EUROPEAN MANAGEMENT PROGRAMME

Iceland: From Heaven to a Freezing Hell... Lessons from the used-to-be Viking Tiger.

CLEMENTZ Jonathan, DEVINEAU Jean Damien, VENEGAS Karla 6/15/2011

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Abstract
Iceland was well-known for its fast economic growth. But how did the 2008 economic crisis affect the Viking Tiger? What were the mistakes made and how is Iceland reacting nowadays towards the new challenges? An economic reason for the crisis is the weak business culture. It resulted in high risk decisions, ending in high debts and economic recession. In addition, the lack of financial knowledge from the consumers caused bubble asset inflation that impacted the overheating of the economy, increasing the exchange rate and the trade deficit of Iceland. The political lessons can be extracted from the continual disagreements from different political actors. The political parties, the president, the prime minister, and the citizens: everyone fights for its own interests and for what each individual considers to be better for the country. Still, civil liberties remain wellestablished and the institutions work correctly. The fishing industry lesson permits to realize the mistake caused by the privatization of the sector and the ITQ system. Hence, new challenges are presented such as: the establishment of a new fishery management system, the Cap-Rent-Recycle; and the transitions made in its policies in order to enter to the EU. The aluminum industry lesson establishes that, although the expansion of the aluminum industry appears to have a positive influence on stability and economic growth, it would face opposition from environmental movements. The environmental and energy lesson elaborates on the high importance of Icelandic renewable energy production and the increase of tourism-caused pollution. Finally, regarding the technology industry lesson, the R&D in the technological sector positioned Iceland as one of the most technological advanced countries in the world. However, the small market size and the limited budget after the crisis have negative effects in this area.

Contents
Contents..............................................................................................................4

Figure 1: Total external debt..............................................................................13 Figure 2: Consumer price index.........................................................................14 Figure 3: General intrest on non-indexed loans..................................................15 Figure 4: Unemployement..................................................................................16 Figure 5: GDP 1980-2010...................................................................................16 Figure 6: GDP 2008, comparison........................................................................18 Figure 7: Inflation 2008, Comparison.................................................................19 Figure 8: forecast of GDP and Inflation until 2016..............................................20 Figure 9: GDP by industries................................................................................20 Figure 10: GDP by industries, from 1980 to 2010...............................................21 Figure 11: EPI rating (detail in appendix 2)........................................................37 Figure 12: CO2 emissions, comparison...............................................................37 Figure 13: Annual generation of energy.............................................................38 Figure 14: energy installed capacity..................................................................39 Figure 15: Total man-made emissions without carbon sequestration.................40 Figure 16: GHG emissions by industries.............................................................41 Figure 17: Emission of carbon dioxyde by source...............................................42

Iceland
From Heaven to a Freezing Hell... lessons from the used-tobe Viking Tiger
The main objective of the present report is to explain the evolution of the Icelandic economic growth. The project also tries to highlight the decisions that led to the 2008 economic crisis. In order to succeed, the focus has been made on five aspects which are considered to be determinant for Icelands development and failure. These characteristics are: its economy, its political system, its industry (fish and aluminum), its environment, and its technology/R&D. The conclusions present the main lessons that can be learned from Iceland.

Situation of Iceland and some figures

Northern Europe, island between the Greenland Sea and the North Atlantic Ocean, northwest of the United Kingdom. Constitution, 16 June 1944, effective 17 June 1944; amended many times Area: Coast line: Population: Age structure: Urban population: 103000 sq km near 5000km 311,058 (July 2011 est.) 198000 in Reykjavik 0-14 years: 20.2% (male 31,929/female 31,034) 15-64 years: 67.1% (male 105,541/female 103,202) 65 years and over: 12.7% (male 17,974/female 21,378) (2011 est.) 93% of total population (2010)

Life expectancy:

80,9 years

PESTEL
In order to acquire an overall perspective of the current situation of Iceland, a PESTEL Analysis is offered (Datamonitor 2011; statice.is 2011):

Political
The government of Iceland has a high economic focus. Its policies strongly support the private sector of the country. In October 2008, the three main banks collapsed and Iceland was able to compensate its national savers, but foreign savers lost all their money. The president called three times for a referendum. Later on he refused to sign the agreement plan to pay the UK and the Netherlands. The last referendum was held in April 2011. The results were negative, therefore the uncertainty of the delay of an economic recovery increased. The governments challenges were to achieve an economic recovery and a global growth. Joining the European Union (EU) is seen as a mean to help the country to overcome its economic difficulties. in July 2009, Iceland submitted its candidature. Official talks towards accession started in July 2010 but the government is showing inabilities to convince its citizens. Icelands current strengths in the political arena are: policies supporting privatization in order to foster economic growth, (outsourced public services such as water supply and healthcare services to private parties) and strong defense relations (close ties with the Nordic, the US and the NATO member states). The current political challenges consist in the opposition of the Icelandic citizens to the payment of the debt (affecting diplomatic and political relations with the United Kingdom (UK) and the Netherlands) and other aspects caused by the banking crisis. A future risk reside in the lack of a political alternative. The current president, Olafur Ragnar Grimsson, is holding power since 1996. He has been reelected three times due to the fact that no other candidate indented to run for the job..

Economical
The services sector is a key element of the Icelandics economy. It went through an economic recession in 2009 and 2010 but recovery is expected this year. In addition, Iceland foreign debt rose up to 850% of GDP in 2009. The current strengths of the economy arena are the improvement of the international investment position and the strong services sector. This one leads the economy and contributes to 67,9 % of the countrys GDP in 2010. In the late

1990s, the privatization of commercial banks and the opening to the international capital market resulted in high foreign investments. The current economic challenge is the high external debt. The financial institutions debts represent 76% of the total amount of debt, posing a great financial risk to the government. In addition, inflation decreased by 3,4% in 20111, a big improvement due to the fact that it amounted for more than 12% in 2009. The inflation rate is expected to decrease further by 2013 (around 1,9%). As future risks, a court ruling in June 2010 stated that several loans given in foreign currencies were illegal. This could threat the country's economic recovery. In addition, there are strong uncertainties related to the banking sector. The government has introduced measures to beat the crisis. Those actions consist in emergency laws that allow the government to take control over banks and to make them take loans from foreign banks.

Social
The Icelandic society can be characterized by strong healthcare and pension system. The vast majority of health institutions are public. Healthcare spending in Iceland accounted for 9.03% of GDP in 2009 close to the OECD average of 9.0%. However, the standards of teaching are decreasing, causing concerns in the educational sector. It has been reported that teachers spend a small percentage of time on teaching and learning. Moreover, teacher absenteeism is massive (24% of teachers attend classes). Additionally, the declining revenues of pension funds is creating a long term challenge for the government. In 2009, a bill amending the Pensions Act was passed. The objective was to introduce a higher degree of flexibility into the Icelandic pension funds in relation to: flexibility in the transfer of pension rights, the start of pension periods as well as the payment of old age pensions and the right to participate in transactions in organized debt markets with securities. Another future risk is the increasing of unemployment (9.53% in 2010 and under 2% before the crisis).

Technological
The highly skilled population is an important asset of the countrys Research and Development sector. Iceland has the highest proportion of people involved in R&D in the world, just after Finland (13 researchers per 1,000 inhabitants). In comparison the average rate equals 5.7. Moreover, the high fragmentation of the research activities is slowing down the countrys process of innovation. The expenditures on science and technology in Iceland have considerably increased since 2000. International co-operation have been set up.

Environmental
1

Figures of May 2011

Iceland is considered to be the cleanest countries in Europe. It has one of the lowest levels of pollution and emissions of greenhouse gases. Furthermore, new policies were set to reduce the effect of agricultural activity on the environment. Iceland is characterized by the good quality of its air and water. The CO2 emissions were reduced between 2008 and 2009 from 3.5m metric tons to 3.4m metric tons. However, the effects of the tourism industry are slowly impacting the environment (increased wastage and pollution). The climate change is affecting the fishing industry. In addition, the Icelandic forest reserves are very limited. It has been estimated that around 95% of the original forest has been completelycut down. The rapid expansion of tourism in Iceland caused the increase of waste, which threaten the environment. The Eyjafjallajokull volcano erupted in April 2010 causing a great environmental damage. The ash dust from the volcano causes a stop in air traffic in northern Europe. After this eruption, there has been much speculation about an eruption of another larger volcanic, Katla. But on May 22nd 2011, a new volcanic eruption (Grimsvoetn) occurred threatening the air traffic once again.

Legal
The principal strengths of the legal system are: the low level of corporate tax and the new international tax agreement. Iceland has a low corporate income tax of 20%2, making it one of the country with lowest corporate income tax rates within the OECD3.This enables more capital gains and dividends for foreign investors as well as the inflow of FDI. However, current challenges are the restrictions on FDI and a weak enforcement law that have limited the effectiveness of the system. The country made several tax information exchange agreements with countries such as: San Marino, Saint Kitts and Nevis, St Vincent and Grenadines, Caribbean and Monaco. This aims to enable transparency of trade and transfers between these countries. Still, Iceland also faces some risks regarding the weak enforcing of the law.

2 3

Effective since January 1, 2011. Only Switzerland (13%), Ireland (12.5%) and Hungary (16%) have a more competitive corporate income tax in the entire Europe.

Icelandic Economy: how it gets to the crisis?

