Iceland. A well-known legal battle was fought during the
year around the state system of compulsory catch quotas for
those who are going to fish. A district court in January
acquitted a fisherman who was charged with fishing without
holding a quota. The Court explained that the quota system
did not offer fair access to a public resource. The ruling
was strongly criticized by Prime Minister Davíd Oddsson, who
said that I's economy would be ruined if everyone were
allowed to compete freely for the total annual catch. The
fishing would then be over in a couple of months, he
claimed. The state appealed against the judgment, and in
April it was set aside by the Supreme Court. However,
critical fishermen believed that the system makes a few
people rich, and they demanded that the government change
COUNTRYAAH, the catch of capelin (a Norwegian fish) in January became
the largest in ten years. But the country's marine research
institutes announced that the stock of cod, the most
important export fish, had decreased, and a sharp reduction
in annual catches was recommended from September. The news
caused a fall in the price of the Icelandic krona, and the
shares of the fishing companies fell on the stock exchange.
Despite the interest rate hike, the krone continued to fall
during the year, reaching a record low in November with the
exchange rate of SEK 88. for a US dollar. After 5% economic
growth for four consecutive years, growth for 2000 was
projected to be only 3.5%. The trade deficit increased and
inflation rose. In April, unemployment was 1.5%.
On the Icelandic National Day in June, southern Iceland was
hit by an earthquake measuring 6.5 on the Richter scale and
was the most powerful the island has experienced since 1912.
Many houses were damaged, hot water lines burst and roads
were destroyed, but no man was seriously injured.
Presidential elections would have been held during the
year, but the election was canceled when no candidate
challenged incumbent President Ólafur Ragnar Grímsson, who
thereby automatically received a new tenure of four years.
The three opposition parties, the Social Democrats, the Folk
Alliance and the Women's List, who had cooperated in a left
alliance in the 1999 elections, joined together during the
year to form a new party, the Alliance.
The financial crisis
In the first years after the turn of the century, Iceland
was increasingly referred to as an economic miracle. From
2002 to 2006, the Reykjavik Stock Exchange rose by 400 per
cent and private consumption by 30 per cent, while house
prices rose 50 per cent in one year. The financial industry
appeared to be the driving force itself, and the financial
institutions were behind the acquisition fright of
everything from banks to retail chains and top football,
mostly in the UK and Denmark, but the raids continued
country after country - through huge borrowings. Foreign
debt increased steeply, the expanding banking sector
gradually incurred foreign claims between nine and ten times
greater than the country's gross domestic product. The
policy ratefollowed. The central bank warned against
overheating the economy, but rejected all indications of a
bubble about to burst. At the turn of the year 2007/2008
Iceland was named by the UN as one of the world's best
countries to live in. A few months later, what was still a
bubble had burst.
The international financial crisis hit Iceland far more
severely than any other Nordic country. The acquisition
raids brought a sudden stop for the three major banks
Glitnir, Landsbanki and Kaupthing, which were in turn taken
over by the Icelandic state. Crisis loans from the
International Monetary Fund and from a number of countries
in the neighborhood poured in, but little to the deficit, a
weak krone, rising inflation and unemployment. Something
like the memory of revolutionary conditions took place when
a raging crowd in January 2009 besieged Alltinget and
succeeded in forcing Prime Minister Geir Haarde's departure.
Central Bank Governor David Oddson retired the same year.
A temporary, red-green crisis government of the Social
Democrats and the Left Alliance, led by Johanna
Sigurdardottir, ruled until the new election in April 2009.
The government coalition gained renewed confidence in the
election. In July, the Swedish parliament, with almost a
majority - 33 out of the 63 mandates - decided to apply for
membership in the EU. The Social Democrats were pushers for
the yes side, with the economic crisis and the transition to
the euro as the main argument. On the no side, the
Independence Party and fishing interests played a key role.
The European Commission decided to initiate membership
negotiations, and on 17 June 2010 Iceland was granted
candidate status at the EU summit. However, Iceland chose to
withdraw the EU application in 2014.
Iceland's President from 2016 is Guðni Thorlacius
Jóhannesson. In the 2017 election, none of the government
alternatives got a pure majority, but the Independence Party
was still the largest in the Allting, with 16 out of 62
seats, and Prime Minister Bjarni Benediktsson formed a