Archive for June, 2013
In her blog (in Icelandic), minister of social affairs Eygló Harðardóttir has aired the idea that the estates of failed financial companies could be taxed. Yes, that debt should and could be taxed. Harðardóttir is not the first to mention this possible source of taxation – the idea has been around for a while, mostly mentioned by the minister’s party members, i.e. from the Progressive party. One of those is party leader and prime minister Sigmundur Davíð Gunnlaugsson.
Harðardóttir underlines that she is not the minister of finance so it is not for her to decide on this source of taxation but she finds it utterly natural and even desirable that estates should be taxed.
Others beg to differ. I mentioned this idea to some lawyers in Iceland who said that taxing the estate of a bankrupt company, i.e. taxing debt, runs contrary to what is normally seen as a taxable source. The minister clearly begs to differ.
The feeling in Iceland is that since the estates of Glitnir and Kaupthing are owned by foreign creditors the estates are particularly attractive as a source of income for the government. It is though not entirely correct that this will only hit foreign financial institutions – Icelandic creditors, i.a. pension funds and the state itself, own ca. 7-8% of claims in these two estates.
Taxing the estates is clearly being considered – but there are no doubt lawyers in the ministry of finance and elsewhere who will make clear that this would be a highly questionable practice.
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When Icelandic politicians defend whaling they refer to the right of indigenous people to cultivate their cultural heritage and the right to control the country’s use of its marine resources. Yet, nothing could be further from the truth – whaling never played a major role in Icelandic culture, it makes no financial sense any longer but the only reason there is still a whaling station is the stubbornness of a man whose father was a major whaling magnate in the early part of last century
“If Christ and Mary give me a whale, I will give you the tail,” is one of the sentences from one of two Icelandic 17th century Basque-Icelandic glossaries. The glossaries indicate cultural ties with Basque whalers who hunted for these magnificent mammals in the oceans around Iceland. First mentioned in Icelandic annals in 1613, the Basques would at times pay a visit, which might explain why there are still people in the Vestfjords with exceptionally black hair and dark eyes.
Icelanders hunted for whale as for other creatures of the seas and made use of “drift-whales,” dead whales that drifted on shore. The meaning of the word “drift-whale” in Icelandic, “hvalreki,” has the same meaning as “wind-fall” – an unexpected good incurred at no cost.
At the time, Basque whalers sailed as far as Newfoundland as did the Dutch and the British, also the Norwegians and whalers from the British colonies in America. The whales were mostly hunted for the oil, i.a. used as fuel for street-lights, ever more frequent in major European cities from the middle of the 18th century. All this was to change in the late 19th century as fossil fuels gained popularity but whaling was still an important industry.
Already around 1900 over-hunting started to drive whalers from old hunting grounds to new. In early 20th century Russians and others used ever bigger ships and more powerful weapons to hunt for whales. After World War II whaling resumed with enormous force, culminating in 1961-62 when almost 70.000 big whales were caught.
The International Whaling Commission and whaling in Iceland
In response to over-exploitation of the big whales, the International Whaling Commission was set up in 1946, both to set quotas and for the purpose of research. For decades the interests of the big whaling nations ruled the IWC and the quotas were too low to make a difference. Over time the protection lobby got stronger and in 1982 the IWC introduced a total ban on commercial whaling, i.e. commercial whaling moratorium, enforced in 1986. Though set to be reviewed at a later time, the moratorium is still in place to this day, except for catch allowed for aboriginal subsistence whaling. The IWC now also establishes protocols for whale-watching and its whole agenda is protection.
Over time, various countries have set their own ban not only on whaling but on any imports of whale products
Around 1900 there were several whaling stations in Iceland, owned by Norwegians who employed Icelanders. In 1948, Hvalur hf, the first and only Icelandic company dedicated to hunt for big whales started operations in Hvalfjörður (Whale-fjord), ca 50 km West of Reykjavík. Minkie whale, a small whale, has been hunted on smaller boats in various places around the country, now almost exclusively in Faxaflói, the gulf around Reykjavík.
At the time, Iceland did not object to the moratorium but in 1992 Iceland left the IWC, having carried on whaling for scientific purposes. In 2002, Iceland sought to re-enter though it did try to preserve some scope for whaling by making a reservation:
Notwithstanding this, the Government of Iceland will not authorise whaling for commercial purposes by Icelandic vessels before 2006 and, thereafter, will not authorise such whaling while progress is being made in negotiations within the IWC … Under no circumstances will whaling for commercial purposes be authorised without a sound scientific basis and an effective management and enforcement scheme.’
Though not all member governments of the IWC accepted this reservation, a majority accepted Iceland’s membership to the IWC.
In 2006, Iceland concluded that commercial whaling could be resumed since the moratorium and the state of whaling had not been re-evaluated as Iceland insisted had been the intention with the moratorium. The quota at the time was only nine fin whales and 30 minkie whales. Since then, Hvalur hf, the Icelandic company, has caught whales on and off.
In 2009 the Icelandic Ministry of fisheries stipulated that fin whales could be haunted in the coming years, through the year 2013. The last two years, Hvalur hf did not send its boat out to hunt for whales but this year, with a quota of 154 fin whales, the whaling boats are out at sea.
