Reykjavík Grapevine - 27.07.2007, Page 11

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My cousin Gummi put it best: “The problem with
the quota system is that it’s always been discussed
in such an obscure, specialized language that no one
really understands how it works, what it’s meant to
do and why.”
Raised in the same remote Westfjords fishing
village (3,000 strong Ísafjörður, proud capital of
our nation’s northwest), Gummi and I both share
memories of grimacing in pain and anxiety whenev-
er the subject of Iceland’s fishing regulatory system
(sometimes known as “the quota system”) came up
– and that happened a lot in our family. It has a way
of infuriating people, causing arguments, breaking
up families, even instigating the formation of entire
political parties.
And perhaps it should. It is an awfully weighty
subject; the way Icelanders manage their fish har-
vesting directly affects all of them, although most
choose not to notice nowadays. And those who do
notice, those who claim to understand, are usually
heavily at odds with one another. Uncovering the
simple truths and facts of the matter in order to half-
decently explain the system to an outsider seems a
wholly Sisyphean task, as no one really agrees on
what they are, or if there even are any.
This is why we decided to ask all of them, at
least as many as we could comfortably fit within a
spread. We posed several questions pertaining to
the Icelandic quota system’s nature, purpose and ef-
fect to a small number of people that are in some
way or the other connected to it and have voiced
opinions on it in the past.
What is the Icelandic Quota System
(or ITQ system)?
Benedikt Jóhannesson (BJ), Reykjavík, is a mathe-
matician, publisher and CEO who has, among other
things, worked as a statistical and actuarial advisor:
“In the late seventies and early eighties, cod fishing
went up greatly. Almost every small town invested
and had its own trawler and fish processing plant.
After all, the vast ocean was there like a chest full of
cod. The politicians had a ball, but the specialists at
the Icelandic Marine Research Institute (MRI) were
not amused. Year after year they recommended
that the total fish harvest should be reduced. They
reminded the nation of the case of the herring of
the sixties. The “silver of the sea” had suddenly van-
ished without warning in 1967, after years of Klon-
dike-like atmosphere in the north and east.
In 1983, a new temporary system of fishing
quotas, setting a total allowable catch (TAC), was
introduced by then fisheries minister, Halldór Ás-
grímsson. The system was supposed to last only
three years. Some members of the parliament were
strongly against quota regulation but accepted it
as a temporary measure. The quotas issued were
based on the catch of each vessel in the previous
three years. And then there were exceptions. The
system was extended temporarily in the years after
1986, until it was made permanent in 1990.”
Einar Kristinn Guðfinnsson (EKG), Bolungarvík,
is a veteran Independence Party MP and Iceland’s
Minister of Fisheries since 2005:
“The ITQ (Individual Transferable Quotas) system
was introduced in 1984 as a response to serious re-
ports about the state of Iceland’s cod stock. Thus,
you might say the original purpose was to ensure
that our overall fishing didn’t surpass agreed-upon
restrictions on the TAC. It has of course evolved
since its inception and is now also has the stated
purpose of encouraging optimization within the
field, reducing costs, etc. This has been achieved by
individualizing the quota; it is allotted to individual
vessels in accordance with the law.
Today, it’s actually a three part system, consist-
ing of the general ITQ system, where most of the
TAC is caught, then there’s a system that caters to
the smaller vessels, and finally one that’s aimed at
strengthening the smaller regions with so-called
“line-concessions” for vessels that meet certain con-
ditions. Those get a 16% discount, as it were, off
their quota. To help regions that have for some
reason lost their access to fishing quota we also
have the “regional quota system”, where part of
the TAC is distributed to those in need.”
Þórarinn Ólafsson (ÞÓ), Ísafjörður, is a Bach-
elor of Science in Fisheries from the University
of Akureyri and works at Hraðfrystihúsið Gun-
nvör (one of the Westfjords’ few still-remaining
giant fishing conglomerates) overseeing their
ventures into cod farming:
“It is a system built to manage fishing around
Iceland.”
Halldór Hermannsson (HH), Ísafjörður, a re-
tired fishing captain is equally outspoken on the
system, although he’s at the other end of the
spectrum from HHG. He is also my grandfather
whom I love and respect:
“As fish is considered to be a limited resource,
we have been managing it with this system since
1984. At first, quota out of the TAC wa allotted
to vessels according to their average catch in the
five preceding years. This was the idea. Those of
us who thought it could work back then now
consider the whole system a raging mess, and
that all of the system’s noble intentions were ru-
ined when they changed it in 1990 to the effect
that quota owners could sell their allotted quota
for profit, without so much as paying a resource
tax off their gains. It spawned tremendous rack-
eteering, people started selling and renting out
their quota for a great profit, everything went
haywire. This was all done to please hard-line
libertarians, and those are no better than hard-
line communists in my book.
