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Further Reading

Faroe Islands

Faroe Islands is Northern Europe, island group between the Norwegian Sea and the North Atlantic Ocean, about half way between Iceland and Norway. It is an archipelago of 17 inhabited islands and one uninhabited island, and a few uninhabited islets; strategically located along important sea lanes in northeastern Atlantic; precipitous terrain limits habitation to small coastal lowlands. Exploration activities indicated that there could be undiscovered oil and gas resources. The home-rule Government has full authority over hydrocarbon exploration in its territory and attempted to move toward greater independence from Denmark by increasing exports of fish products. The islands have no significant identified mineral resources.

Faroe Islands has been an autonomous province of the Kingdom of Denmark since 1948, but there is increasing demand in the Faroe Islands for more. Over the years the Faroese have taken control of most matters except defence, foreign affairs and the legal system. Politically, the present Faroese Home Rule Government has initiated a process toward greater independence from Denmark, if not complete secession from the realm. In that respect, agreement on how to phase out the Danish subsidy plays a crucial role. Because anticipated offshore hydrocarbon resources have not been realized, earlier Faroese proposals for full independence have been deferred; Iceland, the UK, and Ireland dispute Denmark's claim that the Faroe Islands' continental shelf extends beyond 200 nm

The population of the Faroe Islands is largely descended from Viking settlers who arrived in the 9th century. The islands have been connected politically to Denmark since the 14th century. A high degree of self government was granted the Faroese in 1948, who have autonomy over most internal affairs, while Denmark is responsible for justice, defense, and foreign affairs. The Faroe Islands are not part of the European Union.

The unicameral Faroese Parliament or Logting haws 33 seats; members are elected by popular vote on a proportional basis from the seven constituencies to serve four-year terms. Elections were last held on 19 January 2008 (next to be held no later than January 2012). The election results: percent of vote by party - Union Party 21%, Social Democratic Party 19.4%, Republican Party 23.3%, People's Party 20.1%, Center Party 8.4%, Self-Government Party 7.2%, other 0.7%; seats by party - Republican Party 8, Union Party 7, Social Democratic Party 6, People's Party 7, Center Party 3, Independence Party 2.

In early 2008 signs of an impending slowdown in the Faroese economy became apparent. The main difficulty lay with the fishing industry coming under pressure from smaller catches combined with historically high oil prices. Though oil prices have come down, reduced catches of especially cod and haddock have strained the Faroese economy. GDP growth was 0.5% in 2007-2008, but inflation was 4.7%, leading to a drop in real GDP. A contraction in all sectors except the public sector is expected for 2009. The slowdown in the Faroese economy follows a strong performance since the mid-1990s, with annual growth rates averaging close to 6%, mostly as a result of increasing fish landings and salmon farming and high and stable export prices. Unemployment was insignificant and reached its lowest level at 1.2% in the first half of 2008 but increased to 3.3% in April 2009 and is rising. Most of the Faroese who emigrated in the early 1990s (some 10% of the population) due to the economic recession have returned. The positive economic development helped the Faroese Home Rule Government produce increasing budget surpluses that in turn helped to reduce the large public debt, most of it to Denmark. However, the total dependence on fishing and salmon farming makes the Faroese economy very vulnerable, and the surpluses turned to deficits in 2008; a deficit of $100 million is projected for 2009. Initial discoveries of oil in the Faroese area give hope for eventual oil production, which may lay the basis for a more diversified economy and thus less dependence on Denmark and Danish economic assistance. Aided by an annual subsidy from Denmark corresponding to about 6% of Faroese GDP, the Faroese have a standard of living comparable to that of the Danes and other Scandinavians.