History of The Faroe Islands - Post-World War II: Home Rule

Post-World War II: Home Rule

Following the liberation of Denmark and the end of World War II, the last British troops left in September 1945. Until 1948 the Faroes had the official status of a Danish amt (county). A referendum on full independence was held in 1946, which produced a majority in favour. This was, however, not recognised by the Danish Government or king due to only 2/3 of the population participating in the referendum, so the Danish king abolished the government of the Faroes. The subsequent elections Løgting were won by an anti-independence majority and instead a high degree of self-governance was attained in 1948 with the passing of the Act of Faroese Home Rule. Faroese was now an official language, though Danish is still taught as a second language in schools. The Faroese flag was also officially recognised by Danish authorities.

In 1973 Denmark joined the European Community (now European Union). The Faroes refused to join, mainly over the issue of fishing limits.

The 1980s saw an increase in support for Faroese independence. Unemployment was very low, and the Faroese were enjoying one of the world's highest standards of living. The Faroese economy though was almost entirely reliant on fishing. The early 1990s saw a dramatic slump in fish stocks, which were being overfished with new high-tech equipment. During the same period the government was also enagaged in massive overspending. National debt was now at 9.4 billion Danish krones (DKK). Finally, in October 1992, the Faroese national bank (Sjóvinnurbankin) called in receivers and were forced into asking Denmark for a broad financial bailout. The initial sum was 500 million DKK, though this eventually grew to 1.8 billion DKK (this was in addition to the annual grant of 1 billion DKK). Austerity measures were introduced: public spending was cut, there was a tax and VAT increase and public employees were given a 10% wage-cut. Much of the fishing industry was put into receivership, with talk of cutting down on the number of fish-farms and ships.

It was during this period that many Faroese (6%) decided to emigrate, mainly to Denmark. Unemployment rose, up to as much as 20% in Tórshavn, with it being higher in the outlying islands. In 1993 the Sjóvinnurbankin merged with the Faroes second largest bank, Føroya Banki. A third was declared bankrupt and folded. Meanwhile, there was a growing international boycott of Faroese produce over the grindadráp (whaling) issue. The independence movement dissolved on the one hand while Denmark found itself left with the Faroe Islands' unpaid bills on the other.

The measures largely worked. Unemployment peaked in January 1994 at 26%, since which it fell (10% in mid-1996, 5% in April 2000). The fishing industry was not curtailed as much as was being considered, so it survived largely intact. Fish stocks also rose, with the annual catch being 100,000 in 1994, to 150,000 in 1995. In 1998 it was 375,000. Emigration also fell to 1% in 1995, and there was a small population increase in 1996. Oil has been discovered nearby as well. By the early 21st century, weakness in the Faroese economy had been eliminated and, accordingly, many minds turned once again to the possibility of independence from Denmark. However, a planned referendum on a roadmap towards independence in 2001 was called off following Danish Prime Minister Poul Nyrup Rasmussen saying that Danish money grants would be phased out within four years if there was a 'yes' vote.