Overview of the Icelandic Economy

The Icelandic economy went in the same decade from fast growths to one of the biggest crisis in European history. In the article Iceland Laffer Curve from the Wall Street Journal4 we can read that The rags-to-riches story of how Iceland's 300,000 citizens became some of the world's wealthiest people is a testament to capitalism's animal spirits. Only after the economy opened up, privatized state companies and slashed marginal taxes did this once famine-plagued island become a Nordic Tiger, says the Wall Street Journal. The 3 steps to become a Nordic Tiger:

From 1991 to 2001, as the corporate-tax rate fell gradually from 45% to 18%, tax revenues tripled to 9.1 billion kronas from just above 3 billion kronas (U.S. $44.5. million). Since 2001, revenues more than tripled again to an estimated 33 billion kronas in 2007 (U.S. $490 million). Personal income-tax rates were cut gradually as well, from 33% in 1995 to a flat rate of 22.75% in 2007.

Before the 2008 financial crisis, Icelandic economy was heavily based on its banking sector. The three major banks saw their assets value rise to 100% of Icelands GDP in 2004 and up to 920% in 2007 (IMF, 2010). After the crisis, due to global liquidity and external dependence, the government had to intervene and take control of many banks in October 2008. The IMF promised $2.1 billion to save the economy but due to the intervention of the UK and Netherlands governments $1 billion remains to be paid. As explained in the following paragraphs, the UK and the Netherlands are in fact in direct conflict with Iceland concerning reimbursements of loans. Since Iceland is a small country, its economy is restricted. Nevertheless, the banking sector is highly established in term of number of institutions. Before the 2008 the sector was highly concentrated within one commercial bank, Kaupthing Bank, which represented more than 40% of the activity and three the saving companies accounting for 60% of the all banking sector. After the crisis, the government took over many banks in October 2008. The largest commercial
4

http://www.ncpa.org/sub/dpd/index.php?Article_ID=14288 "Iceland's Laffer Curve," Wall Street Journal, March 8, 2007

banks, Kaupthing Bank and Landsbanki, were nationalized. At that time, the government also suspended during 4 days all trades in the Reykjavik Stock Exchange. Nowadays, there are 4 commercial banks, 23 saving companies and a state owned company. This is because the crisis changed the rules. Dutch banks also took a big hit during the crisis with the bankruptcy of the internet based bank: Icesave. The bankruptcy caused important losses for some banks. Under the Dutch law, in case of a bankruptcy, other banks have to share the cost of compensating Dutch customers for part of their lost deposits. For this reason, Dutch banks paid $271 million. The Icelandic government declared at that time that it would repay the Netherlands and UK 20 % of the amount due. Nevertheless, the Icelandic population denied that action through referendums (see section Payment of international debt). This caused both governments to halt the loans given by the IMF at 50% of what was promised (Datamonitor 2010).

The chronology of the banking system that led to the October 2008 crisis
First it is important to understand the process that led the country from a government owned bank system to a privatized one, and then to the 2008 economic crisis. Before the early 90s, the banking sector was not very well developed. The banks used to be to a large extent government owned and somewhat politicized. No risks were taken; they were just serving the economy with the basics. Later on, when Iceland joined the European Economic Area (EEA), with the opening of the financial sector to the world and the privatization of banks, institutions changed their strategies going from safe to risky. At that time, despite the Icelandic Central Bank and a financial supervisory, commercial banks expand at a very fast pace in Europe. In order to finance this expansion, they had to borrow from abroad: sale of bonds and interbank loans. This led to a remarkable growth. Thanks to that development, the entire country benefited of it. Assets were being re-evaluated at higher prices and companies were able to make profits. However this profit did not come from operational success but speculation or also called bubble induced profits. Despite success, suspicions were raised mainly thanks to two reasons: 1. Despite a high activity from the banking sector and particularly from activities abroad, the Icelandic Central Banks reserves of currency was really low compared to what it was supporting especially concerning foreign devices. 2. Suspicion came from experts that noticed the evaluation of assets that were considered as not reflecting the reality. In order to attract new liquidities, Icelandic banks used their branches or subsidiaries in Europe. In a short period of time they were able to raise billions of

Euros that way. But the Icelandic government could insure such important amounts of deposit, especially considering the fact that Iceland is a small country. With the existence of a high asset bubble economy and no back up from the government possible, stock market started to slide. This led to a slip of many indicators: exchange rate, asset prices (including real estate) and later on after 14 months of sliding the collapse of the entire banking system in October 2008 (Yale.edu 2011).

Some economic elements are relevant to clarify the situation: External Debt5

As shown in the following graphic, during the period 2006-2008, the external debt was high (between $8 and $9 billions). After the 2008 banking crisis, the economy contracted and the country was forced to seek financial help from the IMF.

Figure 1: Total external debt

Foreign investments

The external debt is the portion of a country's debt that was borrowed from foreign lenders including commercial banks, governments or international financial institutions.

www.investopedia.com

Due to its geographical and economic situation, FDI in Iceland is usually made by seafood sales and marketing companies, and also by transportation and fisheries companies. On the other hand, Icelandic companies have invested in foreign fisheries companies. That way, those companies hope to get further resources, efficiency and markets. Due to the crisis, FDI fell from $38.4 billion in 2007 to 1.45 billion in 2008 and even further in 2009 to $86 million. Credit rating

On April 13, 2011, after the Icelandic electorate rejects Icesave Agreement a second time, Standard & Poor's Ratings Services (2011) placed the 'BBB-/A-3' foreign currency and 'BBB/A-3' local currency sovereign credit ratings on Iceland on CreditWatch with negative implications. Monetary situation

The Official Cash Rate (OCR) is the interest rate set by the Reserve Bank to meet the inflation target specified in the Policy Targets Agreement. It was introduces in 1999 by the New Zealand Reserve Bank. In order to fight inflation and to assure price stability, the Central Bank of Iceland implements monetary policy by setting the OCR. It is reviewed eight times per year. After a meeting, on May 23rd 2011, the Central Bank of Iceland offered to purchase Icelandic krnur against cash payment in foreign currency.6

Key monetary indicators

The inflation and the interest rates are two major indicators that tend to have a real impact on the currency evolution.

o CPI7 inflation The CPI or Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. The CPI in Iceland has constantly progressed in the past couple years.

http://www.sedlabanki.is/?pageid=194

The CPI or Consumer Price Index is an inflationary indicator that measures the change in the cost of a fixed basket of products and services, including housing, electricity, food, and transportation. The CPI is published monthly. www.investorwords.com Figure 2: Consumer price index

Inflation has always been an important problem for Iceland. This is mainly due to the fact that it is such a small economy. Between 2002 and 2009, inflation has run high. In 2003, the rate of inflation amounted 2.1% and in 2009 it reached 12% (it even peaked at 18.6% in January 2009). In 2010, the inflation was estimated at 5.5% (CIA - 2011). Therefore the impact on the population is important: with the same amount of money, Icelands inhabitants in 2010 can purchase fewer products that they could buy in 2003. o Interest rate In February 2011, the key rate has been cut from 4,5% to 4,25%. This action made by the Central Bank of Iceland was aimed to pursue the monetary easing post crisis. By lowering its interest rates, Iceland is hoping to stimulate its economy and attract investors once again.

Figure 3: General intrest on non-indexed loans

Employment
Before the crisis in 2008, the Icelandic jobless rate was one of the lowest in Europe: below 2%. The financial meltdown altered everything. In 2010 the unemployment reached 9.5% (with a much higher rate for youngsters between 16 and 24 years old), in comparison it was pretty close to the French one. To fight this very high rate, unions have agreed to lower the workers wages hoping that it will contribute to job openings. Reference to the graphs 4

Figure 4: Unemployement

GDPs Analysis

Figure 5: GDP 1980-2010

The Iceland economy is basically capitalistic; still, it has historically been known to be a country with an extensive welfare system and remarkably even distribution of income. The graph 4 show the evolution of Icelands GDP from 1980 until 2010. Iceland suffered from a sharp recession between 1988 and 1993. The fall in fish export was the major reason of that. After 1993 the economy recovered due to the initiation of economic reforms base on market liberation. Between 1996 and

2001, the economy recorded healthy growth rates averaging 4.7% annually. This is the result of: Privatization The governments substantial efforts to elevate the financial sector

In the same period the amount of foreign investment increased while exports of fish products remained healthy (Datamonitor 2010; www.statice.is 2011). In 2002, there was a slowdown with a GDP growth of 0,1%. This contraction was due to a high private sector debt which caused net external liabilities to increase to 80% of the GDP and the gross external debt to rise to 130% of the GDP. In 2003, Icelands economy grew by 2,3% over the year. In 2004 GDP growth rise to 7,7%, this is due to the fact that further liberalization of foreign investment policies by the government key investments was made in electricity generation projects. In addition, it the growth is also because of private consumption and efficient utilization of resources. In 2005, the economy growth remained stable, at 7,5%. This rise in growth was the result of structural reforms concerning the financial market liberalization and unleashed privatization. With the slowdown in European markets in 2006, the growth rate fell to 4,6%. Except for the year 2002 Economic growth has remained relatively robust during the post-cold war period spreading from 1993 to 2007 with an average GDP growth around 4,11% annually. Due to global economic crisis and the turmoil in the banking sector, the countrys economic growth drop in 2008. This was the end of the Nordic Tiger period as Oddgeir Ottesen, a Reykjavik University finance professor, said, "It's a kitten" (Richburg 2008). Iceland's economy plunged into its worst-ever crisis in 200809 following the implosion of its banking system in 2008 and has only begun to inch out of recession. The economy contracted by over 6.8% in 2009 and has contracted by 3.4%. As we notice on the graphs 6 in 2008 Iceland has the most important inflation rate in 2008, due to the crisis. But its GDP remain good compared to OECD GDP average.

