The Faroe Islands, part of the Kingdom of Denmark, won’t observe European Union sanctions the country says make no economic sense as its fish farmers predict a surge in exports to Russia.
“I have a responsibility to my people and I don’t believe in boycotts,” Home Rule Prime Minister Kaj Leo Holm Johannesen said yesterday in a phone interview. “They always end up hurting the wrong people.”
The north Atlantic archipelago, settled by Norse Vikings, has stayed outside the European Union and, unlike non-EU member Norway, has ignored the sanctions against Russia. That means it hasn’t been hit by President Vladimir Putin’s retaliatory trade ban. Bakkafrost P/F (BAKKA), based in the Faroese town of Glyvrar, predicted last month the development will more than triple its fish exports to Russia.
“Criticism from abroad has been very muted,” 50-year-old Johannesen said. “I’ve explained the situation to Brussels, to Danish lawmakers and to the Obama administration when I traveled to Washington and New York recently.”
Danish Foreign Minister Martin Lidegaard said he doesn’t
“want to be the umpire in this matter,” in a brief interview
today. “It’s no crime not to be a member of the EU nor is it a
crime not to be the subject of a boycott. On the other hand,
it’s clear that the EU expects that others don’t take advantage
of the situation to capture market from countries impacted by
the boycott.”
Salmon Demand
Russia, which accounts for about 7 percent of global Atlantic salmon demand, imposed its food ban on countries backing sanctions at the beginning of August. The standoff has left the Faroes, which supply about 4 percent of world output, in a unique position to provide Russians with fresh salmon.
“We don’t want to opt out of selling to Russia,” Johannesen said. “We operate in the world market where we get the best prices. We’re big on salmon in the U.S., China, Europe and Russia. Trade policy and foreign policy weave into each other.”
The trade dispute between Russia and its former cold war foes is distorting trade flows, Nils Smedegaard Andersen, chief executive officer of A.P. Moeller-Maersk A/S said Oct. 8.
“You’ll see an increase in ship cargoes coming into Russia, as all new exports to Russia must come by ship,” he said.
Shipping Flows
Maersk, owner of the world’s largest container line, has registered higher Russian imports of salmon, pork and chicken from Latin America, he said.
Norway is the world’s biggest salmon producer and the government there has sought to support its fishing industry during the trade ban by adjusting quotas as firms seek out new markets.
Since Putin unveiled his trade ban against countries signing up to sanctions in early August, shares in Norway’s Marine Harvest ASA (MHG), the world’s largest salmon producer, have lost 3 percent through yesterday, while Bakkafrost has gained more than 12 percent.
The Faroese are also prepared to ignore any protests from Denmark over their ethical obligation to support the EU.
There is “a real risk” Denmark might object to the decision to ignore EU sanctions, Johannesen said. His administration would “acknowledge the Danish position, but wouldn’t stop trading,” he said.
Russian Fishermen
The Faroese have exported fish to Russia for the past 70 years and signed a fisheries accord with the former Soviet Union in 1966, Johannesen said. Russian fishermen regularly stop at the island to refuel, he said.
The islands were embroiled in a one-year spat with the EU on fishing quotas that ended in August. Brussels imposed trade sanctions against the Faroe Islands, a ban that obliged Denmark to block imports of Faroese fish. The development helped strengthen the islands’ trade ties with Russia.
“Should the same country that recently imposed sanctions on us ask us to boycott Russia? That would be insane,” Johannesen said. “Then we would have a huge problem in the commonwealth.”
