Hoppa yfir valmynd
Prime Minister's Office

Icelandic-Italian Chamber of Commerce

Prime Minister of Iceland, Davíð Oddsson:

Address at a lunch hosted by the Icelandic-Italian Chamber of Commerce
Rome, September 10 2002.

Ladies and Gentlemen:

The proverb that "all roads lead to Rome" took on a cosmopolitan meaning long ago, even though it originally only referred to the fact that when the Romans built roads and bridges more than 2,000 years ago, more resourcefully and more dynamically than anyone had ever done before, these all spread out from the great city of Rome.

On the other hand, Iceland was first settled one thousand years after the Romans launched their major road-building programme. The settlers of Iceland travelled farther afield too, including the eternal city. The Roman road network did not extend, for good reason, as far as Iceland, and in fact the journey from Iceland to Rome was both a long and an arduous one. It began with a sea crossing that would take a week if the winds were favourable, but could of course take much longer if travellers were caught up in storms or went astray at sea and some would never reach shore again.

An abbot by the name of Nikulás Bergsson wrote an account in the mid-twelfth century in which he described the route from Iceland to Rome so that travellers would not go astray. People today have calculated that Abbot Nikulás covered an average of 33 kilometres a day – on a journey that took him weeks and months. The Italians who are here today will probably be interested to hear that the abbot saw reason to mention in his writings that he found the women of Siena particularly attractive.

The early Icelanders mainly made their voyages to Rome because repentant souls wished to relieve themselves of their burdens of sin – and the church was eager to grant them such mercy, at a price. One of the best known Sagas of Icelanders, the Saga of Grettir the Strong – which was written almost 1,000 years ago – describes how Grettir's brother Þorsteinn took revenge on Grettir's killer by beheading him – as it happens in Constantinople, the capital of the Roman Empire then. As he approached old age, Þorsteinn and his wife decided to do penance for their sins, walk to Rome and hand over all their possessions to the Church. They did just this, and so did many more of my countrymen as our ancestors were no less sinners than other people.

Perhaps we Icelanders have made some contribution in this way towards creating the wealth and splendour of Rome. We certainly have more proof of this in later times, because the sculptor Thorvaldsen, who was of Icelandic descent, lived and worked here for many years and left behind for posterity many marvellous works of art which have adorned the city of Rome for a long time.

But that is another story, a story which teaches us about the long tradition behind relations between our countries.
* * *

And now the Icelanders are back in Rome once more and it is my pleasure to accept an invitation from the Icelandic-Italian Chamber of Commerce to attend this meeting and have the opportunity to discuss here various issues which concern people who are engaged in business between Iceland and Italy.

I arrived in Rome yesterday from the beautiful island of Sardinia, where I enjoyed the generous hospitality of the Italian Premier Mr. Silvio Berlusconi. In Sardinia I had the opportunity to learn about the Italian economy and how the country has secured its place among those nations who carry economic weight. It was also interesting, in the meetings we had in Sardinia, to hear the observations of other European politicians about the turbulent and interesting times we now live in.

Iceland's relations with the European Union are an important consideration in this context. Not only because of the major trade interests that are at stake in Iceland's cooperation with the EU, but also because of historical and cultural links with Community members. To safeguard its interests Iceland became member of the European Economic Area agreement in 1994, which grants us full access to the internal market of the EU. So although Iceland does not think that its interests are best served by joining the EU, it is nonetheless a European nation in the finest sense of the term and therefore has much in common with other countries in the continent.

The European Union is based on the noble ideal of peace in Europe. Close cooperation among its member states, some of which were invariably involved in disputes and even wars with each other, has brought them huge benefits. Shared values, shared interests and free trade are one of the best possible guarantees for peace.

The Community's enlargement towards Eastern Europe is an important and historic opportunity to unite the continent after the division that followed the Second World War. Iceland welcomes this development –and firmly supports that those European nations which consider they will benefit from joining the Union do so. The nations now pressing to be allowed to join the EU view this as the best way of safeguarding their interests, both in terms of economy and security.

