GUE/NGL Study Days - Iceland - 2-5 May 2011
GUE/NGL Study Days, Iceland, 2-5 May 2011.
The Arctic Dimension
After describing the current situation faced by the Icelandic government in the wake of the country's financial collapse due to the "reckless expansion and spectacular crash of Icelandic banks", Svandis Svavarsdottír, Iceland's Minister for the Environment and MP for the Left-Green Movement opening GUE/NGL Study Days in Reykjavik on 2 May 2011 said "many see an accelerated exploitation of Iceland's natural resources as a quick ticket out of economic problems."
But, she disagreed with this view, arguing that the lesson to be learned from this and the recent massive and rapid expansion in energy development and heavy industry is not that the use of natural resources will lead to the same results but "that we need to ensure that the use of natural resources leads to real and sustainable growth that would benefit the nation as a whole."
"The focus on quick profits and reckless growth has shown itself to be a dead end. We need real sustainable development as a true underlying philosophy of decision-making."
Ms Svavarsdottír also briefly outlined the Icelandic government's policies on nature conservation, fisheries, tourism and renewable energy, climate change and the Arctic region in the wider global context. "Climate change threatens to trigger an ecological crisis that will be much harder to tackle than the current financial and economic crisis," she warned.
Nowhere was climate change more apparent than in the Arctic, she said, adding that "environmental change is already having a profound effect on shipping, resource development, and the way of life of indigenous people and other inhabitants of the Arctic".
The Minister evoked the work of the Arctic Council which, among other things, "seeks to respond to the challenge caused by climate change in the high north." She explained that Iceland was not one of the most vulnerable countries to climate change, nor was it a specific problem of the Arctic, but a global concern.
Ms Svavarsdottír concluded by saying that she did not see the conflict as being between development and the environment but between sustainable development and profiteering and rapid exploitation. The latter was the prevalent ideology in recent decades in much of the world, she said. "We have seen what it leads to. The result is not pretty. Greed is not good."
GUE/NGL President Lothar Bisky welcomed the contribution to the debate by the Minister and hearing about how the Icelandic government was tackling the financial situation as well as its policies on the environment, energy, fisheries and tourism and its role in the Arctic region.
"We cannot think of Europe without thinking of the Arctic region, because it concerns all of us. The EU has an obligation to preserve the region's species and natural resources. We have a duty to protect an environment that is still intact and not allow the irreparable damage that has taken place in the European Union with the disastrous consequences that we know."
"Only limited attention has been paid in the European Parliament to issues such as the search for raw materials and geo-political and military interests in this region. As a result of our discussions we hope to contribute to this debate," he said.
Guǒfrídur Grétarsdóttir, MP and Member of the Left-Green Movement described the Arctic as the world's "last wilderness" which has a significant role in preserving biodiversity. It is also "extremely vulnerable and fragile" in terms of pollution. She said that the global financial crisis is one that must be dealt with by all. However, in the long-term, a much more critical crisis is lurking, that of climate change.
"Due to climate change, all kinds of opportunities are opening up," she said, warning against the race and competition to exploit resources such as oil and gas in the high north. To counter this, what is needed is "cooperation to ensure that the development of the Arctic region is sustainable for its natural resources, its people and the environment."
The group then heard from Juliane Henningsen, a Member of the Greenlandic Parliament for Inuit Ataqatigit and representative the North Atlantic Group in the Danish Parliament, who warned that "drastic changes are taking place as we speak" with economic heavyweights paying great attention, notably to the oil and gas resources that can be extracted due to the melting ice cap, and also because it makes for cheaper shipping. "These new opportunities produce new risks, particularly for people living in the Arctic region. The challenge is how to respond to them."
Ms Henningsen spoke about how lands were being used for military purposes without any democratic control and stressed "the right to self-determination for all countries in the region for all military and strategic issues."
A scientific explanation was given Jón Ólafsson, from the Earth Sciences University of Iceland on Global warming and the Arctic environment. He described the influence of the Arctic and Atlantic oceans on global warming, the progressing acidification of the ocean, the biological and chemical consequences of CO2 uptake in the oceans, stressing the need for urgent action to reduce CO2 emissions.
Jörundur Svavarsson, from Iceland University's Institute of Biology identified current and future threats for the cold Arctic and sub-Arctic environment which include chemical threats due to long-range transport of pollutants by ocean currents and by shipping. He explained that the decreasing ice sheets were leading to the opening up of the North West and North East Passages to both oil exploration and shipping. He concluded by warning of the "devastating consequences for the Arctic region" of an accident, such as the huge oil spill in the Gulf of Mexico last year.
