As pollsters and political pundits join the growing queue of professions not to be trusted, we realise we are definitely waking up to a world of political and economic uncertainty. The details here in the UK of Brexit and how we will negotiate ourselves a new dawn are definitely still unclear and contentious. In the U.S. Donald Trump campaigned on the message that he will make “America great again” and how he will appease the great band of disaffected across central America will be watched closely. Change is what people want at the moment, cumbersome government controlled by career politicians just isn’t cutting the mustard.
Iceland is an interesting model, in a very short space of time they have had a political and economic revolution. When the 2008 banking crisis hit they took the unusual step of letting their banking system collapse, they were not prepared to mortgage the country to save the banks’ reckless lending. They prosecuted their bankers and put them in jail. They then went cap in hand to the IMF for a loan to finance the economy, letting their currency devalue and allowed interest rates to hit 18%. Draconian fiscal controls were also implemented, foreign investors were prevented from cashing and withdrawing their investments. Pension funds were not allowed to invest overseas. Financial assistance from the government helped facilitate households to clear their debt positions. The results have been nothing short of amazing.
The IMF loan is almost repaid, the economy is booming and a forecast GDP of 4% is higher than any other economy worldwide, and twice that of the UK. Overseas investors are returning seeing Iceland as a great place to invest and ignoring the restrictions on capital movement.
This Nirvana hasn’t stopped the political scene transforming either. The Pirate Party with close links to WikiLeaks editor Julian Assange was formed in 2013 and campaigned on “freedom of expression being one of the corner stones of democracy”. The party declared its solidarity with the French satirical magazine Charlie Hebdo and were responsible for the government’s repeal of its blasphemy laws in 2015. They also lobbied for the granting of citizenship to ex CIA intelligence officer Edward Snowden but this proposal didn’t receive enough political support. The Pirate Party’s popularity and its alternative views continued to grow and when it was revealed earlier this year in the ‘Panama Papers’ that the wife of Iceland’s prime minister was sheltering their investments in an offshore account in the Virgin Islands all hell broke loose. The fact that Sigmundur Gunnlaugsson had steered his country from financial bankruptcy to economic success has counted for nothing and with widespread demonstrations of unrest he reluctantly resigned. The Pirate Party’s popularity now stood at 43% but as we know polls don’t these days reflect which box voters tick. At the elections last month the electorate just weren’t ready to hand the country over to The Pirates.
In the elections The Pirates polled in 3rd place at 22%, leaving the Independence Party (26%) and the Progressive Party (24%) free to form a coalition government. At the same time as the elections last month the fishing unions gave notice that unless agreements could meet over pricing formulas allowing fishermen a larger share of prices in auction markets and agreement on the number of engineers vessels should carry and holidays in December a strike would commence on the 10th December. Agreements were reached on most points some weeks ago and even at the last hour it seemed that a strike would be averted, how wrong that assumption has proved to be.
The strike which started yesterday comes at the worst possible time of the year, Norway is barely catching fish now which means very little or next to nothing available for fresh sales in the market place of cod and haddock primarily. Spain and southern Europe are markets that Iceland in its attempt to diversify have developed, and now account for 34% of their seafood exports. As major buyers of cod they will also be looking for alternative species. Hate to be the bearer of bad news but white fish prices will rise and quickly.
One thing this year that we have learnt is that we, as secondary salmon fish processors, can’t continue guessing what will happen to fish prices. In the past we have been able predict a gentle price wave and take a stab at setting a mean average that we could adjust maybe once or even twice a year. The past 12 months of violent and regular upward spikes means that pricing model is broken. It’s a far more labour intensive and costly exercise but monthly and maybe in some cases weekly pricing is possibly the future.