Fishing deal with Russia creates headache for Faroe Islands

But the war in Ukraine has soured international relations and even their fish have become a geo-economic instrument that can be used as a weapon against Russia or against the Faroese. But it could also result in better relations between Tórshavn, the capital of the Faroe Islands, and Brussels.

Dating back to 1977, the Faroe Islands each year have inked a barter deal for their vessels to fish in Russian waters and vice-versa. Four big Faroese fishing vessels are rigged to fish in the Barents Sea and depend on the deal.

It was renewed last time in November 2022 — but only after some criticism.

"I believe that we must stop all cooperation with Russia," Faroese Centre Party leader, Jenis av Rana, said at the time.

The agreement covers less than two percent of the Faroese gross domestic product but is important for the small country aiming to become independent of Denmark.

Even more important is the Faroese access to sell fish to the Russian dinner tables.

In August 2014 Russia introduced a ban on imports of fish from the EU, US, Canada, Australia and Norway.

But the Faroese Islands were exempted from the Russian ban and have made good profits on selling fish to Russia since then, mainly on herring, which few other countries want to buy.

Since Russia attacked Ukraine the Faroese have found alternative markets for half of their exports to Russia. But Russia remains the fourth-biggest export market for the Faroese, after Denmark, the UK and the US.

Following snap elections in December 2022, the Tórshavn parliament, the Løgting, did an analysis of the country's overall relations with Russia. What would happen if cooperation with Moscow was iced, continued or changed?

A confidential report was completed last week and is now set to be discussed in the parliamentary foreign relations committee, before a decision in the Løgting this summer.

Mackerel wars

Russia became a very important commercial partner for the Faroe Islands 10 years ago when the EU imposed sanctions on the Faroe Islands in a dispute over fishing rights dubbed the 'Mackerel Wars'.

All Faroese vessels carrying herring or mackerel were banned from EU ports on 28 August 2013 for one year.

The Faroese were shocked.

"From one day to the next we lost half of our export market. …. if the EU had put the same sanctions against Russia as against the Faroe Islands in 2013, then perhaps the war [in Ukraine] would stop", Høgni Hoydal, deputy prime minister and minister of foreign affairs, industry and trade said in Copenhagen on Wednesday (10 May).

"The sanctions were tough, in fact the hardest sanctions against a country we have seen anywhere in the world in modern times", he said.

"The EU can export everything to the Faroese Islands but we still have restricted access to the European market for our main products", he noted while adding: "We hope relations to the EU can now come to a new phase".

Colonial-style trade deal

The existing trade agreement between the EU and the Faroese dates back to 1997. It allows only for free trade of non-manufactured raw fish.

"Why must we be retained in this old type of trade deal, hindering innovation of our industry?", one source close the talks asked.

"Now, there is a more constructive dialogue with the European Commission on this. In the light of the geo-political situation the EU has perhaps realised that it is important to retain good relations with the Faroe Islands", the source added.

It could result in a partnership agreement to be signed in a couple of months, EUobserver has learned.

And the clock is ticking, as the next yearly barter deal on fish with Russia will be up for signature in November 2023.

"We wish for this war [with Ukraine] to stop. War is good for absolutely nothing. And we need to address the situation with our partners", Høydal said.

"How do we deal with Russia? … This is debated every week, every day, every hour in the islands of the North Atlantic. It is not easy", he said.

"The geopolitical situation is adding pressure on everything that happens and the North Atlantic and Arctic area. As the minister of foreign affairs of the Faroe Islands it is my main task to build consensus and create coherence around our policies towards Russia", Høydal said, but refused to take a personal stand for now.

"We have not seen any different behaviour in our waters following the attack on Ukraine. But we are working hard on securing infrastructure. We don't however want to create unnecessary anxiety among our people and among our neighbour nations. We are focused on having a low-tension situation in our area and working closely together with Nato on security", Hoydal said.

The Faroese have taken part in a Nato exercise in the Atlantic Ocean with civilian vessels and is preparing for taking over airspace control from Copenhagen.

Longterm the Faroese Islands strive to be come a sovereign country: "As we say: Nothing about us, without us", Hoydal said.