Financial and economic crisis: Monetary and financial policy before and after the crash
"We all know about the challenges that Iceland faced after the collapse of its banking system and we are now looking forward to increasing our knowledge of how this crisis came about and how it is being solved," said Eva-Britt Svensson, Vice-President of the GUE/NGL Group, who chaired the second session of the Group's Study Days on the "Financial and economic crisis: Monetary and financial policy before and after the crash".
Among the keynote speakers welcomed by the Group was Iceland's Finance Minister and Chair of the Left-Green Movement, Steingrímur J. Sigfússon, who gave an overview of the political situation in Iceland since the early 1990s, which was ruled for 18 years by a right-wing government with a traditional neo-liberal ideology and how, under this governance, the Icelandic crisis had come about.
"In the period leading up to the millennium, things were looking up," he said. It was only in 2000, but particularly in 2003, that things started to go wrong when two of the three main banks were privatized and expanded overseas, when the government lowered taxes, especially for people on high salaries, raised levels of housing loans and deregulated the financial sector. "All this made economic management difficult and in a matter of years we ended up with a banking sector 10 times the size of Iceland's economy."
The business sector also took advantage of the situation by going out and investing and building up empires, particularly in the retail sector, in the UK and other European countries, "all of which collapsed in a few days in October 2008 during which the country lost 85% of its banking sector."
He went on to explain the emergency and drastic measures and laws put in place by his government "to prevent a total meltdown of the whole economy." Mr Sigfússon described how Iceland did not try to rescue its banks but "fought the crisis by establishing new banks and completely rebuilding the banking system, by changing the order of priorities, sorting out many complex problems and keeping the country afloat". In doing so, he described how his government managed to safeguard the welfare system as much as possible by seeking to protect the lower income groups.
He concluded by saying that future outlook for Iceland is good "few countries can say that much". Growth is starting to turn positive, with investment on the rise, a positive current account balance and the beginnings of a trade surplus, lower interest rates, and a stabilized exchange rate of the devalued currency. "As a generation, a generation of bankers, politicians and government officials, we have a duty to deal with the crisis, solve the problems now so that we do not pass them on to our children and to future generations."
The main conclusions of the Special Investigation Commission that analyzed the processes leading to the collapse of Iceland's three main banks were presented by Fridrik Már Baldursson. The commission which was put in place in 2009 to probe the causes delivered a "monumental, 2000-page report" one year later which identified one of the main causes of the collapse as the rapid growth of banks after their full privatization in 2003.
Other findings pinpointed the lack of adequate supervision and understaffed supervisory authorities and the size of banks. "Even if the banks had been well run, the country was too small to support banks in a liquidity crisis." There had already been a prelude to the crisis in 2006, Mr Baldursson explained, when there were some temporary liquidity problems on capital markets, which were solved, but the banks didn't learn from this and soon went back to their old practices, he said.
In addition, the Commission findings revealed that the bank owners had "abnormally easy access" to lending facilities and that the biggest loans were to the owners of banks themselves" and cited several examples. Mr Baldursson concluded by saying that the whole story is something that Iceland and the whole world should learn from. "One can only hope that banking practices and regulations will change."
Legal expert Eyvindur Gunnarson started his contribution about the legal environment of deposit guarantee funds by telling GUE/NGL MEPs that in his view that "this is an unrealistic scheme that needs to be rethought", but admitted that it would be difficult to do because of the EU principles of free movement and free establishment.
He argued against the EU guarantee scheme saying that there were too many dangers, that the EU directive was too vague and left it to member states to decide whether these funds would be public or private and also argued against the freedom of banks to establish branches in other member states, because there is no home country control of the state's banking system.
He stressed the huge gap between law and reality in the EU saying that the deposit guarantee directive had been overused. He urged regulatory reforms on a national rather than EU basis, stating that "harmonization is a myth and it won't work" and better supervision - "one can have the best supervision in the world but if banks are too big to manage, we will only see cosmetic and not the deep reforms that are necessary."
He concluded by calling for the re-sizing of banks that have become too big, restrictions on branching and a clear separation between commercial and investment banks.
Closing the session, Greek GUE/NGL MEP Nikos Chountis said that he would have liked to hear more from Icelandic representatives. "Iceland was the first country, long before Portugal, Greece and Ireland to really come to the brink of bankruptcy and collapse. We forget when we speak about the economic crisis that it is very important to look at what has happened in a country like Iceland and to draw lessons from it."