Figure 6: GDP 2008, comparison

Figure 7: Inflation 2008, Comparison

The Gross Domestic Product (GDP) decreased by 6,9% in 2009. This is due to: o A 20,9% decline in domestic expenditure. o Household final consumption decreased by 16% o Government final consumption decreased by 1,7% o Fixed capital formation by 50.9%. o Exports grew by 7.4% while imports declined by 24.1%. In 2010 the GDP growth is better than in 2009 with 3,5% and planned to go back to a positive. The graphics 8 present a forecast (statice.is 2011) of the countrys possible recovery. A positive GDP growth and inflation at the world average level are predicted to start the present year, 2011.

Figure 8: forecast of GDP and Inflation until 2016

Gross Domestic Product by industries

The graphs 9 present the increase of the financial sector and the service activities over the past thirty years while agriculture and fishing proportion decreased. The construction sector remains stable until 2003 where it follows the growth and drop due to the crisis. Also, the behavior of the industry (including energy) proportion decrease during its prosperous period, that could be explain by the consumption and financial behavior over the same period.

The first major contributor to GDP is the services sector (4, 5 & 6 on the graphs). It dominates the economy and contributes to more than 68% of the country's GDP in 2010 against 56% in 1980. Overall the major sub-sector of the services industry during the last 30 years is financial services. The coalition government is undertaking further measures to make sure that this sector strongly continues to contribute to the economy by leveraging the benefits of the ongoing liberalization process. (all data are detailed in appendix 1)

Figure 9: GDP by industries

The second major contributor to GDP is the industrial sector. Within the industrial sector, the major sub-sectors are aluminum smelting, fish processing, ferrosilicon production and manufacturing8. According to government sources (Datamonitor 2011), Iceland has substantial geothermal and hydropower resources, most of which are as yet untapped. The government also intends to augment foreign investments in the energy sector. Finally agriculture is the third major sector. The main agricultural products of Iceland are potatoes, green vegetables, mutton, dairy products and fish9.

Figure 10: GDP by industries, from 1980 to 2010

8 9

Datamonitor Datamonitor

Political System: Reaction towards the crisis?

Overview of the political arena
The economic crisis caused collateral victims in the political arena: Prime Minister Geir Haarde, from the Independence Party (IP: center-conservative) had to resign, in late January 2009, due to the inability of his government to overcome the challenges posed by the crisis. At this moment, the support for the government felt to 26%10 as Icelandic society faced widespread protests and riots (EIU 2011a). As a result of this event, the President of Iceland lafur Grmsson asked the leaders of the Social Democratic Alliance (SDA: center-left) and the Left-Green Movement (LGM: left) to form a coalition to govern until the holding of early elections on April 25, 2009 (EIU 2011b). These elections represented an opportunity for a political shift: since 1991, the political landscape had been dominated by the Independence Party (Michalon 2010). The new coalition managed to agree on an economic program with the IMF, which was crucial for the economic recovery. Nevertheless, this new coalition (SDA and LGM) was divided and faced strong opposition from the Independence Party (IP) and the Progressive Party (PP) (EIU 2011d). Hence the financial collapse and its subsequent consequences have caused a decline in confidence in political parties. At the beginning, the decline affected directly the Independence Party (IP), which holds the actual government and deals with the crisis. Though, confidence in the SDA and LGM has also fallen during 2010 due to severity measures that the coalition needed to introduce; its weakness in managing negotiations with the UK and the Netherlands on reimbursement for Icesave deposits; and divisions within the LGM, which almost brought down the government at the end of 2010(EIU 2011b). As the Gallup poll results show, the support for the present government increased 36% in November 2010, well below the level of 50% recorded at the start of the year and 61% after the coalition took office in May 2009 (EIU 2011a). Even if next elections are expected to be held in April 2013, an early vote could occur due to the limited support for the government. The IP could emerge as the largest party (only 16% are satisfied with the opposition) (EIU 2011a). Nonetheless, all four major political parties have to compete against the general public disillusion with the political system. This disillusion has been proven by the election of a political comedian Jon Gnarr as the mayor of Reykjavik in May 2010 (EIU 2011c).

10

Gallup poll

In addition to this political disappointment, the Althingi (Parliament) is presently debating on a resolution to establish criminal charges against ministers of the former government for gross misconduct by not reacting to the possible threats from the oversized banking sector (EIU 2011d). If the Althingi votes to make the ministers accountable before the special constitutional court11, it will cause a great damage and tension on the political system and more specifically to the SDA and the LGM (current holders of the office) (Oxford Analytica 2010). The former ministers from the IP accused are: the prime minister, Geir Haarde, and the minister of finance, Arni Mathiesen. On the other side, those accused from the SDA are the minister of foreign affairs, Ingibjorg Solrun Gisladottir, and the minister of business affairs, Bjorgvin Sigurdsson (EIU 2011d). Another point to highlight is the disagreement on the government's 2011 budget. In December 2009, the members of the LGM in parliament criticized and voted against the budget. However at the end the vote passed only by one vote. Furthermore, the Prime Minister, Johanna Sigurdardottir (SDA), is committed to make deep changes to the government as she wants to reduce the number of ministries to nine in 2011 regardless of the opposition from some members of the LGM. The Ministry of Agriculture and Fisheries and the Ministry of Industry will merge into a new Ministry of Industry (EIU 2011a).

Payment of international debt: Political reactions

The collapse of the three major commercial banks of Iceland has had important repercussions on the diplomatic relations with UK and the Netherlands. An agreement, the Icesave bill, is needed to be passed and approved by the president in order to reimburse those countries. On three occasions the Althingi tried to pass a bill on accepting the Icesave Law12 . The first one occurred in August 2009. The second time was in December 2009, but the president refused to sign it in January 2010 at the request of a popular initiative supported by over 56,000 people, a quarter of the electorate (Baigorri Argitaletxea 2011). Polls also indicated that around 70% of the population was opposed the deal (Vogel 2010). Hence the bill was put to a popular referendum. Grimsson stated that the reason of his decision was that now the people have the power and the responsibility in their hands Many Icelanders question why taxpayers should reimburse private investors who lost money in the collapse of a private bank (Vogel 2010). This referendum was rejected in March 2010. Finally, a third revised agreement with less strict terms for Iceland was ratified by parliament (44 votes to 16) in February 2011. Nevertheless, the president once again put it to a referendum and the Icesave bill for the loan deal was again rejected in April. Consequently, UK and the Netherland will take legal action at the EFTA Surveillance Authority (EIU 2011c). The Icelandic Minister for Economic Affairs, rni Pll rnason, sent a letter to the ESA in early May stating that it
11 12

Secretary of the Treasury to issue a state guarantee on loans of EUR 3 900 million granted by Governments in the UK and the Netherlands to the Guarantee Fund for Depositors and Investors Iceland. The purpose of the loan is repaid to the British and Dutch compensation and granted to their citizens who have savings accounts in the subsidiary Icesave Landsbanki Online.

Which has existed legally since 1905 but never been used The "Law Icesave" authorizes the Icelandic Minister of Finance, on behalf of the States

looks as if the Landsbanki bankruptcy estate will be able to cover the vast majority of deposit claims (Iceland Review 2011a). The prerequisite for these payments is the decision of Althingi, to make all deposits priority claims to Landsbankis bankruptcy estate with the establishment of the emergency law in October 2008 (Iceland Review 2011a). The 9th of June 2011, the EFTA set for Iceland a deadline of three months to compensate British and Dutch governments around 4,000 million or it would go to court (Prez 2011).

Moving forward to join the European Union? Is Iceland an ideal candidate?

Historically, Iceland has been very little attracted by the European Union. The economic crisis that hit the economy in 2008 caused the conversion of Iceland into an official candidate for EU entry. Since the crisis highlighted the benefits of membership and minimize the costs, it can be considered as the main responsible for this radical change in the Icelandic perspective towards the EU. However, the progressive improvement of the economic outlook is likely to drive Iceland back to its traditional view (Michalon 2010). Iceland presented its candidature to the EU on July 17th 2009. In response, the European Commission sent an exhaustive questioner to evaluate the country and submit its candidacy. Afterwards, the European Council will decide if Iceland is accepted or not. An analysis of Iceland accomplishment with the EU accession criteria permits to evaluate the capability that Iceland has to being accepted as a candidate. The three criteria are presented next (Comision Europea 2010): 1. Political Criteria Iceland is a functioning democracy with strong institutions. It is a parliamentary republic with a strong tradition of representative democracy13 and division of powers (Michalon 2010). It has legal and constitutional institutions and a stable government. It respects the separation of executive, legislative and judicial with stable checks and balances. The municipal authorities act efficiently. Following the financial crisis certain issues have been raised concerning potential conflicts of interest in public life (Such as the Icelandic close links between politicians and the corporate sector). A special commission was created to investigate and to prosecute alleged crimes related to the banking collapse. Mechanisms to strengthen and reduced the scope of conflicts of interest have been improved. Iceland has a comprehensive system of safeguarding the fundamental rights, maintaining a high level of cooperation with international mechanisms for the protection of human rights. 2. Economic Criteria

13

Whose unicameral Parliament, called Althingi, is presented frequently as the oldest still operating in the world.

Iceland is a small opened economy and is a member of EFTA since 1994. As a member of the EEA, Iceland is well integrated into the EU economy. It has carried out economic restructuring, primarily through deregulation and liberalization since the 1990s. Icelandic economy has evolved from an economy based mainly on the fishing industry to a more diversified economy opened to the financial sector. Given the level of risk taken by the Icelandic banks and the lack of adequate supervision of the financial sector, the banking sector collapsed in 2008.