Those strongly in favour of whaling are equally strongly opposed to Icelandic membership to the European Union since it is clear that the EU is not in favour of whaling in Iceland.
Icelandic whaling and the convoluted interests: part of the past, not the present
During the centuries, whale meat was been eaten in Iceland. The meat is very perishable, turns rancid very quickly. The layer of fat next to the red meat would be could into strips and preserved in whey. After freezing was introduced as means of preserving food, the whale meat was frozen as soon as possible. Meat from big whales was by no means a stable during the latter part of the 20th century but was at times on sale. When fresh it does not have a strong taste, the texture is similar to beef and it was sometimes used in stews as a substitute for beef. Lately, some restaurants in Iceland serve grilled minkie whale meat or cured like gravlax.
The sense in Iceland has long been that it was of vital importance for Iceland to hold on to its right to whaling – any retraction would seriously undermine Iceland’s sovereign rights to make use of its marine resources, in addition to whaling being part of the Icelandic cultural heritage. “First the foreigners forbid us to hunt for whales, one day they might tell us to stop catching cod,” was a frequent argument.
Lately however, more and more Icelanders are asking if Iceland really has any interest at all in continued whaling.
The interests of the whalers weighed against the general interests of Iceland as a country that makes sustainable use of its natural resources was questioned this week from an unexpected direction: a shareholder in Hvalur hf.
In a newspaper article (in Icelandic), Birna Björk Árnadóttir, a grandchild of one of the founders of Hvalur hf and as such, as deeply imbued in the whole ethos of whaling as can be, wrote that for years she was in favour of whaling, for the same arguments so often repeated by Icelandic politicians (translation and emphasis mine):
The species caught by us are not in danger of extinction, it is the right of a sovereign nation to make sustainable use of its resources, whales impoverish us by eating so much and last, but not least, whaling is a profitable profession, contributing export revenues to the national economy. I have now changed my mind and I guess I’m not the only one. Although certain whale species are not about to become extinct, whaling is part of our past, not our future. The argument that we should catch whales because we have the right to and we can is both out-of-date and provincial in the global society we inhabit. Consequently, it is sad to hear a new minister of fisheries refer to centuries’ old tradition in making use of resources and lack of understanding when whaling is criticised in foreign media.
Árnadóttir then poses the question if catching 154 fin whales is necessary and reasonable. She both refutes the argument of aboriginal subsistence whaling and any regional importance though the hunting creates a few jobs in Hvalfjörður. Fin whales are not on sale in Iceland, the meat is exported and since there is no Icelandic industry based on whale products this is just export of raw material.
The only market is Japan and the meat does not really sell there at all – part of the catch from 2009 to 2010 is still unsold, kept frozen there. This is the situation, in spite of numerous marketing trips to Japan the last few years and regular statements that the market is improving.
Árnadóttir is pointing out, what many have surmised: it is an illusion that there is a market for whale meat.
According to Árnadóttir, the Hvalur hf management is unwilling to reveal the cost of whaling. She wonders how much money should be thrown at feeding whale meat to the Japanese who are not buying it. The only buyer seems to have been a Japanese pet food producer who just recently announced it had stopped buying fin whales. There really seem to be no other buyers for fin whales, making the whaling a rather strange undertaking.
Are we perhaps sacrificing greater interest for less interest? Let’s not forget our main trading partners oppose commercial whaling and trade in whale products. As the situation is now there is only one person who decides if these fin whales will be caught or not. I really wish he would let go of this whaling stubbornness and use his energy and assets for something else. The barracks in Hvalfjörður and the old whaling ships do indeed offer plenty of opportunities.
Continued whaling: more Freud than financial arguments
The person Árnadóttir does not name is Kristján Loftsson, son of Loftur Bjarnason who founded Hvalur hf, together with Árnadóttir’s grandfather. There are now 98 shareholders in Hvalur hf, a holding company for various fishing industry assets. Loftsson has always been very close to the Independence Party, which has been a staunch supporter of the company and the Icelandic right to whaling. There is probably no single Icelandic company, which for so many decade has enjoyed as much governmental support as Hvalur hf.
Some say that Loftsson’s push to keep Hvalur hf whaling seems to have more to do with Freud than financial motives; he cannot let go of the activities his father built up.
It is safe to conclude that the profit of whaling is negligible if any. However, another and very different whale-related industry is booming: whale watching. Those who oppose whaling see a conflict of interest here. Those in favour of whaling claim both industries can thrive side by side.
Árnadóttir makes a forceful argument: whaling hardly contributes anything at all to the economy – and it disturbs the relationship Iceland has with its most important trading partners. But as long as politicians continue to make statements as the new minister of fisheries Sigurður Ingi Jóhannsson, the driven owner of Hvalur hf is not the only one showing considerable stubbornness.
As so often, the politicians seem to be the last to sense that ever more Icelanders do indeed think like Árnadóttir: whaling makes no sense whatsoever and it does indeed belong to Iceland’s past and not its future.
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