Enlargement will hopefully bolster stability in the continent and at the same time expand the European Economic Area, thereby presenting Iceland with new business opportunities and full access to a bigger and more dynamic internal market.

There are, on the other hand, good and valid reasons why Iceland is not interested in joining the European Union. While Iceland is a modern welfare society with high living standards our economy is in some way structurally different from that of the EU countries, not least due to our relative dependence on fisheries.

The Common Fisheries Policy continues to be a major obstacle when it comes to the question of Iceland's membership of the EU. The central principle of the Common Fisheries Policy – that important decisions are not taken by the member countries concerned but by the Union – is not acceptable to Iceland and it is very hard to imagine that such conditions will ever be accepted by the Icelandic people.

Another major obstacle – also due to how different our economy is compared with other European countries – relates to the European Monetary Union. It has been pointed out that because of Iceland's relatively undiversified exports – with fisheries still by far our largest export industry – it would be risky for us to enter the Monetary Union. The structural differences between our economy and those of other European countries are both fundamental and clear, and consequently the economic situation in Iceland at any given time can be different from that within the EMU countries. What may be a sensible monetary policy in Europe may under certain circumstances spell economic disaster in Iceland. This point is presented here to show that it is necessary for Iceland to maintain its own interest rate policy and exchange rate policy.

Our standpoint of remaining outside the EU is not inherently negative. The Icelandic government has decided to exploit the advantages that our special position entails and the opportunities that it presents. Despite having full and unlimited access to the European Union's single market, Iceland remains outside the Community itself and therefore has more scope for tailoring its legal environment as effectively as possible to the needs of the businesses that operate there, without having to comply with EU directives in each and every respect.

Globalisation provides Iceland with a certain degree of freedom to act, and it is up to us to create new opportunities for ourselves. As an example, our government has recently implemented a major cut in corporate income tax, from 30% to 18%, and thereby made Iceland an attractive option for investors. The Icelandic government is firmly committed to creating a framework where Icelandic and foreign businesses alike see benefits for themselves from operating in Iceland. I believe that Iceland already has much to offer foreign investors. A well educated and dedicated workforce, access to markets on both sides of the Atlantic, a stable economic environment, transparent government administration and high level of technology – all of these are important factors contributing to a flourishing economy.

In order to keep progressive domestic companies in Iceland and attract investment from abroad, Iceland needs to offer as good a business environment as the nations with which it likes to compare itself – and preferably a better one. The government firmly underlines that the administration and legal environment should keep pace with the needs of industry, thereby contributing to the creation of as much value as possible.
* * *

Iceland enjoys a distinctive position as an export market, and although it is not a large one in terms of population, it is certainly dynamic. GDP per capita ranks with the highest anywhere in the world and purchasing power has grown in recent years alongside robust general economic growth. In addition, Iceland is a very open economy, with a large proportion of foreign trade on both the import and export side.

Economic developments in Iceland over the past decade have brought great benefits for our nation. Globalisation of business opens up new possibilities for Iceland and economic growth in the future will depend not least on how well we succeed in taking advantage of these new opportunities. A business-friendly environment and a well educated and enterprising nation are the resources with which we will face the new times ahead. I am fully convinced that Iceland will prosper best in the closest possible cooperation with other nations.

Iceland and Italy enjoy very good relations and Italy has been an important trading partner of ours for a long time. During the first half of the last century – when Iceland was an impoverished society in desperate need of foreign currency – important markets for saltfish were built up in Italy. Imports from Italy amounted to 3.3% of our total imports in 2001, while exports to Italy accounted for 1.7% of our total exports at the same time. It is gratifying to see the large and steady growth in the number of Italian travellers to Iceland, and the great interest that they take in our country and our culture.

I would like to take this opportunity to thank the Icelandic-Italian Chamber of Commerce for its fine work and its contribution towards greater business between our countries. I am sure that relations between Italy and Iceland will continue on the excellent terms that have been established today and that trade between our countries will grow and flourish, to the benefit of both nations.

As we said, it is common knowledge that all roads lead to Rome, but in all modesty I wish to point out that the they are not one-way -– they are not a senso unico – and if we look carefully, we will see that there is a swift route from Rome to Reykjavik too.

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