The Icelandic government requested assistance from the international community (including the IMF) to support the currency and restore a sustainable macroeconomic stability. It has reached a broad consensus on key elements of recovery. The authorities have taken important economic measures for stabilization. However, macroeconomic stabilization is not yet complete. Fiscal consolidation remains a key challenge. The public and private debts need a powerful sustainable restructuring leading to the recovery. Complete the restructuring of financial sector, improve the practices and establish institutional framework regulations are some of the key challenges to be addressed in the short term. Despite having been hit hard by the economic crisis, the Icelandic economy is one of the most advanced in the world. According to the IMF, in 2008 Iceland held the eighth highest per capita GDP (about $ 53 000). It anticipated a strong contraction of this indicator for 2009, leaving the country the twentieth place with $ 36 000 per capita, a level similar to the USA. Nevertheless, Iceland is still categorized as part of the developed nations (Michalon 2010). 3. Legislative alignment In general, Iceland has a history of satisfactory compliance with the EEA obligations. According to the Authority and the EFTA, in July 2009 the proportion of internal market legislation was introduced in national legislation as required. The total number of infringement proceedings against Iceland has decreased considerably in recent months. Overall, Iceland is well prepared to assume the obligations of its membership in most of the subjects covered by the EEA. In addition, Iceland is a member since 1996 of the Schengen area where there are not internal frontiers. Therefore border crossings do not require presentation of identification documents. Prominent compliance with the Union's policies allows to stay longer in line with much of the acquis communautaire14. Its small population size would minimize the impact of its possible membership of the
14

acquis communautaire is a French term referring to the cumulative body of European Community laws, comprising the ECs objectives, substantive rules, policies and, in particular, the primary and secondary legislation and case law all of which form part of the legal order of the European Union (EU). This includes all the treaties, regulations and directives passed by the European institutions, as well as judgments laid down by the European Court of Justice. Eurofond (2007) Acquis communautaire. Available at: http://www.eurofound.europa.eu/areas/industrialrelations/dictionary/definitions/acquiscommunau taire.htm [Accessed 5 June 2011]

European institutions, while entering the EU budget would not affect it significantly (Michalon 2010). The sectors in which Iceland needs efforts to align its legislation according to acquis, in order to comply in time of the accession criteria are: fishing, agriculture and rural development environment, free movement of capital, financial services, customs union, taxation, statistics, food safety, veterinary and phytosanitary policy, politics regional and coordination of structural instruments, as well as financial control (Comisin Europea 2010). Impediments towards accession

Despite the success of completion regarding the accession criteria, the Iceland's application for EU membership has caused opposition from several actors. It is unclear whether the government of Prime Minister Johanna Sigurdardottir has to resolve the political capital to bring it to fruition (Oxford Analytica 2010). o Political division: The weakness and volatility of the political system

The Icelandic government itself is not united on the issue of EU membership. A coalition between the IP and the SD has, until now, been split on the issue, with the Social Democrats in favor and their right-wing colleagues against (Leonard 2008). The SDA headed by the Prime Minister, Johanna Sigurdardottir, has promoted EU membership for years; however its coalition partner, the LGM, is formally opposed to it. The PP changed completely its opinion towards the accession of Iceland to the EU. On January 17th 2009, the PP announced its support on the opening of negotiations with the European Union, but it accompanied this favorable position with a series of demands, particularly on agricultural and fishing issues. Due to the unrealistic nature of some of their requests, it is not considered that the PP is fully in favor of EU membership. (Michalon 2010). In the other hand, the IP maintained its opposition to the entry into the EU in late March 2009. Since it anticipated a defeat against a party supporting the accession, the IP stated that if initiated, a rapprochement with the EU, two referendums should be held: a first referendum on whether to open negotiations, and if validated, a second on the actual accession of Iceland to the UE. This slight change can be interpreted as a strategy to retain the support of the business sector, which represents a significant base of their electorate and whose support for the EU has grown following the crisis (Michalon 2010). At the end of 2010, the IP's opposition to EU membership appeared to be winning its support as euro adoption is seen as less and less beneficial since the euro zone crisis continues and the krona stabilizes within the capital controls (EIU 2011b). In addition, the dispute with the United Kingdom and the Netherlands on the regarding Icesave, degraded the image of European countries towards the Icelandic public (Michalon 2010).

The gap between the possible accession to the Union and the possible adoption of the euro

One of the main causes for Iceland to apply to the EU membership is to join the euro after the virtual destruction of its currency (Leonard 2008). Though, it is needed to take into consideration the implications of this act. First of all, this will not be immediately done because it will require a preliminary period of two years during which the Icelandic krona would need to be within the narrow band of the exchange rate mechanism. In addition, joining the EU implies more than just sharing the euro as Jrgen Stark (2008), member of the European Central Bank's Executive Executive Board, stated: The fact that a country must first join the EU before it becomes a member of the euro area is not a coincidence. It is a deliberate approach, which underlines the fact that the EU is more than a mere economic undertaking. After all, a currency is a key attribute of sovereignty. Sharing a common currency implies sharing a common political destiny. Euro adoption is not anymore seen as a resolution to Iceland's immediate problems, as the 55% depreciation of the Icelandic currency, the krona, over the past year has proved to be an important mechanism for economic adjustment, with rising revenue from exports and solid tourist numbers (EIU 2010). In addition, to join the "eurozone" Iceland must fulfill several conditions, called convergence criteria):
1. 2. 3. 4. Budget deficit, has to be below 3% of Gross Domestic Product (GDP) Public debt, has to be less than 60% of GDP Inflation rate within 1.5% of the three EU countries with the lowest rate. Long-term interest rates must be within 2% of the three lowest interest rates in EU.

5. Exchange rates must be kept within "normal" fluctuation margins of Europe's exchange-rate mechanism.

European regulations on fisheries

In 2008 the fish industry contributed to about 5% of Iceland GDP. That same year, the sector accounted for 32.3% of total export value of Iceland (which situated it behind aluminum). 85% of those exports go to European nations, and 75% specifically to EU countries (Michalon 2010). The rapid industrial development over the past two decades now represents much less than 50% of Iceland's exports (Leonard 2008). The accession to the EU could also signify a loss of sovereignty for Iceland because it will have to be accordance to the decisions about the fishing industry but Reykjavik is not willing to abandon their prerogatives in a field that is so important to its economy (Michelon 2010). What is the reason? Iceland is aware of the need to avoid overexploitation of marine resources so it applies its own quota mechanism.

The current European Common Fisheries Policy is widely criticized for shortcomings in its operation. In fact, European quotas (approved each year) are reported by researchers and environmental organizations to be far exceeding the amounts recommended by scientists. Even the European Commission itself recognized the shortcomings of this policy by stating that EU fisheries policies are still characterized by making short term decisions and conduct shortsighted (Michelon 2010). The memories of the "Cod Wars15", which accounted for Reykjavik last episode of serious international tensions to date, and contributes to the fishery closely associated with the issue of national sovereignty. Being part of the Union would lead to the acceptance of the presence of foreign vessels (even British) in the waters that at the moment are reserved to Icelandic fishermen. In addition, whaling is another bigger obstacle: while this activity is condemned unanimously by the EU, it is still practiced in Iceland. It allows up to 350 annual catches. o UK and Netherlands possible blockage to Icelands accession

The UK and Dutch governments have stated that they are prepared to block Iceland's membership proposal if the Icesave agreement is rejected or considerably changed by the parliament (European Voice 2009) unless Reykjavik ratifies the bill and begins implementing the repayment scheme (Vogel 2010). Since the three referendums resulted in a negative position on reimbursing the debts, it is expected to lead to international litigation that could take years, finishing with part of Iceland's government's hopes of speed membership negotiations (European Voice 2011). UK and the Netherland did not accept the idea that the reimbursement is conditioned by the outcome of a referendum. They are willing to mobilize all possible means of pressure to reach their goals (Michalon 2010). The UK and the Netherlands argue that Iceland is bound by EEA rules to reimburse account-holders (Vogel 2010), but Iceland rejects this interpretations. Dutch and British diplomats say that substantial changes to the June agreement would amount to Iceland refusing to implement parts of the EU's body of law, the acquis communautaire (Vogel 2010). Afterwards, the Icelandic government has been locked in extended negotiations with UK and Dutch government concerning deposit insurance schemes. As a result, the European Commission has described the issue as "bilateral" and states that there is no direct link between the Icesave compensation and the membership talks. (European Voice 2011) The UK and the Netherlands argue that Iceland is bound by EEA rules to reimburse account-holders (Vogel 2010), but Iceland rejects this interpretations. Dutch and British diplomats say that substantial changes to the June agreement would amount to Iceland refusing to implement parts of the EU's body of law, the acquis communautaire (Vogel 2010). Afterwards, the Icelandic government has been locked in sometimes abusive negotiations with UK and Dutch government deposit insurance schemes. It has been forced to accept that since the country could reimburse prioritizing depositors, then it will have to extend this priority to
15

Series of confrontations in the 1950s and 1970s between the UK and Iceland regarding fishing rights in the North Atlantic.

foreign depositors as well (Euromoney 2011). In relation to this, the European Commission has described the issue as "bilateral" and states that there is no formal, direct link between the Icesave compensation and the membership talks. (European Voice 2011)

