing and promoting the legal framework for Iceland's new data privacy laws.

Following the country's 2010 financial crisis, mass protests broke out against the nepotism, corruption and lack of transparency exposed by the collapse. A group of Icelandic activists began working on an initiative to create the world's strongest media and free speech protection laws, as well as a state-of-the-art privacy law.

Birgitta Jónsdóttir is IMMI's spokeswoman and now represents the Pirate Party in the Icelandic parliament. She met Al Jazeera at her office in Reykjavik and explained that one of IMMI's goals is "to allow people working on human rights or investigative journalists, as well as people who want to host data on a massive scale, to be free from worrying about privacy issues".





She added: "Iceland should become for information what Switzerland is for money."

In 2010, the IMMI, then known as the Icelandic Modern Media Initiative, proposed a resolution to change Icelandic law to ensure data privacy and freedom of speech. The proposal includes protection for whistleblowers and journalists' sources, as well as an "ultra-modern Freedom of Information Act" based on elements from existing laws in Estonia, the United Kingdom, and Norway.





The data centres would benefit from a clause in the law that ensures the protection of intermediaries such as internet service providers and telecommunications carriers.





Decline in information freedom?





The resolution was passed by the Icelandic parliament that same year, and is now being implemented into law, piece by piece.





"A bit more than half of what IMMI proposed has been made into law - somewhere between 50 and 70 percent," Jonsdottir said.

Adalheidur Amundadóttir stands beside a poster of Chelsea Manning [Felix Gaedtke/Al Jazeera]

Adalheidur Amundadóttir, IMMI's legal advisor, said she believes that Iceland already has some of the best laws in the world when it comes to protecting journalists' sources.





Nevertheless, she explained, "The idea behind IMMI is that we should always have the best possible laws at any given time - so we need to constantly be upgrading and amending laws."

Data-privacy laws ensure when a journalist is working on an investigative story, his or her data and sources remain protected - and that a government authority or judicial system will not have the right to stop the publishing of the ensuing report.





Despite the new measures, Icelandic journalist Jón Bjarki Magnusson said he thinks his country still has a long way to go when it comes to media freedom.

"IMMI for me is a bit like a fairy tale, reality on the ground is different from the idea," he told Al Jazeera at a café in downtown Reykjavik. "I like the idea but Iceland is far from being a haven for free journalism."

Earlier this year, Magnusson worked on an investigative story for DV newspaper, in which an assistant to Iceland's interior minister was identified as being under police investigation. Even though it was true, the official filed criminal libel charges against Magnusson and a colleague, Johann Pall Johannsson, demanding a sentence of up to two years in prison.

Watchdog group Reporters Without Borders (RSF) issued a statement condemning the steps against the reporters. The group said freedom of information in Iceland has declined over the past two years, citing the libel case and budget cuts for public broadcasters. Iceland's abundant renewable energy from geothermal and hydroelectric plants means the cost of running data centres is low [Felix Gaedtke/Al Jazeera]

Business sense

Alix Johnson, a PhD student at University of California-Santa Cruz, conducts research on data centres and the IMMI in Iceland.





According to Johnson, Iceland could become an attractive place for activities such as supercomputing and the "mining" of virtual currencies like BitCoin, given the high processing capacity available.

Some small communities in Iceland are also excited about these possibilities. Arnar Þór Saevarsson, the mayor of a small town in northern Iceland called Blönduós, told Al Jazeera he sees the potential to attract foreign investment. The municipality has been pitching itself as an attractive destination for hosting cloud service industry events from around the world.

Johnson said Iceland's new information laws will help to attract this business.





"People told me: 'No one cares about human rights, but if there is a profit motive behind it, this government is going to get involved,'" Johnson said of her findings. "And of course, it is good for business."