"The economic crisis is a crisis of democracy too," MEP Chountis continued. With this crisis and the solutions put forward, "we have seen the degradation of democracy and the crumbling of labour movements." This was avoided in Iceland, he explained repeating that "we should learn from the Icelandic example and implement it in our own countries. Above all, we must keep the interests and welfare of workers in mind in our decision making processes."
"The way things are done today to help countries in financial crisis should be reversed altogether. We should change the Stability Pact into a Pact for Workers, we should change the role of the European Central Bank and we should introduce a new model for Europe not based on competition but focusing on employment creation, the environment and improved workers' rights."
Fisheries policy: fisheries and marine resources
Introducing the third and final session on fisheries policy, Søren Bo Søndergaard (GUE/NGL, Denmark), who chaired this session, said that fisheries was "the absolutely dominant trade and was vital for Iceland's economy" while stressing that today's discussion "is particularly important in light of the current review of the EU's Common Fisheries Policy."
Iceland's Minister for Fisheries & Agriculture and leader of the Left Green Movement, Jon Bjarnason reviewed the current situation of fisheries in Iceland in the light of the ongoing recovery programme. "We know that fisheries are important for the EU and its member states but even when we combine all EU member states, the importance of fishing and fisheries for the independence of Iceland is much more important for us."
He provided figures, such as the 1.7 to 2.1 million tons of fish caught by Icelandic fishermen a year, representing 1.5% of the world's total catches and a total annual market value of some 2 billion US dollars. Iceland is listed 14th on the world's most important fishing nations, making it, along with Norway, the only two European countries to feature so high on this list.
"Sustainable fisheries have proved to be the pillar of Iceland' economic and social organization during the crisis, providing 40-50% of the country's export revenue," he said. With a total fishing fleet of some 2,000 boats and after gaining control of its 200-mile exclusive economic zone in 1976, fishing and the fisheries industry is the subject of "intense political debate" in Iceland.
He explained that the whole fishing sector was now under review with priority being given to the smaller and more remote fishing communities. The quota system in place up until now had tended to increase the conglomeration of enterprises and this had meant that quotas had been taken from villages and communities and given to the larger corporations with the result that the smaller fishermen felt their rights had been infringed. That's why the government was currently tackling this particular injustice by handing back their rights to smaller fishermen, he said.
He reminded the assembly that Icelandic fisheries did not avail of state aid; fishermen must compete on their own, so different rules apply here than in the EU. A great emphasis was also placed on the sustainability of fisheries and the important role played by the Icelandic Marine Institute. The main emphasis is on ecological, environmental and economic sustainability for the fisheries sector.
He spoke of Iceland's application for EU membership, which is "highly disputed" by politicians, the public and agricultural and fisheries organizations. "We don't want to give away our authority over the oceans surrounding us. It is better kept with us because we know how to manage it in a sustainable and responsible manner," Mr Bjarnason concluded.
"We are at a crucial moment in time in the fisheries sector in the EU," said GUE/NGL MEP João Ferreira, explaining that the reform of the Common Fisheries Policy is currently under discussion "against a background of countries facing deep economic recession and social crises and in which fisheries play an important role." In addition, he said, we are facing a further crisis in terms of the preservation of fish and fish stocks.
He explained that the EU's institutional context had been deeply changed by the Lisbon Treaty, in which many things had become the exclusive competence of the Union. "This goes against what we consider important, which is to promote local management, in the best interests of fisheries workers."
"The objectives of fisheries policies should be to ensure supply and provide a stable environment and prices for local fishermen. Considering the diversity of fleets and the different types of fish fished throughout the EU, the objectives should state that the best kind of management is local management. With the Lisbon Treaty, this kind of management is being challenged," he said. The new system will inevitably lead to the concentration in the ownership of fisheries rights among a few operators.
The issue of fish yields and revenues was particularly important for countries in crisis. One of the main objectives of the common organization of markets, one of the oldest pillars of EU fisheries policies, was to provide fishermen with fair prices for their catches. The Commission is now deregulating and dismantling these with as a result the beaching of fleet and the reduction of subsidies so as to reduce capacity for the benefit the major operators.
MEP Ferreira also highlighted external dimension of fisheries policies when it comes to agreements with other countries, particularly developing countries and especially the transfer of funds to gain access to fishing grounds.
Taking account of all that, he concluded that the GUE/NGL was against the current review of the CFP and had made proposals in Committee and in plenary to promote local management, support small-scale fishing, recognise national authority of fisheries, maintain 12-mile areas for national fleets, promote mechanisms for ensuring fair prices and establish emergency mechanisms bearing in mind the crisis faced by fishermen in their communities.