REYKJAVIK- The key to reviving Iceland’s economy may lie in the country itself—-literally. Since a severe economic depression hit the country last fall, the small north-Atlantic island now looks toward its largest industries to bring stability back to Iceland. As Icelandic fishing vessels bring home millions of dollars worth of fish and the central bank lowers interest rates by the week, Icelanders may have a brighter future ahead.
In the past two weeks, the central Icelandic bank, Sedlabanki, has lowered its benchmark interest rate from its all-time high of 17 percent to 15.5 percent. As the Krona stabilizes, many Icelandic fisheries bring valuable foreign currency into the country. Kristinn Soffanias Runarsson comes from a family with a long history in the Icelandic fishing industry. According to Runarsson, fishing plays a key role in rebuilding Iceland.
“As of now, the fishing industry is the sole source of foreign currency flowing into the country, along with aluminum from the smelter plants. This hasn’t changed for decades, but I think now these companies are our best bet to help get foreign currency into Iceland,” Runarsson said.
According to a report by the Icelandic Ministry of Fisheries and Agriculture, roughly 8,000 Icelanders were employed in the fishing and fish processing industry last year.
During the hardest times, many Icelanders began to favor joining the European Union to regain their economic stability. Traditionally, Icelanders have been opposed to this option because of the changes it will bring to the fishing industry. Agust Olafur Agustsson is currently a member of the Icelandic Parliament, Althing. According to Agustsson, joining the EU would not affect the sovereignty of Icelandic fishing waters as much as many believe.
“The EU fishery policy isn’t such a big threshold as many people think. First of all the rule of relativity stability, which is the cornerstone of EU fishery policy, depends more and less of the traditional fishing patterns of the countries. The big change is that the decision of the size of the quota (TAC) will be decided by the Council of Ministers in Brussels but it would only be a formal decision because Iceland would have all the quotas according to [relative] stability,” Agustsson said.
According to Agustsson, Iceland would still be largely able to control their own fishing and would gain ownership of all of their fishing quotas. Agreements to share fish with other countries, called quota hopping, would be controlled through close international communication. When Norway joined the European Economic Area in 1994, they were given four years to adjust their quotas with those of other nations.
”As a member-state Iceland would gain a lot of possibilities in fishing all around the world because of the many agreements that EU has with another countries. The EU has always showed great concern about areas which are very [dependent] on fisheries or one industry. It’s also not in the interest of EU to destroy a small economy or a new member-state.”
The decisions made to establish fishing quotas are a topic of debate even among Icelanders. “The political parties are always debating about the quota system. I’d say that the people are split in the decision about if the system is good or not,” Runarsson said.
*written for International News 4/09, Photo courtesy of the AP.
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