We warned that Iceland’s small towns would
shrivel up, and this is what’s happened. It’s a
terrible way to treat a nation whose identity is
so firmly grounded in fishing. New Zealanders
established a similar system around the same
time, but they did it right, and humanely. Seven
percent of the catch is paid back to the nation
in form of a resource tax, and quota can only be
rented out with a 2% commission, which is a far
cry from the 60–70% commission they charge
here.
Also, the system invites so much swindling;
those who buy or rent overpriced quota can
only ever bring the biggest fish to land, throw-
ing the small, less profitable ones dead in the
ocean. This is among the reasons why the sys-
tem has failed to reach its original purpose: cod
stock now is smaller than ever before. I say to
hell with it!”
Hannes Hólmsteinn Gissurarson (HHG),
Reykjavík, is a Political Science professor at the
University of Iceland, well known for his liber-
tarian views and an outspoken supporter of the
system in question:
“The ITQ system is a system of individual trans-
ferable quotas. The purpose is both to limit ac-
cess to a limited resource and to ensure that
those who run their enterprises most efficiently,
do harvest the catch.”
Grímur Atlason (GA), Bolungarvík, is the
mayor of small (pop. 900) Westfjords village
that’s heavily dependant on the fishing industry,
and thus the quota system:
“Iceland’s fish management system was es-
tablished in 1983 to protect the fish stock and
build it up. It wasn’t originally conceived as a
system of ownership as much as a system that
enabled those best suited to catch the fish to do
so. Today, it’s the complete reverse, and has be-
come property based. Quota is now a valuable
commodity that’s traded in the marketplace and
that has both good and bad aspects. It’s both
an established venue for honest, healthy trading
that’s important to Iceland’s economy, and also
a sort of racket. They’re still trying to use it to
manage the fish stock, but with all due respect
it’s safe to say that it’s all but collapsed.”
How does it work?
HHG: “Those who are most efficient buy out
the others who leave the fishery. This is a good
thing since the problem was that too many were
harvesting the limited resource.”
EKG: “Its original declared purpose was to keep
the total catch within certain limits, something
we failed to do at first because the system al-
lowed the industry to surpass them. Nowadays,
however, the total catch is close to what the
government decrees.
It has reduced the cost of fishing, while at
the same time putting the industry in more
debt. On the other hand, the fishing industry
seems more able to deal with that debt than
before because the whole process has become
much more efficient. In this regard it’s evident
that the system has met its purpose; efficiency
has gone up and costs have gone down. It has
also had some negative effects, and I think the
most negative ones can be seen when quota
is sold from already weakened fishing villages.
So there’s an answer to how it has worked:
positively in the economic department, and
negatively in regards to regional development
outside of Reykjavík. It should be kept in mind,
however, that quota transferrals usually happen
between the coastline’s fishing villages for the
most part. Some of the small towns grow stron-
ger at the cost of others.”
HH: “I can’t see that it’s working at all. They
say it encourages the industry to turn out a bet-
ter product, but that simply stems from the fact
that it’s sold on the market today and a better
product means a better price. The cod stock has
collapsed. Fishing villages are being abandoned.
Less people find work in the industry. Are those
the desired results?”
BJ: “Each vessel owner is allotted a certain per-
centage of the quota and if the total catch goes
up, they all do. If the total allotted catch goes
down the reverse happens. Quota can be trans-
ferred between vessels and fishing companies.
The vessel owners are buying and selling quotas.
In some cases they are temporarily leasing quo-
tas from one company to another. This means
that some can start collecting quota while oth-
ers are pushed out of fishing altogether.”
What is its main purpose?
Has it been reached?
HHG: “The purpose was to ensure that those
who are most efficient at harvesting fish, do so,
and that those who are less efficient, leave the
fishery and do other things where they may be
more efficient. It has more or less been reached,
at least in comparison to other nations where
the fisheries are loss-making enterprises, de-
pendent on government subsidies.”
HH: “Its main purpose was originally to protect
the fish in the ocean, limit the total catch and
strengthen the various settlements around the
country. It has failed on every count, as is clear
now when the total cod quota has been cut
down to 130,000 tons compared to an average
of 300,000 tons in the past. Of course nature
plays a role here, but to claim that the system
works is ludicrous.
And now they’re saying that the government
doesn’t subsidize fisheries like in the past, as if
that’s the great accomplishment and goal! And
even that is a lie; the government subsidizes the
fisheries and vessel owners by exempting them
from paying the resource tax. Hannes Hólmste-
inn (HHG) and his cronies, us fishermen despise
them, travelling the world saying Iceland has the
best fish management system. Our quota sys-
tem is a bleeding mess and that’s clear to any-
one with eyes in their head.”
