Icelandic seafood export companies are expected to suffer considerable losses due to the war in Ukraine, RÚV reports. The technology industry could be equally impacted by the conflict. Iceland’s Finance Minister stated he has no qualms regarding the country’s participation in economic sanctions against Russia and that Iceland must accept their potential impact.
Alþingi’s Industrial Affairs Committee held a meeting yesterday to discuss the economic impact of the war in Ukraine. Its chairman Stefán Vagn Stefánsson stated that it could be far-reaching, affecting both businesses and consumers in Iceland. The losses in the seafood industry are expected to amount to billions of Icelandic krónur, or tens of millions of US dollars.
Finance Minister supports sanctions
Finance Minister Bjarni Benediktsson stated that while the overall impact of the war on Iceland’s economy would be limited, it would affect some of Iceland’s seafood and technology companies considerably. “We must accept some impact, we have to be ready to sacrifice something in order to send a message and it remains to be seen what that [sacrifice] will be,” Bjarni stated, adding that he supported the international efforts to impose economic sanctions on Russia. “I have absolutely no doubts, and I am very happy that a very broad, far-reaching agreement has been achieved to do much more than we have done before, because it has often been criticised that some of what was done [in response to] the annexation of Crimea was too ineffectual.”
Seafood exporters shifted from Russia to Ukraine
In 2014, Russia set a ban on food imports from Iceland, along with several other countries, in response to sanctions following the annexation of Crimea. Seafood exports made up around 90% of exports to Russia at the time. The value of Icelandic trade to Russia dropped from ISK 26 billion [$209m; €187m] in 2014 to ISK 4 billion [$32m; €29m] in 2018. In response to the ban, many Icelandic seafood companies increased exports to Ukraine, which have now been halted due to the war.
Iceland’s last government worked to increase trade with Russia, even establishing a Russian-Icelandic chamber of commerce in 2019. The focus was on technology exports, particularly in the food industry. In 2020, exports to Russia amounted to ISK 6.6 billion [$51.2m; €46.2m]. Those exports have also come to a stop now, as Russian companies buying Icelandic products are unable to pay for them in foreign currency since the ruble’s dramatic devaluation.
