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Friends With Benefits

Friends With Benefits

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Published May 7, 2012

Many people speak of China and Iceland as if China’s interest in Iceland is only a few years old. This belief is forgivable—most China/Iceland relations have been decidedly low-key, with two recent exceptions: former Chinese President Jiang Zemin’s 2002 visit, during which members of Falun Gong—both visiting and local—were detained by police to prevent them from protesting his arrival, and more recently Chinese businessman Huang Nubo’s interest in buying land in Iceland last year, which sparked much controversy amongst Icelanders.

In fact, relations between the two countries go back quite a ways—Iceland and China established diplomatic relations in 1971. “Before that there were no formal relations between the governments of the two countries,” Magnús Björnsson, a lecturer at the University of Iceland who specializes in China studies, told The Grapevine. “The Icelandic Chinese Cultural Society (KÍM) was established in 1953, and through that a window was opened into China. Earlier contacts were only through personal connections including Icelandic missionaries going to China, beginning in the 1920s.” So the two countries are not exactly strangers to each other.

Falun Gong, Amnesty International and others have taken issue with China’s human rights record, and MP for The Movement Þór Saari made it a point to ask Foreign Minister Össur Skarphéðinsson in parliament if he planned to discuss human rights with the premier, to which the minister replied, “I consider it quite certain that at some point during the visit human rights will be discussed.” But what has made many more Icelanders nervous about China’s interest in Iceland has less to do with human rights than it does with China’s presence in Iceland.

Suspicious minds

Icelanders’ concerns over China’s presence in Iceland became apparent in 2011, when Chinese businessman Huang Nubo offered to pay 1 billion ISK for land in Grímsstaðir á Fjöllum.  Encompassing 30,639 hectares in northeast Iceland, it is a place of natural beauty located near the mountain Herðubreið, and a popular camping spot. The fact that the area is naturally pristine and his intention was to build a luxury hotel and golf course on the land set off a great deal of public outrage. Matters weren’t helped when it came to light that he had personal contacts with numerous members of the Social Democratic Party in Iceland, which leads Iceland’s current coalition government.

Diligent Icelandic bloggers dug up some more dirt on Huang Nubo—in particular that one of his companies, Beijing Zhongdian Investment Corp, was in the business of cheating rural Chinese out of their land for use in tourism, and that his resume includes working within the Propaganda Department of the Communist Party of China. Ultimately, Huang Nubo was denied permission to buy land in Iceland, as The Ministry of the Interior pointed out that Icelandic law prohibits non-Scandinavians from buying land here. Only days ago, it was brought to light that municipalities of northern and eastern Iceland intend to create a shareholding company, buy a 70% share of the property, and then lease it to Huang Nubo over the next 40 years. He has already paid the full amount in advance.

As a result of this very recent controversy, many Icelanders regarded the arrival of Wen Jiabao with suspicion. What does China want with Iceland? And why is Iceland trying so hard to build a relationship with China?

“Iceland needs trading partners and China is a good one—providing all kinds of goods to Icelanders, most at agreeable prices,” Magnús says. “In the future, China can also become one of the most important markets for Icelandic exports like fish and tourism. Iceland can be important to China by providing techniques for harnessing geothermal energy, which is abundant in China but has not been utilised to any degree so far. This is very important as China is taking steps toward more green energy. China also needs Iceland as a strategic partner in the Arctic region when the Trans-Arctic shipping route becomes an option in transportation and for future utilisation of natural resources in the Arctic. In that field, the benefits should be for both parties.”

This last point is an important one. China is the world’s largest energy consumer, and the United States Geological Survey estimates that around 13% of the world’s undiscovered oil reserves and at least 30% of its gas are buried under the Arctic Ocean. Also, around 46% of the Chinese gross national product is linked to shipping, according to the Journal of Energy and Security. Melting Arctic ice, and the opening of new shipping lanes, would be quite a boon to China. But getting access to the region isn’t easy—to get to the Arctic, China needs to get through the Arctic Council first.

The Arctic Council is an organisation comprised of Iceland, Denmark, Norway, Sweden, Canada, Russia, and the US. Founded in 1996, the Arctic Council is the gatekeeper of the Arctic—its focus is primarily on environmental protection and sustainable development of the region. Any country that wants to do business in the region, whether exploring for oil or building bases of operations, must get the unanimous approval of the Arctic Council members.
With everything China has to gain in the Arctic—and every vote on the council needed for any kind of development in the region—it’s small wonder China should be courting Iceland.