Main Resources: Fish and Metal Industries

Fish industry: Overview and background
Highly productive fishing grounds surround Iceland which makes it one of the worlds top 20 fishing nations, in both volume and value (Food and Water Watch 2010). The fisheries industry is one of the most important industries in Iceland and it represents an important part of the GDP and of the exports. Until 2000 the fishing and fish processing industries had accounted for 10-15% of GDP after this year the contribution fell down to 4,3% in 2007, in 2009 it had a slight increase being 5,7% . Nevertheless, the contribution to GDP is the highest among OCED countries. Although the input of the fisheries industry into GDP has turn down over the past decades, actual gross outputs in prices have kept an increasing trend. The contribution of the fishing industry in the overall exports of goods had also been declining, from 80% in 1991 (OCDE 2010) to around 36.9% in 2010 (statice.is 2011). EEA is the most important market area for Icelandic marine products and in 2010 the export value of this area amounted to ISK 160 billion or 73% of the total value of Icelandic fish exports (statice.is 2011). However, this decline is not explained by a direct fall in the fisheries themselves, but by the significant increases in exports of others industries, such as financial services, software design and aluminum manufacturing. Foreign currency earnings from exports are vital when the local currency is weak, as it is occurring in this moment in Iceland. The fishing sector was regarded as a key economic stabilizer for the country (Food and Water Watch 2010). Nevertheless, the contribution of fisheries to the economy is not stable due to fluctuations in the international fish prices. In addition, it is also subject to the changing conditions of fish stocks exploitation (FAO 2010). The main activity of the industry is catching and processing fishes: primarily cod, but also haddock, pollock and redfish (Food and Water Watch 2010). The greater amount of commercially caught fish is exported. The largest part of it is processed16 before export and the rest is exported as a whole fish mainly to EU member countries, for instance Great Britain and Germany. Catching, processing, distributing and selling fish are major sources of employment in the communities situated on the coast of Iceland in fact it represents approximately 6.5 percent of the workforce (OCDE 2010). Despite this, employment in the fisheries has been decreasing due to the increase of automation on vessels and in fish processing (FAO 2010). o
16

Catch Share System Individual Transfer Quota (ITQ) system

salting, freezing, drying, fishmeal and fish oil

As the marine resources are vital for Iceland, the government has tried to implement policies in order to prevent the overexploitation of the different species. In the late 1980s the extreme fishing became intolerable and there was an important pressure to establish well defined restrictions, into a unique management system so that all operators follow the same rules. Iceland started the implementation of fishery privatization and market liberalization the same year (CBI 2008). This led to the resolution of validating the legislation of the Fisheries Management Act in 1990. The Fisheries Management Act (known as the Individual Transfer Quota) changes the management of all commercially important fish species to operate according to the privatized catch share program (Food and Water Watch 2010). According to this system, the Total Allowable Catch (TAC), is establish on the basis of a biological evaluation of how abundant a fish stock is. The TAC is distributed into a fixed-quota allocations among fishing vessels, relative to their percentage based ITQ holding (Food and Water Watch 2010). Applications for quota transfers should be presented to the Directorate of Fisheries so it can verify and register the transfers on the website. The Icelandic Quota Exchange started to operate in 2001. Since that year, quotas have been transferred on an open market by individual firms or through brokers (OCDE 2010). A huge amount of annual catch quotas is traded each year by internal transfers between vessels owned by a same operator. Also, an important part of the trade is in the form of interspecies exchange17. Furthermore, some of the annual catch quotas are also traded for money. According to the critics of this system, the privatization of Icelands fisheries provided a get-rich-quick outlet for a select few, while it marginalized existing small-scale fishermen and left out future fishermen and the public entirely (Food and Water Watch 2010). The reason is that it undermines the fishing communities and because of the actual system, the access to fish (fishing per se) is in control of private entities, (regardless that the fishes are public resources). As a response to this, the government is reviewing a way to recover public control. Regrettably, once a government gives this access to private entities, it is challenging and expensive to reacquire it (Food and Water Watch 2010). o Key features of the ITQ System (OCDE 2010)

Quota allocation. The TACs of each species are determined by the Ministry of Fisheries by taking into consideration the recommendations from the Marine Research Institute (MRI) for stock status of target species. Divisibility and transferability. Quota shares and annual catch quotas are divisible and transferable to other fishing vessels with minor restrictions. The restrictions18 are designed to discourage speculative quota holdings. Another constraint is that the quota-shares held by any company or individual should not exceed certain limits19.

17 18

One operator trades a part of its annual quotas in one species for quotas in another species. Two restrictions: (1) no vessels may purchase quotas that are clearly excessive of what the vessel can harvest, and (2) any vessel that does not harvest 50% of its annual catch quotas in two subsequent years will lose its permanent quota share.

Fee. A special fishing fee has been levied on annual quota allocation from September 2004. At that moment the fee was 6% and it increased to 9.5% by 2009 (statice.is 2011) Management of small fishing vessels. Since the small vessels started to gain great importance. Therefore, individual vessel quotas had been imposed on them. Now the quota management system for small vessels is the same as to the general quota management. Special regional quota allocation: shock absorbers. These quotas are used for special allocations when local stocks collapse and a limited group of vessels which are specialized in local fisheries stocks are severely affected. When a community suffering from the lost of quotas through transfers or because of a reduction in catches for other reasons, it can apply to the Minister for a special regional quota allocation.

Problematic of the ITQ system

Inequality: The Lucky Few and Those Who Are Left Behind

After privatization, anyone who wanted to fish was forced to pay private individuals or firms for their quota. Fishermen now needed to buy or rent catch shares from private vessel owners who received some quota when the program started. Since the access to the fish was privatized it has been argued that the opportunity to catch fish had become a private financial instrument, rather than a valuable public asset (Food and Water Watch 2010). In fact, feudal metaphors are frequently used to describe the current political economy of fishing in Iceland for instance, large catch share holders are referred to as sea-lords because they dictate who gets to fish and control the quantities and quota leasing rates (Food and Water Watch 2010). There are two contrasting point of views on the impacts of the quota concentration system. Eythrsson (2000) argues that since the introduction of the ITQ system there is a huge concentration of quota shares from large companies: 22 companies shared 47.2% of the total quotas in 1994, compared to 25.5% in 1991. In addition, figures show that 20 largest companies held rights to harvest 56.6 % of the total allowable catches in 1998/99 (OCDE 2010). As a result, numerous fisheries-dependent communities, especially those in remote villages have lost their fishing quotas and therefore face unemployment. Contrary to this perspective, Runolfsson (2001) argues that concentration is not a serious problem. The reason is that the percentage of total quota shares of the 10 largest harvesting companies increased considerably from 24.7 % in 1991 to 37.6% in 1998, due a large wave of the mergers in the fisheries sector. The majority of the 10 largest companies merged with other large and small companies in the 1990s (Runolfsson, 2001).
19

The quota share should not exceed more than 12% of the value of the total quotas allocated for all species.

High-Grading

For fishers it is not possible to limit their catch completely, according to their wants, since there is a wide variety of different species and grades of fish that lives in the same habitat. Fishers wanted to maximize their gains, so it is an advantage to throw away fishes that does not add profit. High-grading is the practice of limiting landings to more valuable grades of a targeted species by discarding the less valuable ones at sea (Kristofferson and Rickertsen, 2005) causing a high mortality rate of fishes. In addition there are also social costs: the market value of the fish is lost, the effort used to harvest the fish is wasted, and the reproductive potential of the fish is wasted (Kristofferson and Rickertsen, 2005).

Aluminum Industry: Overview and background

Metal production in Iceland has increased over the last decades. It plays a major role in the nations economy by providing resources and a source of income from foreign exports (Thorsten 2008). There are great challenges for processing aluminum although it is one of the most common minerals on earth. It is very hard to found aluminum in nature in its pure state because of its reactive nature, it is often found bound with other elements. Hence, electrolysis20 is used for aluminum smelting. This process requires a great deal of energy. Mass production of aluminum requires huge amounts of energy. It results in the great challenge of finding places with lowcost sources of electricity/energy in order to minimize costs of smelting the aluminum (Thorsten 2008). As explained in the energy section, Iceland is a volcanic island with many active geological sites. Those can be used to generate geothermal energy and hydroelectric power by tapping into the islands rivers and glacier-fed bodies of water (Thorsten 2008). With this kind of resources, Iceland provides competitive advantage to aluminum industry. That explained the fast expansion of the aluminum industry in Iceland, attracting foreign and domestic companies. Hence, the costs of importing raw material and exporting the processed aluminum can be reduce and be competitive in the market. The growth in aluminum production is the consequence of the expansion of the existing Alcan smelter which was originally built in 1969 by Alusuisse and of the construction of a new greenfield smelter owned by Columbia Ventures Co. of the USA, which started its operations since 1998 (Hilmarsson 2003). In addition, a new smelter owned by Alcoa, a U.S.-owned aluminum company, began operations in June 2007 and is expected to have a production capacity of 346,000 tons per year when it will fully operate. As a result of this new smelter, the Krahnjkar hydroelectric power plant, completed in early 2007, was built to provide power to the Alcoa smelter (Business Source Premier 2008). Now, Iceland's three smelters consume at least five times more electricity as all
20

It is used to separate aluminum from its ore and bonds, as aluminum oxides still require temperatures up to 2000 degrees Celsius in order to melt.

