By Christian Wienberg
Nov. 25 (Bloomberg) -- Greenlanders vote today on a proposal to wrest more autonomy from Denmark, an effort at increasing control over their natural resources that may founder in the face of the global economic slump.
The referendum, which polls show is likely to be approved, would give the 56,000 mainly native Inuit citizens of Greenland full control over deciding whether they want to secede from Denmark. Currently, the government in Copenhagen would have to approve such a move. It would also for the first time mandate a division of income from natural resources with Denmark, which has ruled the territory since the 18th century.
With commodity prices plunging from records, some Greenlanders are expressing doubts that the world’s biggest island can escape its dependence on Danish subsidies, which account for half of public spending. Vancouver, Canada-based Crew Gold Corp., for instance, is pulling out of the island’s only operating gold mine after a 24 percent drop in the price of the metal since March.
“The prospects that Greenland will become a natural resource-based economy certainly haven’t improved,” said Lars- Emil Johansen, former premier of Greenland, and one of the lawmakers who drafted the bill that’s up for vote. Greenland is also rich in diamonds, iron ore, lead, zinc and uranium.
Greenland entered the then European Community -- now the European Union -- with Denmark in 1973. It quit the bloc in 1985 in a dispute over fishing quotas, making it the only region to ever withdraw from the EU, which now has 27 members. Passage of today’s referendum would presage a vote on full independence, government officials and trade union leaders say.
Poll Shows ‘Yes’
A poll on the referendum -- which asks Greenlanders if they want to become “self-governing” -- showed backing by 59 percent will vote “yes” and opposition among 20 percent, with 20 undecided. The poll by the Institute for Administration of Greenland’s Nuuk-based university surveyed 600 people between Nov. 8 and Nov. 13, Associate Professor Pia Vedel Ankersen said. There was no margin of error.
The Democrats, Greenland’s fourth-biggest party and the only one recommending a “no” vote, argue that costs of running the parts of government -- including the justice and natural resources departments -- that Greenland would take over from Denmark, may be twice the budgeted 305 million krone ($52 million).
“We feel that we need to see the benefits from our natural resources on our budgets before we believe it,” Jens B. Frederiksen, head of the party, said in a telephone interview. “Expectations have been unrealistic.”
Construction Suspended
Angus & Ross Plc., a mining company based in York, England, on Aug. 29 suspended construction of a new zinc and lead mine in Uummannaq, western Greenland, as it couldn’t secure financing for the project.
“The financial crisis and the decline in prices for some of Greenland’s natural resources, has maybe made people realize that economic independence doesn’t come by itself,” Martin Kviesgaard, chief executive officer of Groenlandsbanken, the island’s biggest bank, said in a telephone interview from Nuuk.
NunaMinerals A/S, a Greenland mineral explorer partnered with Rio Tinto Plc., raised less than half the amount expected from a share sale in June and said it will slow development plans as a result. It has 14 concessions on the island exploring for gold, diamonds and nickel.
Oil companies, including Chevron Corp. and Exxon Mobil Corp., have begun looking for crude-oil deposits off the west coast. Greenland estimates there may be more oil off its west coast alone than the entire past production of the North Sea, which would equal about 50 billion barrels. Production costs for oil may be as high as $50 per barrel in that area, according to the Geological Survey of Denmark and Greenland, leaving little room for company profit and government tax income as the oil price has been dipping below $50 this month.
Gold Exports
The Crew gold mine boosted exports by 173.8 million kroner in the first nine months of 2007 -- the most recent period for which data is available, according to government statistics. That’s 13 percent of total exports. Almost all other exports were from fish and fish products, with prawns making up half.
The government says it will be able achieve political as well as economic independence by adjusting budgets until revenue from oil and natural resources starts coming in.
“This is a good deal for Greenland because we keep the Danish subsidies and therefore don’t jeopardize our standard of living,” Minister of Finance and Foreign Affairs Per Berthelsen said in a telephone interview. ‘This is an opportunity that other former colonies will envy us for.” Greenland receives 3.2 billion kroner each year from Denmark.
Official Language
About 39,000 eligible voters can participate in the referendum, which also includes a passage recognizing Greenlanders as a people and makes Greenlandic the official language.
Premier Hans Enoksen has said Greenland may hold a referendum on full independence by 2020, while SIK, Greenland’s biggest labor union, has said it wants a vote in 2012.
“We’re hunters up here and as we say, you shouldn’t sell the skin before you’ve shot the bear,” said Frederiksen of the “no”-voting Democrats. “That’s what we risk doing if we assume our natural resources will give us independence.”
To contact the reporter on this story: Christian Wienberg in Copenhagen at cwienberg@bloomberg.net
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