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Faroe Islands

Yearbook 2001

Faroe Islands. The question of independence from Denmark continued to dominate politics in the Faroe Islands. At the beginning of the year, the leader of the National Board, Lawman Anfinn Kallsberg from the People's Party, canceled a planned referendum on the start of an independence process. The opinion then pointed to a no-majority, since the Danish government threatened to withdraw all financial aid within four years if the vote was carried out.

The Minister of Independence, Republican leader Høgni Hoydal, tried to push the process in conflict with the People's Party, triggering a government crisis. However, the National Board was able to agree on a plan to transfer social functions from Danish to Faroese responsibility until 2012. This mainly concerns the church, the judiciary, the social services, health care, the police, communications and currency. At the same time, Danish support will be phased out and an economic fund will secure a self-sustaining economy. According to the plan, a referendum is to be held before independence.

In July, drilling for oil started on the Faroese seabed. A consortium led by the American company Amerada Hess. Faroese Atlantic Petroleum announced in November that oil had been found. The potential profitability of the discovery for commercial extraction would be investigated.

The National Government's independence plan received harsh criticism from the opposition and became the main issue in the election campaign in the Faroe Islands ahead of the Danish parliamentary elections in November. One of the two Faroese mandates went to the Union Party, which wants to maintain ties with Denmark, and the other was won by the Republicans.

Economy

In ancient times, agriculture was the main industry of the Faroe Islands. The sheep breeding was so dominant that it gave the islands its name. Sheep management is still extensive, but fishing, fish farming and industry and service related to fishing are now the islands' most important industries.

Exports consist almost entirely of fish and fish products. A problem in recent years has been overcapacity in the fishing industry and that some species have been overfished. The Faroe Islands have had severe conflicts over fishing quotas with the EU and Norway.

Fishing was traditionally conducted on a small scale from open boats near the coast. In the late 1800s, the Faroe Islands began to buy seagoing sailing vessels by the Englishmen who had gone over to steamboats.

Some of the Faroe Islands' meat supply comes from gate whales. The hunt for gate whales, which are hunted for shallow water by the coast and slaughtered, is contentious. The hunt has sparked protests among animal welfare advocates abroad, but the population is not threatened and the Faroe Islands do not want to forgo this ancient tradition.

The income-producing long distance fishery had to cut down on the Faroese as other countries expanded their fishing zones. Half of the catch is now taken in the Faroe Islands. The changeover required new boats and gear, and from the mid-1970s the Faroe Islands invested heavily in the fishing fleet, fish farms and fishing industry.

In addition, large sums were invested in improving the infrastructure with good roads, tunnels, bridges, sports facilities, state and municipal construction and private housing. Large sums were borrowed in Denmark and abroad. The result was an overheated boom that culminated in 1986–1988, and the Faroese turned to a standard of living slightly above the Danish one. Foreign debt eventually exceeded the Faroe Islands' gross domestic product (GDP), and the management of the archipelago's finances was relentless. When the fishing industry got into trouble, a recession was triggered. A number of bankruptcies followed and something for the Faroe Islands completely new: unemployment. This caused a tenth of the Faroese to move from the islands, not least to the fishing communities in Jutland.

The Danish state helped to clear the debt on the condition that fiscal policy was severely tightened and came under Danish supervision. The aid was effective, but cost taxpayers in Denmark a billion SEK in addition to the annual contribution to the national treasury of one billion.

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