The Chinese embassy’s political office responded to the Grapevine in predictably nebulous fashion, saying, “Iceland and China are good friends and partners. In the future we expect to enhance mutual trust, increase trade and promote people-to-people friendly contact. Both sides could enhance their cooperation in a number of fields, including: geothermal development both in China and possibly to other areas; research in geo-sciences; environment protection of glacier [sic]; tourism; educational and cultural exchanges. Bi-lateral cooperation is on equality and will be mutually beneficial.”

Interestingly, the Office of the Prime Minister responded in almost the same tone and fashion, saying, “Iceland and China have enjoyed diplomatic relations for 40 years, with enhanced cooperation over the past few years.  China is a growing and upcoming economy, and an important trade partner to Iceland, and free trade negotiations have been in progress for the past few years.  Several of the largest companies in Iceland have operations in China.

Iceland and China have also increased their cooperation in other areas, such as research, renewable energy and geothermal cooperation in China.”

So what do they want?

Speaking in generalities about growing partnerships is all well and good, but what, exactly, did China and Iceland agree to during Wen Jiatbao’s visit?

The “willingness agreements,” signed by Chinese and Icelandic officials at the Culture House, outline six points: the first two points state that the two countries will work more closely together on Arctic issues, primarily in the areas of scientific research and transportation. No surprises here. The third point welcomes Iceland to share its geothermal energy technology with China, but also that the two countries could work together to build up geothermal energy in developing countries; in particular, in east Africa.

The last three points, however, shift the focus more towards private industry. The company Chinese company BlueStar—which in 2011 bought Elkem in Norway, which owns an iron blending factory in Grundartangi—wants to build a silicon metals factory in Iceland. The partially government-funded company Promote Iceland and the China Development Bank intend to work more closely together to make it easier for their respective countrymen to invest in each other’s nations. Finally, Orka Energy Holding ehf.—an Icelandic geothermal energy company that, according to its website, has “the major components” of its operations in Asia—and China Petrochemical Corporation want to build upon the geothermal energy work they started in China in 2006, and to expand operations there.

While the initial points on cooperation in the Arctic regarding “transportation” and “research” might have been kept purposefully vague, it is obvious why the region is important to China.

Business first, 
human rights second

However rosy the relationship between China and Iceland may be, it’s only as strong as the people who cast their votes for those who will run the country allow it to be. And it is clear that the aforementioned human rights concerns do matter to Icelanders. While Falun Gong members were able to publicly protest Wen Jiabao’s visit without incident, they penned an open letter, published on Vísir.is, calling on the Icelandic government to uphold human rights while members of their organisation in China continue to be persecuted.

The Prime Minister’s office confirmed that Jóhanna did discuss human rights with Wen Jiabao, telling The Grapevine that “particular contents of discussions with foreign guests are not disclosed to a larger extent than was stated in the press release of the PM’s Office on Friday 20 April.” The only mention of a human rights discussion in that particular press release states “the Prime Minister also discussed human rights issues, civil rights and international commitments. The Prime Minister and Premier agreed to enhance relations and cooperation on gender equality in the near future.”

The local press also reported that journalists who tagged along for Wen Jiabao’s tour of the country were not permitted to ask questions. When Bloomberg reporter Ómar R. Valdimarsson attempted to ask Wen Jiabao a question about Bo Xilai, a high-ranking official in China who was recently fired from his party, DV reported that one of Wen Jiabao bodyguards attempted to block Ómar from asking his question. When Ómar asked it anyway, the bodyguard pushed him. Ómar loudly exclaimed, “Don’t touch me!” three times, and the bodyguard then backed off.

When asked about this apparent silencing of journalists, the Prime Minister’s Office responded, “The programme of the visit did not include statements to the press or a press conference. The Prime Minister’s Office did not prevent anyone from asking questions but at the same time, a foreign guest is not obliged to answer questions put to him, when that is not part of the programme that has been decided. The Prime Minister of Iceland gave interviews to the press, during and after the visit to local press.”

The Political Office of the Chinese embassy also responded to the matter of journalists, albeit more cryptically, saying, “Prior to the meeting between the two Prime Ministers, as a normal international practice, the media is given a few minutes photo opportunity. The Icelandic media, like their Chinese counterparts, and everyone was on equal footing. The Icelandic media acted professionally.”

A matter of conscience

Of course, as cynical as it may sound, it is a fact of life that democratic nations can and will do business with nations with very different ideas about human rights. It has been rightfully argued that it is nearly impossible to avoid “doing business” with China—so much of what we buy comes from China, after all. However, Iceland—like other Arctic countries—is now in the unique position of having something China wants, and being able to provide it, or deny it. The Icelandic government could bargain for sweeter business deals, which might be what it’s doing. Or, as so many Icelandic voters appear to want, it could bargain for improvements in human rights in China. Or it could do both.Whichever way Iceland chooses to go, its relationship with China is arguably just as important for China as it is for Iceland.



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