Sigrún Davíðsdóttir's Icelog

Iceland tops the ‘Environmental Performance Index’ – and Magma

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The ‘Environmental Performance Index‘ is an index that rates the environmental performance of 163 countries across several policy categories such as climate change, agriculture, fisheries, forestry, biodiversity and habitat, water and environmental burden of disease. When all is counted and added up, Iceland is the top performing country on the index that Yale and Columbia Universities published in January during the World Economic Forum at Davos in January.

As always, it depends on what is being measured. Iceland has long been a top performer on the Transparency International index over corruption though many Icelanders will claim that the Report of the Investigative Commission shows clear signs of corruption. It’s just not the kind of corruption that the TI measures. Corruption in Iceland doesn’t consist in taking a brown envelop to a judge to get a favourable ruling.

Though Iceland scores high on the EPI it doesn’t mean that there is a great sense of urgency among the Icelandic ruling class when it comes to environmental issues. There are many reasons for this, one being that nature is close to Icelanders, it’s there to be used, not just to be looked at as in so many other European country. Icelanders are still trying to conquer nature, overcome it – and often feel quite helpless as when a volcano suddenly starts to erupt (though this time it made a big part of the world feel equally helpless).

Iceland is also trying to harness nature and often the harnessing seems to be more important than protecting it. Recently, a Canadian energy company, Magma Energy, has divided opinions in Iceland by buying into the energy sector. Since only companies form the EU/EEA can own companies in the energy sector in Iceland it would seem to exclude Magma from ownership. But the holding company for Magma’s interests in Iceland is a Swedish Magma that has no other purpose but to own shares in Icelandic energy companies, set up solely as a holding company. – A clever way of avoiding rules or regulations or a sensible solution to attracting foreign investment to Iceland? Depends whom you ask.

The value of Magma’s investment isn’t clear. At first it was thought it would bring much needed currency to Iceland. Then it turned out, according to Icelandic media, that Magma bought Icelandic kronur at knockdown prices abroad on a market created by currency restrictions in Iceland, to pay part of the price and then borrowing the lion share of the price in Iceland.

Topping the EPI is sweet but deals and investments in environmentally friendly sectors like the sale to Magma Energy raises serious questions. The bank crash in October 2008 was a reality check of the Icelandic way of doing business and a bitter lesson. It will turn even more bitter if it turns out that nothing was learnt from it.

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Written by Sigrún Davídsdóttir

May 31st, 2010 at 11:00 pm

Posted in Iceland

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