From Iceland — The Sexy, Exciting Fishing Fees Saga

The Sexy, Exciting Fishing Fees Saga

Published July 22, 2013

The Sexy, Exciting Fishing Fees Saga

Last week was significant in Iceland’s political history. President Ólafur Ragnar Grímsson decided to sign a bill into law that had caused so much controversy that more than 35 thousand Icelanders signed a petition urging him to veto it and send it to a national referendum (see: IceSave). There were heated discussions, even filibustering, in Alþingi before the bill was passed, and the subject remains the water cooler topic in every single workplace in Iceland. And it’s about fish.
Where else could a tedious, un-sexy issue like fishing fees become such a hot debate but in Iceland? It makes sense, though, as fishing amounts to just over 40% of Iceland’s GDP (down from as much as 90% a few decades ago). And what’s the fuss all about now? In short: last year, the then-reigning coalition government of the Social Democratic Alliance and Left-Green passed a bill that increased the fee charged to fishing quota owners significantly, from 4.5 billion ISK to an estimated 13 billion. In return, family allowance and interest relief were raised, plans were set in motion to start developments on transportation improvements (such as a tunnel to Norðfjörður in the Northeast), and to increase financial support to various smaller industries and trades, such as tourism, film production and the science- and technology development fund.
Women and children, no wait, quota owners first!
The fisheries and quota owners were less than thrilled at the prospect. The Federation of Icelandic Fishing Vessel Owners (LÍÚ) claimed the industry was being put to its knees; that several fisheries would go out of business and be forced to discontinue some of their fish processing plants around the country, rendering hundreds unemployed.
LÍÚ organised massive protests that, among other things, entailed sailing a fleet of vessels to Reykjavík harbour—where they blew their horns incessantly for days on end—staged rallies in front of Alþingi, and pleaded to the president to veto the bill. While their efforts certainly raised a lot of attention, they were ultimately to little avail, with the bill passing despite LÍÚ’s massive outcry.
However, the full force of the new law wasn’t scheduled to take effect until later this year, resulting in traditional LÍÚ ally the Independence Party making the revoking of the law one of the main points of their platform for this spring’s election. The party won the popular vote, forming a coalition government with the election’s other victors (slash long-time collaborators) the Progressive Party in May.
It came as no surprise, then, when the new government approved a new bill presented by the Minister of Fisheries and Agriculture on June 12, which effectively revoked the fishing fee law and reduced the fees significantly. The newly instated minister, Sigurður Ingi Jóhannsson, insisted that by doing so he was responding to the fact that smaller fisheries could not pay such high fees without consid-erable loss of income, because their profits this year were so far much lower than had been estimated. In effect, Sigurður Ingi went as far as saying that last year’s bill was “technically flawed.”
Considering that the Progressive Party’s campaign promise was to immediately tackle the problems of indebted homeowners—it was in fact their biggest platform point—many were startled when the coalition announced that homeowners’ debts couldn’t be “corrected” right away, and that they’d form a committee to look into the matter in the fall.
This former priority of the Progressives, which arguably won them the seat of Prime Minister, was postponed, due to “lack of available funds,” while a priority was placed on passing the new fishing fee bill—which severely limits the state’s income—during Alþingi’s short summer session.
Large portions of the general public were, to say the least, not amused. A petition was launched on Iceland’s National Day, June 17, to protest the decision and challenge the president to veto the bill if it were passed by Alþingi, forcing a referendum where the nation would make the final decision on the matter. The petitioners’ hopes were high, as President Ólafur Ragnar had set a precedent by refusing to sign new laws three times while in office: a bill meant to restrict corporate ownership of media in 2004 (the bill was withdrawn and never went to referendum) and the notorious IceSave bill, which was rejected two times in a referendum during the previous government’s four-year reign. Ólafur Ragnar had furthermore stated in interviews during his 2012 presidential campaign that fisheries management, a long-time point of contention for the Icelandic nation, was especially suitable for referendum.
Keep digging
The outside world also seemingly supported this outcome. When IMF delegates visited in June, as part of the fund’s regular audit of Iceland’s economy, they reviewed the fishing fees and concluded that they would not prevent investment in the sector, which has been the government’s primary argument for revoking them. In fact, the IMF recommended the fee be maintained, while noting that it was still waiting to see a detailed plan for household debt relief. As for the general public, a recent survey by newspaper Fréttablaðið revealed that 70.5% of the population opposed reducing the fees.
It should be noted that the new law does not entail completely slashing the fishing fees, or even reducing them to what they were before. According to the new bill, the estimated return to the state treasury for 2013 to 2014 is 9.8 billion ISK, 4.2 billion ISK less than what the fees would have yielded under the old law. However, while Iceland has recovered remarkably from the economic collapse over the past four years, the state’s budget is tight, and the loss of 4.2 billion ISK will make a considerable dent.
All eyez on Óli
Iceland’s proverbial eyes were thus clearly fixed on President Ólafur Ragnar Grímsson. Would he or wouldn’t he? After a period of spec-ulation, Ólafur Ragnar announced a press meeting on July 9, five days after the fishing fees bill was passed by Alþingi. In a short statement, Ólafur Ragnar announced that he would be signing the bill, declaring that he didn’t consider such a matter fit for a referendum, since technically it regarded taxation. It would be hard to maintain direct democracy and referendums on decisions that would affect taxation and state revenue, he said, explaining to the reporters in the post-statement Q&A that they had just probably misunderstood whatever it was he was supposed to have said while campaigning for presidency in 2012 (“…due to their nature, relatively few matters are better suited for a referendum as those to do with the quota system,” in case you were wondering).
Iceland’s constitution is a rather confusing document. There are no clear rules or regulations regarding what can and can’t be channelled to a referendum, so for every one of his decisions, Ólafur Ragnar (who remains the only Icelandic president to have used this veto power) usually just goes by his own interpretation or “gut feeling.”
And this is exactly what he did.

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