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Iceland and China: A Tale of True Friendship

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Photo: Viktor Agaton

Opposite sides of the world. One, the world’s most populous nation – the other, one of Europe’s smallest. Even so, the relationship between China and Iceland appears good, with a free trade agreement and a possibility of deeper cooperation in some joint areas. What do these two nation see in one another, and more importantly, how can they both help each other to reach further?

In Iceland, life seems to be good. Icelandic citizens are ranked the second happiest people after the Swiss, and for a long time the island state has had a vast social security net. If one disregards the financial crisis of 2008, unemployment has remained steady at around 2-4%. Iceland is also considered one of the leading countries in regards to granting social security and equality for its population: earlier this year, Iceland topped the charts of the World Economic Forum for the sixth consecutive year as the most gender-equal country. Similar to its fellow Nordic and European states, equality and democratic values are central and form the foundation for Iceland’s domestic state policy. However, along with many western countries who have proclaimed themselves guardians of democracy, the Icelandic values don’t seem to weigh as heavily when applied to international cooperation, and since 2009 Iceland has been in a free-trade agreement (FTA) with the Peoples Republic of China.

According to Human Rights Watch, in the name of the ”fight against separatism, religious extremism, and terrorism” China is continuing to curb the right to freedom of expression and religion of its citizens. Social groups and minorities are being exposed to constitutional discrimination and face both torture and imprisonment, often without any lawful reason. Even though Iceland was the first European country to initiate a free trade agreement with China, this type of policy is in line with the rest of Europe. The European stance against Chinese state policy seems to be in decline, as exemplified by the fact that David Cameron and Xi Jinpeng recently spent 3 days in London riding carts and discussing new deals of trade and cooperation.

Signed in 2009, the FTA entered into force on July 1st last year. Despite the seemingly vast ambitions of this deal, the Chinese foreign minister Li Keqiang claimed it was to lift the nation’s economic relationship ”to a new height”, albeit the impact of the FTA is yet to be seen. The European Union and the Scandinavian states have previously accounted for the majority of Iceland’s trade, and even though Iceland is increasingly more hostile towards entering the European Union, the economic ties and close cultural relationship are unlikely to dissolve in the near future. In comparison, China accounted for merely 1,2% of the total Icelandic exports in 2013.

Economic cooperation does not appear to be the only ambition of this deal; the 600 page document includes tax reliefs, relaxing regulations, and information exchange programs aiming to encourage both public and private cooperation between the two nations. Looking at the deal in a context of the 2008 financial crisis, Iceland’s economic incentives are prominent; as the world’s second largest economy, the Chinese market certainly has potential for consuming Icelandic goods. Additionally, the amount of Chinese tourists traveling to Iceland experienced a 7.8% increase in 2014. For a government standing on the brink of state bankruptcy, while also being reluctant towards the European Union, the world’s leading emerging economy is undoubtedly an attractive trading partner.

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Photo: Viktor Agaton

However, it is unlikely that the interests of a 10.400 billion dollar Chinese economy – at least not primarily – lie in the economic benefits of trade with a 17 billion dollar Icelandic market. Despite a discourse of great economic ambitions, Chinese officials have proclaimed special interest in Iceland’s expertise in geothermal energy. As pollution levels in urban Chinese areas are reaching all-time heights, the need to reduce China’s reliance on coal becomes evident. Additionally, the international pressure on China to reform its energy production is increasing, as it posed a key issue during the COP21 in Paris. Thus, both due to the trade deal and its advantageous geological prospects, Reykjavik can provide a world-leading expertise in geothermal energy solutions to Chinese companies.

The majority of China’s potential geothermal energy plants are, however, located in the Himalayas, which before 1951 constituted the autonomous state of Tibet. Although media has failed to properly cover the occupation, China’s increasing interest in the region is underpinning the institutionalized human rights violations of China’s 8 million Tibetans. For instance, actions of cultural celebration such as waving the Tibetan flag are criminalized. Moreover, the escalating presence in the region has since 2006 resulted in involuntarily rehousing of nearly 2 million Tibetan households.

Trade and exchange of information spark innovation and are considered key to tackling transnational problems. The Icelandic-Chinese partnership is indeed mutually beneficial, and one could argue that it is essential in issues such as the environment. However, when cooperating with China it is important to keep the country’s human rights violations in mind. FTAs and exchange of information legitimize a different notion of humanity, a notion where state policy is authoritarian and human rights are curbed. Even though the progressive and supportive position towards cooperation with China is prominent among Icelandic leaders – and likewise with a growing amount of European leaders – a question worth asking is whether or not it is desirable.

Viktor Agaton

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