PRIVATISATION A LA RUS
By Jón Baldvin Hannibalsson
What a pity that Mr. Carney should have run such a fool´s errand the other day in Reykjavik (see: Fishing for Trouble in Iceland, WSJ, Oct. 10). Unfortunately he has let himself be duped into believing that the oligarchs, who have been given (for free) exclusive access to the valuable fishing resources in Iceland´s economic zone, are willing to pay „the market rate“ for the privilege, whereas an ideologically driven left-wing government won´t let them.
Mr. Carney couldn´t be more wrong. As a matter of fact it is exactly the opposite. Previous conservative governments abused their political power to circumvent the law, by handing out the valuable fishing quotas for free to shipowners, traditionally a powerful lobby within the conservative ranks. It is the left in Iceland who have proposed to bring market forces into play to put a price on those privileges, by auctioning the quotas. The conservatives and their clients – by now their paymasters – are adamantly opposed. So far we seem to be stuck with a compromise. The oligarchs will be legally obliged to pay approximately a quarter of the annual „resource rent“ they have until now received for free. The conservatives have pledged to abolish it, if they are returned to power.
The dispute on fisheries management in Iceland is not about „the tragedy of the commons“. It is not about the State restricting access to the fisheries, based on the best scientific data available (though often imperfect and erroneous). This is generally beyond dispute. The raging debate is about the hitherto corrupt practice of conservative politicians of handing out those privileges to a favoured few – to the exclusion of everybody else – in return for financial and political support. We are talking about billions of euros annually in give-aways by the state. This sort of political favouritism is known elsewhere under the name of crony capitalism. It is beyond doubt in breach of the basic principles of equality before the law and freedom of employment, protected under our constitution. This is in fact a case of blatant political corruption, contrary to accepted norms of market competition, which the state should uphold.
How have the oligarchs returned the compliment? Here Mr. Carney at last stumbles unto the truth. By pouring „their money into (bad) investments in the boom years, helping to stoke the Icelandic bubble“. Mr. Carney might have added that those bad investments were either abroad or in the privatized Icelandic banks, which in less than half a decade piled up debt to the tune of 10 times Iceland´s GDP, for foreign creditors (mainly German) and Icelandic taxpayers to pick up. Despite those generous political handouts many of the oligarchs have sunk their companies into debt with uncaught fish as collateral (incidentally reducing their taxburden). At the same time they have neglected investment in the fisheries sector, which now stands at a record low, with the fleet rapidly becoming obsolete.
The introduction of „property rights into its fisheries“, which Mr. Carney describes so admiringly, turned out to be in fact privatisation a la Rus. May I suggest that Mr. Carney continue his fact-finding mission from Reykjavik to Russia to find out what abuse of political power in the service of plutocracy does to society in general. And to democratic governance, and the rule of law, in particular.
10. October, 2012
Jón Baldvin Hannibalsson