320,000 of the country's population and these plants provide jobs for about 1,400 people (LA 2011). The Icelandic government is trying to give an impulse to this industry in order to diversify the economy and decrease the dependence toward the fisheries (Hilmarsson 2003) and it has described the island as having, competitive energy costs and a highly educated and skilled labor force (CBI). In addition, Landsvirkjun, the national power company, is attracting investors. Nevertheless, environmental issues are arising nowadays. From one point of view, some argue that smelting aluminum in Iceland, allows it to exploit its own natural resources, such as rivers, waterfalls, hot springs and volcanoes, by supplying the aluminum plants with hydropower and geothermal energy at competitive prices (LA 2011). Contrary to this, the fast expansion has caused a recent reaction among the Icelandic population and international environmental groups. Those argue that the smelters themselves produce emissions and waste from the process of smelting aluminum (Thorsten 2008). In addition even if environmentalists acknowledge the use of clean energy21, they highlight the rapid expansion as a problem; aluminum companies are extracting heat from the Earth faster than it can be replenished22 (LA 2011). o Aluminums Economic Impact The aluminum industry has been considered as key element for the recovery of Iceland's economy after it collapsed in 2008, since its aluminum production from its smelters continued and helped to keep exports alive through two years of recession. This metal already accounts for about one-seventh of Iceland's entire economic output (LA 2011). Even if this perspective is supported there are some critics that blame the aluminum industry for causing the country's financial troubles in the first place, by igniting an unsustainable economic boom (LA 2011) since many foreign investors stated to pour huge amount of money into Iceland. Gylfi Zoega, an economist at the University of Iceland, stated that "the economy is in such a slump now that a boost would not create irrational exuberance," though he warned against turning to the aluminum industry for "a quick fix" (LA 2011). o Major concerns towards aluminum expansion plan.

1. The electrolysis, which is necessary to the process of smelting aluminum, produces carbon dioxide as well as aluminum metal. This had increased concern form environmentalist groups due to the greenhouses gases and the quality of the Icelandic air.

21 22

Since the plants in Iceland pollute less than coal-fired smelters in other countries . Although the subterranean heat is virtually inexhaustible from a global perspective, digging too many wells to tap into the hot water and steam, without allowing enough time for nature to renew the supply, can deplete a local site over time.

2. In addition, another source of waste which is produce in large quantities is the leftover bauxite, also called slag. This huge amount of slag need to either be exported from the island at cost to the companies involved and the Icelandic industry, or have to be stored and/or used on the island, giving the small country more waste to deal with in addition to that created by other industries and the populace (Thorsten 2008). 3. Another concern is the usage of Icelands natural resources and the development of natural areas. Iceland has historically viewed itself as an island with wilderness and natural preservation, but the production of large scale aluminum smelters and additional geothermal and hydroelectric plants will require the development and destruction natural wild areas. 4. Also, in relation to Iceland's biggest smelter opened in 2007 and from whom the government built several dams and a massive reservoir, environmentalists fear it will speed up erosion and harm the area's population of deer and pink-footed geese (LA 2011).

Environment and Energy

According to the Environmental Performance Index (EPI 2010) Iceland is the worlds most environmentally friendly country with an EPI score of 93.5 as presented in appendix 2. The EPI looks at ten different environmental factors for each country, including: the health of the natural environment, air quality, water quality, biological diversity, fisheries management and agriculture. Iceland is recognized since it has the highest rates for reducing carbon emissions and the planting of new forests. Iceland is often lauded for its renewable energy production, which supplies nearly every home and business with abundant green electricity and hot water. However, from one perspective is has been argue that Iceland adopted renewable energy since it makes good economic profits; hence it is not an environmental gesture at all (IceNews 2010). Iceland hopes to become the first country to be entirely reliant upon this energy source and despite its size, it would be making a huge impact on becoming ecofriendly. Iceland uses its geothermal landscape to utilize clean electricity and heat. The most commonly used source for heat and electricity is hydrogen. Hydrogen energy is used by homeowners and those who occupy buildings, but is also used for transportation. Only 18% of Iceland energy sources come from coal, the other 82% is pure hydrogen and geothermal power. While it may seem like a tough goal, by 2050, Icelands minister of industry and energy, ssur Skarphdinsson, hopes to have the country carbon and oil free. (Toptenz.net 2010).

Figure 11: EPI rating (detail in appendix 2)

Figure 12: CO2 emissions, comparison

Energy in Iceland
The graph 12, titled the annual generation of energy, the scale is logarithmic, and fuel generation is very low compared to the others.

In proportion of installed capacity, geothermal energy knows and expansion around 1995 while hydroelectric have a little decrease compared to the fuel proportion which drop from 17,4% to 4,7% within twenty years. We noticed in both graphs (graphs 13 and 14) that the proportion of geothermal energy and hydroelectric energy increase while the fuel proportion decreases. This is one of the reasons why Iceland is the greenest country in the world, both hydroelectric and geothermal energy are known to be the least emitting sources of CO2. The repartition of the gross energy consumption in Iceland in 2009 was (datamonitor 2011): 66% geothermal energy 19% hydro energy 15% imported energy (oil and coal)

It is important to highlight that the use of important energy has decreased 50% during the last 10 years. This can be appreciated since in 1998 imported energy was 38% of gross energy consumption. Gross consumption of electricity was multiplied by four between 1989 and 2009, increased from 4,475 to 16,883 GWh. The increase in electricity consumption is mainly due to aluminum smelters. In 2009 the public power plants consumed around 79% of gross consumption of energy. Oil consumption remain quite stable over the last decade, in 2009 it was 660 kilo tonnes and 708 in 1999. The consumption of automobiles and equipments was 47% of total oil consumption in 2009 but 34% in 1999. That means that during

Figure 13: Annual generation of energy

the same period the oil use of the domestic fishing fleet decreased by 22% .

Figure 14: energy installed capacity

Greenhouse gases

As we can appreciate on the graph 15 the total greenhouse gas emission has increased in Iceland during the last 20 years. We noticed that it is mainly due to emission from the metal industry between 2000 and 2008.

Figure 15: Total man-made emissions without carbon sequestration

Over the 20 last years, it has been noticed (graph 15) a decrease of the total fuel combustion and agriculture proportion of greenhouse gases emission. While industrial processes emissions decrease a little bit before, they have an increase around 70% between 2000 and 2008. That could be explained by the emissions from the metal industry which had doubled, mainly carbon dioxide (CO2) as it will be seeing in the next part.

Figure 16: GHG emissions by industries

Carbon dioxide
The graph 17, highlights the four most important sources of CO2 emissions: fishing vessel, industry and construction, road transport and metal industry. In this graph it is possible to appreciate the drop of CO2 emission for the fishing vessel, this could be explained by the Fisheries Management Act passed in 1990 (see section: Catch Share System Individual Transfer Quota (ITQ) system for further details). For the metal industry the increase is explained by the two new smelters constructed in the period and an existing smelter was expanded23.

23

www.statis.is

Figure 17: Emission of carbon dioxyde by source

World class technologies and R&D

Overview of the technological landscape
In 1940, the first R&D establishment NRC was established. In 1987 with the apparition of Rannis, Iceland furthered its technological policies. This entity, which depends of the Icelandic government, provides professional assistance in the preparation and implementation of science and technologys policies in Iceland. Due to various changes in 2003, a new organization appeared: STPC. It brought in streamlined policy structure for R&D and innovation in science and technology in Iceland. In order to develop its industry and responds to its needs, Iceland has been able to meet success in the technological field. Until 1998, only a state owned company named Siminn was allowed to develop and use R&D. But liberalization has since then changed the game. The telecom market is a good illustration of such transformation. In 2003, 48 licenses were issued and the government was pushing for new foreign investors to enter the business.

Main Policies

o Intellectual property The regulation of Icelandic intellectual property is very similar to what is known in Western Europe. However, specific laws such as Trade Marks Act 1997 and the Design Act 2001 relate to other intellectual properties. o Research and development In order to be competitive in the international economy, Iceland has decided to make the R&D one of its priorities. In 2003, the creation of the SPTC, Iceland has created more financial resources. Both scientists and the entire economy have benefited from the policies. Furthermore, R&D infrastructures have prospered in many universities. In 2004, a new program aimed to amplify the R&D in marine and fishery sectors was launched. The public funding has proved to be very successful in the R&D over the years. o Technology agreements / pacts To promote internationally its R&D, the Icelandic government decided to participate in various events. For example, its presence in the EU Framework

Program on Research and Technological Development has permitted great exposure. Universities have furthermore a very important role in international relationships. For example, links between the United States and Iceland in R&D have been constructed thanks to the academic field.

Performance in sectors of opportunity

o Telecommunication and internet The telecommunication market is considered small compared to the rest of the world, but the penetration of high technologies is one of the highest in Europe. The Icelandic telecom market has been very competitive; therefore, prices decrease in order to benefit both, households and companies. GSM, GPRS and NMT have a great presence. Concerning internet, more than 2/3 of the Icelandic use it frequently, compared to 93% in France and 60% in the world (TNS Sofres year -2011; Journaldunet.com 2010). Iceland Telecom (Siminn) and Og Vodafone, the two major operators, are dominating the market. There were 123 mobile phones per 100 people in 2009. In the same year, the total number of broadband internet users stood at 0.26m. o Biotechnology Iceland is considered as an ideal environment for the biotechnologies. Many reasons explain this: good health care system, important place given to R&D and universities, and public funding. Due to its location, between Europe and the USA, and its population positive reaction toward science and R&D, Iceland is able to be one of the top nations in biotechnology. o ICT Sector ICT (information and communications technology) is an umbrella term that includes any communication device or application, encompassing: radio, television, cellular phones, computer and network hardware and software, satellite systems and so on, as well as the various services and applications associated with them, such as videoconferencing and distance learning (searchcCIO 2003). ICT is a high developing sector in Iceland thanks mainly to entrepreneurship labors. o Research & Development In Icelands case, the numbers must be carefully analyzed. In fact, in terms of numbers in 2008, Iceland ha the lowest R&D expenditure in the EC and OCDE communities ($0.45 billion) but compared to its GDP this number turns out to be one of the highest (2.8%) (Datamonitor - 2011).

