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rfmcdonaldThis Bloomberg article certainly caught my attention. While I'm inclined to think that the Icelandic government should do things that the Icelandic people/electorate want, I'm also inclined to agree with the commentators who say that this sort of intervention won't do much for the economy. Call it a good idea at a bad time, perhaps?
Singer-songwriter Björk Gudmundsdottir is spearheading a push that one poll shows is backed by 85 percent of Icelanders to put foreign energy takeovers to referenda if enough people oppose the deals.
The popular movement would block an acquisition by Canada’s Magma Energy Corp. of geothermal power generator HS Orka hf, which was approved by a parliamentary commission on March 22. More than 18,100 Icelanders have signed a petition demanding the deal be reversed, about half the number Premier Johanna Sigurdardottir has said should be enough to hold a referendum.
A July 21-28 Capacent Gallup poll of 1,200 voters showed 85 percent “would like to regain the rights to their energy source,” Björk, 44, said in an e-mailed reply to questions. “Why not let the people of Iceland decide? We are asking the government to stop the sale and organize a national referendum on how Icelanders feel about whether access to their energy sources should be privatized or not.”
[. . .]
“A referendum on a particular private contract isn’t good politics,” said Gunnar Helgi Kristinsson, a professor of political science at the University of Iceland. “If the government wants to hold a referendum, it would have to pose a general question to the public, such as whether energy companies should be privately or publicly held.”
Kristinsson says plebiscites that aren’t required by the constitution aren’t legally binding, “only consultative.”
[. . .]
[B]locking foreign ownership of natural resources will hurt foreign investment in one of Iceland’s most attractive industries, said Bjorn Thor Arnarson, head economist with the Chamber of Commerce. Iceland is “trailing far behind other countries” in luring foreign investors, who may back away in coming years “because they are scared politicians will meddle,” he said in an interview.
Foreign direct investment in Iceland fell by more than 70 percent between 2006 and 2008, the central bank says, largely due to the completion of an aluminum smelter by Alcoa Inc., which began operations in April 2007. Century Aluminum completed expanding a smelter in October 2006.
“International giants” like Alcoa get a discount on energy prices while local greenhouses have to pay in full,” said Björk, referring to a government price discount extended to large enterprises in return for guarantees to purchase a specified amount of power. “Instead of harnessing all of Iceland’s energy for huge industrial-age dinosaurs, we could invent and develop more sustainable options.”