GA: “At first it was to protect and build up
the fish stock, and to strengthen Iceland’s fish-
ing settlements. Today, the latter purpose has
all but vanished from the system. It’s more of
a control mechanism now, and its success at
protecting the fish stock is limited, especially
in light of the latest cutbacks. What might be
needed is more research on fishing grounds; all
the different species and other factors combine
to make a complex eco system that we really
don’t understand well enough. Also, many fish-
ing villages now have no quota and are slowly
turning into ghost towns. So I’d say it’s failed
both of its purported purposes. I don’t know if
we can ever change it back, as it’s become an
intricate part of our economy, but it’s clear that
in and of itself, it’s a failure.
ÞÓ: “To keep control of fishing around Iceland,
that’s the main purpose. To ensure that fishing
is done in as efficient and profitable manner as
possible. These goals have been reached for the
most part, although one could go into a long
tirade counting the pros and cons of the sys-
tem.”
BJ: “To restrict fishing from a limited resource
and try to allocate access in a fair manner. The
idea is to build up the fish stock in the future. In
view of recent events, when the cod quota was
cut down to 130 thousand tons, it is hard to
say that the system has achieved its goals. How-
ever, one cannot overlook the fact that since the
quota system was taken up in 1984, cod fishing
has been some 900 thousand tons more than
the specialists at the MRI recommended.”
Name some of the effects its had
since its inception.
BJ: “The fishing industry is much more efficient
than before because of it. In recent months, the
Icelandic Króna has become stronger, almost by
the day. A few years ago, this would have called
for government involvement in some way and
cries for the devaluation of the currency. Now,
companies are weathering the storm on their
own.”
EKG: “It’s safe to say that it’s introduced great
efficiency and optimized its processes, reducing
waste where possible. It also increased the risk
of certain illegal activities such as unreported
catches and instances where the smaller fish get
thrown away so it doesn’t come off the vessel’s
quota. We have been trying to react to those
negatives aspects using various means, and
continue to do so.”
HH: “Fisheries all around the country have col-
lapsed and now stand empty, people who lost
their jobs continue to vacate the smaller towns,
etc. Here in Ísafjörður, right beside the world’s
richest fishing grounds, there’s barely a sem-
blance left of what was once a bustling econo-
my. We once had nearly two dozen large vessels
operating from here, now they’re down to two
or three. Those who claim that the quota system
is good and benevolent are nothing but liars.”
HHG: “It has transferred the quotas, i.e. the ac-
cess rights, from the less efficient to the more
efficient. It has rationalised the fisheries. It
has created a lot of capital, and is one of the
explanations for the accumulation of capital
abroad.”
Does it affect Icelanders not directly
involved with the fishing industry?
ÞÓ: “Yes, in negative and positive ways, espe-
cially those living in the smaller fishing villages.”
HHG: “Yes, indirectly, because it is an efficient
system. Essentially, the fish stocks which were
a common good before, and therefore value-
less, as all common goods are, became a private
good, and got valuable.”
EKG: “There’s no doubt about that. In fact,
the University of Iceland’s Institute of Economic
Studies has shown that the fishing industry’s af-
fect on our economy is underestimated. Fewer
people are working in the industry now because
of technological advancements, but every vessel
and fishery creates jobs in the service industry, in
marketing, engineering and in the scientific and
technological fields, for instance.”
BJ: “Yes, of course. One part of the economy
can never be separated from the rest. However,
nowadays the fishing industry is no longer in the
news every day. Twenty years ago the govern-
ment was much more involved on a day-to-day
basis, and a reduction in the cod quota would
have been a major blow to the economy. People
in every sector could have expected a reduction
in their real wages. Now the change mostly af-
fects inhabitants of fishing villages, not every-
body.”
GA: “It does, a lot. The recent cutbacks will af-
fect our entire nation, however indirectly; our
total export value will decrease by 20 billions
per year. On a smaller scale, in towns where
fishing is the main industry, it affects everyone
from the storeowner to the cleaning lady. And
those drinking beer at Sirkús tonight, it will af-
fect them, too.
Alienation is getting to be a big problem in
Icelandic society; people don’t think that the
fishing industry affects anyone but a few deso-
late souls in the countryside and maybe some
immigrants. They even fail to see anything out-
side of Reykjavík as a part of Iceland. People get
outraged when the government decides to build
a tunnel to Bolungarvík, for instance, not real-
izing that the townspeople contributed over 300
million ISK in taxes last year. It’s bad PR on our
behalf, basically.”
Text by Haukur Magnússon and his amazing
panel of experts Photos by Gulli
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