Resources and Pressure

Torbjørn Jacobsen, borgmeistari, setanarøða til ráðstevnuna "Fyrimunir og vansar við fríari uppboðssølu". 01.09.16

The grand continental plates—and later all the lands of earth—fared rather differently when first shaped and formed in Creation. There were smaller and larger units, narrow waters and vast oceans. And the gifts were perhaps distributed particularly unevenly when it came to natural resources. Scarce in some places and bountiful in others. Deserts here and thriving fruitage there. Abundance of fish in one place and lifeless ocean in another. Regardless of these circumstances, homo sapiens, the general of the food chain, had to find ways to survive and adapt to the circumstances and conditions they found themselves in.

What then, in the final analysis, is the thing that matters? Well, here we naturally think of two eras, before and after the Industrial Revolution. It spelled the beginning of the international trade that we live in today, in which raw materials and finished products change hands across borders and continents every day. It is quite possible that the raw materials and the finished product come from different parts of the world. What matters is quality, competitiveness, skills, marketing—to constantly navigate and be in control of every parameter that contributes to one thing: that your particular product is the first to make it to the checkout counters in the supermarkets around the world.

The world we live in works in such a way that we – from a simplified point of view – see two categories of countries when it comes to production. Countries with plenty of animate and inanimate resources and those with little or no natural resources. Considering that a strong industry is pivotal to welfare states, among which we wanted to be counted, production is of the first importance for not only consumption but also commerce—the financial scales must after all balance over time! You either produce from your own resources, or, if you have none, you buy raw materials to produce goods to sell. One might think, using common sense, that countries with plentiful natural resources should have become the most prosperous during all these years in which world trade has developed; however, the truth is not that simple.

This complexity is to a large extent due to the fact that sooner or later a country’s natural resources become a highly political issue. The history of imperialism is also the history of resources. Industrial nations had to acquire cheap resources, and they left many a place in ruins, for example in Africa and Latin America. Resources have caused pressure, political pressure. Changes have been dictated by the ideologies of those in power. Stalin takes the land from the farmers and collectivises agriculture by force, Hoxha does the same in Albania, leaving it the third poorest country in the world, and, for the same reason, the famous land of sugar, Cuba, barely manages to sugar-feed its own people. A famous Cuban minister of industry once said that sugar was a true curse for the island. Most of the work force laboured in sugar production; this could never sustain the island as a welfare state. And so, when the aid from the Soviet Union ceased, so did the sugar production in the collectivised fields. At the opposite end of the spectrum, we find these super conservative oil states, such as Saudi Arabia, where a single small family has taken the rights to all the resources found in the ground, the oil. Only a political and military iron fist prevents the people to revolt and claim their share of the wealth.

And so we conclude that a country’s own resources unsettle its political system, they create a conflict that must be solved in one way or another. Things have proven far easier to countries like Denmark, which has had no natural resources to speak of before they found oil in the North Sea in recent years – which has also caused strife. Apart from the oil, Danes have concerned themselves mostly with the politics of commerce and trade. They, as so many other countries around the world, have realised that trade and profit depend on many other factors than simply of what you see right in front of your eyes, natural resources needed for production that you can extract for free from sea or mines. It seems that business acumen grows according to need. Humanity seems to have inherited quite a few of the same qualities as the chameleon, but, or so it seems, they are only awoken and exploited as the need arises.

The Faroe Islands is one of the nations abundantly blessed with natural resources. Some considered it a restriction when the economic zone was expanded to 12 nautical miles—and especially when it was extended to 200 nautical miles—at the same time as this happened in other countries where we traditionally had made most of our fishing. But today, this has proven to be an enormously valuable resource when calculated on a per capita basis. But, on the other hand, a restriction remains a restriction. In it lies the condition that the freedom to fish at will is gone. You know the approximate size of the stock and how much you can exploit it annually for it to remain healthy. Therefore, the discussion is bound to end up on the polished floors of the political system. Who gets what of the people’s asset that swims in the sea? Who draws the lucky straw when the licenses are issued? How do you decide to whom a license is to be issued? There are many interested parties: The people, the politicians, the ship owners, the seamen, etc. In the end, facing the natural restrictions, we all know limits must be placed on the fishing licenses. Otherwise, economic and commercial chaos will ensue. Fifty-thousand people do not benefit from individually going out to sea to retrieve their share. Therefore, we need to find a system that rationalizes fisheries in order to have an industry that is as profitable and sustainable as possible. Only then can all parties benefit from this great wealth.

There seems to be a consensus that a licence to fish in our own pool or in other waters, as agreed upon in bilateral and other agreements, provides an extraordinary gain far surpassing the normal commercial profit needed to be able to move forward in business. Licences are issued from the people’s asset for a rational operation run by a few parties. Therefore, the additional gain belongs to those who own the sea and its resources, that is, all of us or society. The urgent question today then is how this unusual gain, the result of the aforementioned limitation, is to be collected. On this opinions abound.

We have now reached the end phase of this matter. Existing licences received notices of discharge in 2007, most likely because the political system wanted some form of change in the industry. However, little has been heard from the political parties or the parliamentarians on what they plan to do after New Year’ Eve 2017 when the licenses expire. As the time approaches, many raise their voices, some wanting no change while others want to revolutionise the current system. What remains of 2016 will undoubtedly be a crucial time in this matter. All viewpoints must be put on the table. With this mind, the radio station R7, with Petur, Eivind and Tórur in the lead, has organised this conference, where experts in a variety of fields will present their views. In a democratic country, it would be a disgrace not to listen to all perspectives; only then can you digest and sort through the arguments according to your own convictions.

The Faroese economy is so closely tied up in marine resources that a national agreement on the government’s role in fisheries after 1 January 2018 is crucial. We have received this gift from the dawn of creation, and gifts are to be appreciated and well-looked after. The sea of politics will roar in the coming days and months, but we all need to make an effort to solve this matter as unanimously as possible to ensure that the outcome will benefit the whole nation. The magnitude of this issue is so great that we all, somehow, must be willing to bend and lean into something of a modus vivendi and so ensure the framework in which the industry can operate for decades to come.

Finally, I wish to welcome Johnny í Grótinum, Magni Laksáfoss, Osmundur Justinussen, Gary D. Libecap, Charles R. Plott, Martin Paldam and Jón Kristjánsson to help us better think through what is to happen in this important matter in the very near future.

With this I declare the fishing industry conference at Løkshøll – “Fyrimunir og vansar við fríari uppboðssølu”, “Advantages and Disadvantages with Open Auctions – open.