Conclusion: Lessons learned

Lesson #1: Economy
Icelands economy was among the top economy in the world and the financial crisis underlined its weaknesses. But what were the reasons that led the Viking Tiger to hell? And what can be made to comeback to a heaven status? o Weak business culture The privatization of banks in the 90s led to a change of management and strategies. And according to Gylfi Magnsson, Minister of Business Affairs in Iceland: the people who bought the banks turned out to be not quite the kind of people you would want to run banks because they were fairly aggressive and risk-loving. They very quickly changed the strategy of the banks The controls by a financial supervisory authority and the Central Bank were not appropriate. Other experts24 declared in the Journal of Business Ethics (2011) that: Although there was a high level of corruption in Iceland, it transpired not so much in direct benefits to the parties involved but rather as an attitude that allowed a weak business culture and unethical business behaviors to flourish, and that the traditional measures of corruption proves inadequate in capturing it. In order to fight and change this business culture, lessons could have been taken before. For example various indicators concerning the corruption but also the balance of strength, power or size should have been controlled frequently. A strong supervisory authority should read the signals and adapt its policy toward wrong doings. Currency According to experts, as part of the European Economic Area, Iceland gets probably 90% of the benefits of being an EU member: free trade, free flow of capital, free flow of labor, and same regulations on commerce as the European Union. But Iceland always wanted to keep its sovereignty over its policy and particularly those concerning the fishing sector. Therefore Iceland had and still has its own currency: the krona. This allows the country to conduct its own money policy. That way Iceland decided to have high interest rates to fight inflation. Despite
24

Vlad Vaiman, Throstur Olaf Sigurjonsson and Pall Asgeir Davidsson

this well considered measure, those rates were not considered by foreign investors high enough and they attracted capital. By being part of the euro zone, Iceland would have been able to have access to the European Central Bank. This would have helped the country to obtain liquidities. The krona, being a currency supporting a small economy, can also be depreciated by markets pretty easily and pretty quickly. This led to the amplification of the crisis. By adopting the euro or at least by hooking the krona to the euro, the Icelandic government would have been able to lower the risk of the crisis and maybe with better control even avoid it. o Consumer behavior

The Icelandic population was highly involved in the creation of the bubble. In fact, lot of inhabitants, seeing their fortune rising on paper due to the bubble asset inflation, started to invest in stocks or real estate. Such behavior led to the overheating of the economy, to the increase of the exchange rate and to the trade deficit of Iceland. To illustrate the trade deficit one image can be revealing: Iceland was importing more Range Rovers than the rest of Scandinavia which is 100 times as large a market The consumer behavior is the trickiest element to get influence on. A communication campaign from the government would probably have helped.

Lesson 2: Political
The degree of democracy applied in the country is an actual challenge of the political arena. One of the main issues is to convince Icelanders to ratify the accession referendum, when the main reason for their support - the euro - would not happen until several years after joining the EU. The citizens expect to see quick benefits by joining the EU, but they will have to wait for several years before noticing any results. The government should carry out internal reforms in order to be in compliance with each of the convergence criteria. But these measures would involve, among other things, a tax increase to restore the balance of public finances. Therefore such changes would have a high political cost. Another aspect that has to be dealt with is the recurrent negative answers of the citizens in the referendums regarding the payment of the debts to the UK and the Netherlands caused by Icesave. The citizens have the right to decide, but until which point this right should be respected when the economic recovery depends on it? The tensions in the diplomatic relations with these two countries are delaying the loan given by the IMF and the accession toward the EU. The political division in the government and the disillusionment of the citizens toward politics represent other challenges to the political arena. Still, civil liberties remain well entrenched, and the institutions work well in enabling

changes of government and effective opposition to whichever government is in office (EIU 2011c).

Lesson 3: Fishing Industry

o The introduction of the ITQ system in fisheries management is not a simple task. It is an evolutionary process of gradual discovery and difficult bargaining it evolved more by trial and error than by a grand design (OCDE 2010). The ITQ was accepted, in response to a perceived danger of a collapse in the stock levels and a serious financial crisis in the fisheries in 1984. This means that just when the stakeholders face a crisis, especially involving a significant falls in income, they are willing to accept policy changes (Ibid). The Catch or high-grading issue. Since high-grading became a common activity to increase profits, the government decided to permit that every vessel could land up to 5 % extra of the vessels annual catch quota. Concentration of quota ownership: distributional effects and equity issue. It has been argued by critics of the ITQ system that the system could encourage quota concentration. Therefore it causes high unemployment in fishing communities that are heavily dependent on the fisheries industry (Ibid). Legal Challenges. The ITQ system has been taken to court several times. In addition, some fishermen took their case to the United Nations Human Rights Committee alleging that privatization violated the International Covenant on Civil and Political Rights because the system forced fishermen without quotas to pay money to a privileged group of citizens, the holders of quota, in order to pursue their occupation (Food and Water Watch 2010). In October 2007, the Committee took its decision and stated that Icelands privatized catch share market violated international law since the privatized catch share market transformed the right to use and exploit this public property into individual property (Ibid).

o o

In 2009, the actual government started reviewing the countrys fishery management system and announced that reforms are being considered. This reforms could end in a buying (or reclaiming without payment) of all of their catch shares at 5 percent per year over 20 years (Food and Water Watch 2010). A new approach to manage the fish industry is called: Cap-Rent-Recycle. The idea under this approach is that the government maintains the management control over the public fish. Also, it should places a cap on catch levels and finally rents catch shares on a fixed-term basis to eligible entities such as independent fishermen, communities and firms, and finally invests the revenue in better management practices (Food and Water Watch 2010). Regarding the problematic with the accession towards the UE and regarding the sovereignty of the fishing industry, there are two possible solutions: first, that the EU reforms in a meaningful and convincing way its fisheries policy; second, to grant Reykjavik long periods of transition in this field. Probably the best

solution lies in a combination of both options, allowing the second one to buy time to shape the first one.

Lesson 4: Aluminum Industry

The expansion of the aluminum industry appears to have a positive influence on Iceland. The reason for that is that the excess power generated can be used as a mean to support the economy. It is expected that the aluminum will provide more stability and growth to the economy. Attracted by low energy costs, foreign aluminum companies are eager to expand operations. Their supporters argue that large-scale investment projects are vital to encourage economic growth and job creation (LA 2011). Nevertheless, the aluminum industry will face future problems if it continues to expand at this velocity. Iceland does not want every river to have a dam and every volcanic site to have a geothermal plant, so the seemingly free energy will eventually run out, and practical places to build large sites without interfering with residential areas will meet the borders of Icelands many wildlife refuges, preventing more building (Thorsten 2008).

Lesson 5: Environment, lessons to be learned

Energie

Outlook

and

Iceland is often lauded for its renewable energy production. In fact, it supplies nearly every home and business with abundant green electricity and hot water. The goal to reach 100% green electricity, exploiting geothermal and hydraulic resources, seems to be reachable. Concerning the other sources of greenhouse gases, the aluminum industry (the most polluting of its sector) could improve considerably its emissions. Iceland should strengthen its laws concerning pollution (with high priority on the tourism sector) and should continue promoting hydrogen powered transportation.

Lesson 6: Technologic Outlook and lessons to be learned

During the recent years, Icelands economy changed. It went from a traditional economy to giving more importance to the development of knowledge technologies. Between 1998 and 2006, the fastest growing sectors of the Icelandic economy included R&D services, computer services, chemicals and financial intermediation. Iceland dedicated lot of its resources to Technologies and therefore became one of the most technological advanced countries in the world. Due to the financial

crisis that hit the country in 2008, Iceland has lost lots of potential investors. . The Nordic country should use the competitive advantage it possess over other countries in R&D to attract a different type of investors.

