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
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
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
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.