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When the Director threatens to send Bernard to Iceland (this is when Bernard asks for permission to visit the Reservation), he thinks that Bernard will be scared and will change his behavior to be more like the "normal" people in the society.
But instead, Bernard goes a bit the other way. Strangely enough, he gets really cocky and confident when the Director threatens him. It makes him feel more alive. It makes him feel like he is a rebel. So now he feels like he matters, he feels that he is an important person if he is so dangerous as to be threatened with being sent to Iceland.
I think this is the passage you need to look at:
"That'll teach him," he said to himself. But he was mistaken. For Bernard left the room with a swagger, exulting, as he banged the door behind him, in the thought that he stood alone, embattled against the order of things; elated by the intoxicating consciousness of his individual significance and importance. Even the thought of persecution left him undismayed, was rather tonic than depressing. He felt strong enough to meet and overcome affliction, strong enough to face even Iceland. And this confidence was the greater for his not for a moment really believing that he would be called upon to face anything at all. People simply weren't transferred for things like that. Iceland was just a threat. A most stimulating and life-giving threat. Walking along the corridor, he actually whistled.
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