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Appendix
1. GDP by industry
R L bels ow a 1 Ag . riculture, hunting forestrya fishing(A+ ) , nd B A. Ag riculture, huntinga forestry nd A-01 Agriculture and hunting A-02 Forestry, logging and related service activities BF . ishing opera , tionof fishha tcheriesa fishfa s nd rm 2 Industry, includingenerg (C+ + ) . y DE C. Mininga qua nd rrying D Ma . nufa cturing D-15 Manufacture of food products and beverages D-16 Manufacture of tobacco products D-17 Manufacture of textiles D-18 Manufacture of wearingapparel; dressing; dyeing of fur D-19 Tanning, dressingof leather; manufacture of luggage D-20 Manufacture. of wood and of products of wood and cork, except furniture D-21 Manufacture of pulp, paper and paper products D-22 Publishing, printing, reproduction of recorded media D-23 Manufacture of coke, refined petroleumproducts D-24 Manufacture of chemicals and chemical products D-25 Manufacture of rubber and plastic products D-26 Manufacture of other non-metallic mineral products D-27 Manufacture of basic metals D-28 Manufacture of fabricated metal products, except machinery and equipment D-29 Manufacture of machinery and equipment n.e.c. D-30 Manufacture of office machinery and computers D-31 Manufacture of electrical machinery and apparatus n.e.c. D-32 Manufacture of radio, televison and communication equipment and apparatus D-33 Manufacture of medical, precision and optical instruments, watches and clocks D-34 Manufacture of motor vehicles, trailers and semi-trailers D-35 Manufacture of other transport equipment D-36 Manufacture of furniture; manufacturingn.e.c. D-37 Recycling EE . lectricity, g sa wa supply a nd ter E-40 Electricity, gas steamand hot water supply E-41 Collection, purification and distribution of water 3 Construction(F . ) 4 Wholesa a reta tra hotelsa resta nts, tra . le nd il de, nd ura nsport a com unica nd m tion (G+ + H I) G. Wholesa a reta tra repa of m le nd il de; ir otor vehiclesa householdg nd oods G-50 Wholesale trade and commission trade, except of motor vehicles G-51 Wholesale trade and commission trade G-52 Retail trade, except of motor vehicles; repair of personal and household goods HH . otelsa resta nts nd ura I. T nsport, stora e a com unica ra g nd m tion I-60Land transport; transport via pipelines I-61Water transport I-62Air transport I-63Supportingtransport activties; travel agencies I-64Post and telecommunications 5 F ncia rea . ina l, l-esta rentinga businessa te, nd ctivities(J+ ) K J. F inancia interm l edia tion J-65Financial interm ediation, except insurance and pension funding J-66Insurance and pension funding, except compulsory social security J-67Activites auxiliary to financial intermediation K R esta rentinga businessa . eal te, nd ctivities K-70 Real estate activities K-71 Renting of machinery and equipment K-72 Computer and related activities K-73 Research and development K-74 Other business activities 6 Other service a . ctivities(L -P) LP . ublica inistra dm tion; com pulsorysocia security l M. E duca tion N. H ltha socia work ea nd l O. Other com unity, socia a persona service a m l nd l ctivities O-90 Sewage & refuse disposal, sanitation & similar activities O-91 Activities of membership organization n.e.c. O-92 Recreational, cultural and sporting activities O-93 Other service activities P. P te householdswithem riva ployedpersons T l ota S of 1 8 S of 1 8 S of 1 9 S of 1 9 S of 2 0 S of 2 0 S of 2 0 um 9 0 um 9 5 um 9 0 um 9 5 um 0 0 um 0 5 um 0 8 1 ,8 % 2 0 1 ,1 % 2 4 1 ,1 % 2 6 1 ,8 % 1 0 9 0 ,1 % 6 7 ,2 % 6 9 ,2 % 4 0 ,8 % 4 1 ,4 % 2 9 ,5 % 2 0 ,3 % 2 0 ,0 % 1 9 ,4 % 1 0 ,4 % 4,80% 4,41% 2,59% 2,20% 2,00% 1,49% 1,40% 0,00% 0,00% 0,00% 0,10% 0,00% 0,00% 0,00% 8 0 ,0 % 7 2 ,7 % 9 7 ,5 % 9 0 ,5 % 7 0 ,1 % 4 8 ,7 % 4 0 ,9 % 2 ,4 % 4 0 2 ,3 % 4 7 2 ,5 % 0 4 2 ,1 % 0 0 1 ,4 % 7 0 1 ,9 % 3 4 1 ,8 % 7 8 0 0 ,1 % 0 0 ,1 % 0 0 ,2 % 0 0 ,1 % 0 0 ,1 % 0 0 ,1 % 0 0 ,1 % 2 ,1 % 0 0 1 ,3 % 8 6 1 ,4 % 6 5 1 ,1 % 6 0 1 ,8 % 3 0 1 ,5 % 0 6 1 ,0 % 3 9 9,50% 9,33% 7,58% 7,80% 5,20% 3,69% 4,70% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 1,40% 1,10% 0,60% 0,60% 0,30% 0,20% 0,10% 0,20% 0,20% 0,10% 0,20% 0,10% 0,10% 0,10% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,70% 0,40% 0,40% 0,30% 0,20% 0,20% 0,20% 0,10% 0,20% 0,20% 0,20% 0,10% 0,10% 0,00% 1,20% 1,40% 1,60% 1,50% 1,30% 1,10% 0,80% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,50% 0,60% 0,60% 0,50% 0,60% 0,60% 0,70% 0,30% 0,40% 0,50% 0,50% 0,40% 0,30% 0,20% 0,60% 0,60% 0,60% 0,60% 0,70% 0,70% 0,70% 1,60% 0,90% 0,90% 1,10% 1,80% 1,10% 3,00% 0,90% 0,70% 0,80% 0,60% 1,10% 0,80% 0,90% 1,00% 0,80% 0,80% 0,70% 0,50% 0,50% 0,70% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,40% 0,50% 0,50% 0,40% 0,20% 0,10% 0,10% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,10% 0,10% 0,30% 0,20% 0,40% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 0,00% 1,00% 0,70% 0,60% 0,50% 0,60% 0,50% 0,20% 0,70% 0,50% 0,50% 0,40% 0,40% 0,30% 0,20% 0,00% 0,00% 0,10% 0,10% 0,00% 0,10% 0,10% 4 0 ,2 % 5 2 ,9 % 3 9 ,8 % 3 0 ,9 % 3 0 ,5 % 3 9 ,2 % 4 0 ,7 % 4,00% 5,72% 3,69% 3,70% 3,30% 2,99% 4,50% 0,20% 0,20% 0,20% 0,20% 0,20% 0,30% 0,20% 8 0 ,7 % 7 2 ,8 % 8 7 ,3 % 7 0 ,1 % 8 0 ,7 % 1 ,4 % 0 6 9 9 ,1 % 1 ,0 % 9 0 1 ,1 % 0 0 1,60% 4,70% 3,80% 1 0 ,1 % 7 0 ,8 % 1,50% 2,40% 1,20% 1,20% 1,50% 1 ,9 % 7 0 5 0 ,4 % 4,70% 0,10% 0,60% 1 ,5 % 2 0 10,20% 0,00% 0,00% 0,00% 2,30% 1 ,2 % 7 0 1 ,5 % 4 0 0 0 ,0 % 1 0 ,2 % 1 0 ,5 % 0,00% 0,40% 0,80% 0,30% 0 0 ,0 % 10 0 0 ,0 % 1 ,9 % 9 6 1 ,1 % 0 3 1,50% 4,81% 3,81% 1 1 ,7 % 8 2 ,1 % 1,40% 2,11% 1,60% 1,60% 1,40% 1 ,9 % 8 6 5 2 ,7 % 5,22% 0,00% 0,50% 1 ,2 % 3 4 10,33% 0,00% 0,00% 0,00% 2,91% 1 ,7 % 6 5 1 ,4 % 3 4 0 0 ,0 % 1 0 ,4 % 1 1 ,9 % 0,00% 0,40% 1,10% 0,40% 0 0 ,0 % 10 0 0 ,0 % 2 ,7 % 1 3 1 ,7 % 1 6 1,79% 5,08% 4,89% 1 9 ,9 % 7 8 ,9 % 1,69% 1,60% 1,50% 1,69% 1,50% 1 ,6 % 7 5 5 8 ,3 % 4,89% 0,20% 0,30% 1 ,2 % 2 6 8,47% 0,00% 0,70% 0,00% 3,09% 1 ,5 % 9 4 1 ,8 % 2 6 0 0 ,0 % 3 9 ,3 % 3 9 ,2 % 0,10% 1,10% 1,60% 0,50% 0 0 ,0 % 10 0 0 ,0 % 2 ,3 % 2 0 1 ,0 % 2 0 1,60% 5,50% 4,90% 2 0 ,0 % 8 0 ,3 % 1,30% 1,40% 2,00% 1,70% 1,90% 1 ,2 % 7 0 5 0 ,2 % 4,50% 0,20% 0,50% 1 ,0 % 2 0 8,00% 0,00% 0,60% 0,00% 3,40% 2 ,5 % 1 0 1 ,0 % 4 0 0 0 ,0 % 3 0 ,8 % 3 0 ,6 % 0,30% 1,00% 1,80% 0,50% 0 0 ,1 % 10 0 0 ,0 % 2 ,0 % 2 0 1 ,5 % 1 0 1,70% 4,20% 5,60% 1 0 ,9 % 8 0 ,6 % 1,30% 0,90% 2,60% 1,30% 2,50% 1 ,0 % 9 0 5 0 ,2 % 4,80% 0,20% 0,20% 1 ,8 % 3 0 7,30% 0,30% 1,30% 0,50% 4,40% 2 ,8 % 3 0 5 0 ,9 % 4 0 ,7 % 9 0 ,4 % 3 0 ,7 % 0,30% 0,90% 2,00% 0,50% 0 0 ,1 % 10 0 0 ,0 % 1 ,9 % 8 2 1 ,1 % 1 6 1,89% 4,18% 5,08% 1 9 ,5 % 6 8 ,1 % 1,00% 0,40% 1,20% 1,29% 2,29% 2 ,4 % 5 0 8 6 ,7 % 7,67% 0,80% 0,30% 1 ,6 % 6 3 9,16% 0,30% 1,59% 0,50% 5,08% 2 ,0 % 5 0 5 8 ,7 % 5 8 ,3 % 9 6 ,8 % 3 8 ,8 % 0,40% 1,00% 1,99% 0,50% 0 0 ,1 % 10 0 0 ,0 % 1 ,4 % 7 8 9 9 ,0 % 0,50% 4,70% 3,90% 1 0 ,7 % 6 9 ,6 % 0,90% 0,70% 1,90% 1,40% 1,80% 2 ,2 % 6 7 8 9 ,1 % 7,49% 0,50% 0,20% 1 ,0 % 8 8 9,59% 0,40% 1,60% 0,30% 6,19% 2 ,8 % 2 8 5 9 ,4 % 4 0 ,4 % 9 9 ,1 % 3 0 ,7 % 0,40% 1,10% 1,70% 0,50% 0 0 ,1 % 10 0 0 ,0 %

2.EPI Rating