Reception hosted by Faroese Representation in Copenhagen 29 April 2009
Excellencies
Ladies and gentlemen
In her book Faroes’ Child, Antonia Stephenson, a woman of Slavic origin who in post-war Europe was a refugee in the Faroes, describes the Faroese as diligent, egalitarian, God-fearing and on the surface a little cheerless. Almost as an apology she adds: “anyone who has endured a few stormy Faroese winters is bound to feel cheerless at the end of them”.
Perhaps it will not come as a surprise that I do not necessarily agree with Mrs. Stephenson’s description. But considering the changes in the global economy it is safe to assume that most of us have experienced a rather cheerless winter.
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With respect to the financial crisis the Faroes have suffered mildly so far, while access to loans is not as easily obtained as a few years ago and financing costs have gone up. The fact that the Faroese parliament chose to put in force in the Faroes the bank packages passed by the Danish parliament has contributed to stabilising the financial sector. I have no hesitation in stating that my government will continue working with the relevant Danish authorities with respect to securing a sound and healthy financial sector in the Faroes.
But the financial crisis grew into a global economic recession.
Reductions in consumer purchasing power have led to a decline in the market price of many high-end fish products while at the same time catches for expensive fish species such as cod and haddock have fallen sharply. Clearly, this is affecting our economy, which is characterised by a limited internal market and thus heavily dependant on external trade, where fish products account for approximately 96 per cent of our exports in goods.
Our situation is quite similar to that of other countries as we face an expected modest decline in GDP, low consumer confidence and rising unemployment. Still, we find ourselves in a favourable position to deal with the economic down-turn as unemployment in 2008 reached an average of only 1.8 per cent of the total working force and is expected to rise to around 4 per cent by 2010. Fortunately, several of the economic fundamentals in our resource based industries look healthy and therefore the outlook for the future is not all gloomy. The decline in prices for cod and haddock are likely to bring about a reduction in the catch effort for those species followed by a long term reestablishment of these fish stocks.
With respect to the public budget, the shrinking of the economy has made clear that we for a period of time have had a structural deficit, which to some extent was hidden by the extraordinarily high revenues during the boom of the past decade. The government is therefore at present preparing a white paper with a view to bringing about a long term balance in the public sector budget.
These measures will include:
• introduction of new revenues,
• limitations on tax deductions,
• structural reforms in the public and private sector, and
• zero growth in all public operating costs
The recommendations of the white paper will be made operational with the passing of the 2010 budget and the objective is to balance the budget in 3 to 5 years.
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In the field of foreign policy I should like to highlight two areas of focus for the Faroese government.
Firstly, it is my government’s objective to secure closer and better cooperation with continental Europe for instance the EFTA and EU countries.
Geographically, we are a part of Europe and we consider ourselves as Europeans. It is therefore an unacceptable situation that our formal relations with the vast majority of European nations, namely those in the European Union, is based on an old fashioned trade agreement covering little more than trade in goods.
This situation calls for improvement and recently we have established a group of EU experts with a view to come up with specific proposals for a better cooperation with the European Union. Our aim is to expand the cooperation with the EU countries to cover the freedoms of the internal market as well as to take part in a number of European programs in specific areas of common interest for instance research and education.
The second area of focus is the issue of climate change and our objective is to become part of the post-Kyoto agreement to be adopted in Copenhagen in December this year. Until now we have not been at the forefront of fighting climate change.
Last year the Faroese government published a green paper mapping the potential for CO2 reductions in energy, traffic, and various industrial sectors. Furthermore, the green paper includes an assessment of the possibility of applying more fiscal measures than at present.
The green paper has been considered by all ministries, which have come up with specific proposals on CO2 reductions. The aim is to adopt a resolution in the Faroese parliament with firm reduction targets later this year.
We are fully aware of the fact that our contribution to reducing CO2 emissions on a global scale is going to be modest and may not even be seen in the statistics. We will take part in such a global agreement and bear our part of the burden.
In addition to fulfilling our share of a global commitment on CO2 reductions, we hope to be able to demonstrate at the conference in Copenhagen that Faroese companies, especially those in the maritime field, are able to produce technical solutions that may make a profound contribution to reducing industrial CO2 emissions.
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Ladies and gentlemen
Let me in closing turn to a totally different subject.
Later today I have the pleasure to open an exhibition on Faroese contemporary art that will be on display here at the North Atlantic House during the summer. Hopefully, some of you will visit the exhibition as it will demonstrate that the Faroese society is both forward looking and creative.
So where the economy at present may be a cause for concern, Faroese art is a constant source of joy and inspiration. It can almost make the Faroese cheerful.
Thank you.
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Kaj Leo Johannesen
Prime Minister