Trade and Economic Relations

Trade and Economic Relations

Trade and economic relations between Russia and Iceland have been steadily developing since the early 1950s. Iceland supplied the USSR with seafood (primarily herring) and woolen products, in exchange for importing fuel, cars, tractors and other industrial goods. Subsequently, Iceland strengthened its position in the Russian market, becoming one of the main suppliers of fish products.

Restrictive measures imposed in 2015 by Russia against certain goods from Iceland, which was a response to Reykjavik’s joining in 2014 to the EU sanctions against Russia, caused serious damage to Icelandic export. The country actually lost the opportunity to supply the Russian market with fish and seafood, which accounted for up to 95% of the total Icelandic export to Russia.

Nowadays, Iceland exports to Russia mainly fishing trawlers and specialized equipment for fish processing, as well as products of the chemical industry, raw materials from non-precious metals, including aluminum. Fuel, timber, foodstuff, machinery and equipment are imported from the Russian Federation.

In the trade and economic sphere the following joint projects have been implemented in recent years between the two countries:

- in early 2018 the Icelandic company “NAUTIC” and the Russian “ShipTech” created a joint venture - a shipbuilding design bureau, whose tasks include adapting Icelandic design documentation for various types of ships to the requirements of the Russian Maritime Register of Shipping;

- in February 2018 Icelandic companies “Skaginn 3X”, “Frost” and “Rafeyri” signed a contract with the Russian company “Gidrostroy” for the construction of a fishing enterprise on Shikotan, which started operation in 2019;

- in June 2018 the production of traditional Icelandic cultured milk product “skyr” started at the dairy plant “Lactis” in Veliky Novgorod. “VkusVill” and “Perekrestok” supermarkets sell the product, which allowed the Icelanders to gain a foothold in Moscow;

- in July 2018 “Skaginn 3X” and “Frost” signed an agreement with the Lenin fishing farm on the construction of a fishing plant in Petropavlovsk-Kamchatsky. The enterprise is designed to produce up to 900 tons of product per day with the possibility of further production expansion;

- in November 2018 the Icelandic company “Valka” signed an agreement with Russian fishing company “Murman Seafood” on the construction of an enterprise in Kola, Murmansk region, specializing in the processing of bottom-dwelling fish.

In October 2019 a Memorandum of understanding on the development of cooperation was signed between the Russian innovation center Skolkovo and the Innovation Center of Iceland.

In the field of pharmacology, the Icelandic company “Lýsi ehf.” is successfully operating on the Russian market. Distributor “Lýsi-Russia”, which  distributes cod liver and fish oil under its own brand, works in Russia.

A significant contribution to the development of bilateral trade and economic cooperation was the establishment of the Icelandic-Russian Chamber of Commerce (IRCC) in November 2019. It includes more than 40 Icelandic companies, including such large ones as “Icelandair” (air transportation), “Knarr Maritime” (design and construction of fishing vessels), “Promote Iceland” (agency for promoting Iceland's public image, attracting investments and promoting export), “Skaginn 3X” and “Marel” (fish processing equipment), “Samskip” (transport and logistics services), “MS” (dairy products), “KS” (meat products), etc. Representatives of IRCC accompanied Minister for Foreign Affairs of Iceland Gúðlaugur Þór Þórðarsson during his visit to Moscow on November 25-26, 2019, during which they discussed opportunities to expand trade and economic cooperation with Russia.

Development of Russian-Icelandic tourism, which peaked in 2019, when over 16 thousand tourists from Russia visited Iceland, was facilitated, in particular, by the organization of weekly direct flights on the Moscow-Keflavik route from April to September by the Russian airline “S7 Airlines”. In 2020, the company planned to continue this practice, however, in the context of the COVID-19 pandemic, flights were suspended until the sanitary and epidemiological situation in the world improved.

The similarity of climatic conditions in Iceland and in the Arctic zone of Russia made it possible for the Icelandic company “Arctic Trucks”, which “tunes-up” of off-road vehicles adapted for severe weather conditions, to prove itself in the Russian market. Since the opening of an office in Krasnoyarsk in 2010, Icelandic technologies in this area have continued to be implemented in Russia.

Relevant issues of interaction at the governmental and interdepartamental levels between our countries are discussed in the framework of the Russia-Icelandic trade and economic consultations, as well as annual sessions of the Joint Russian-Icelandic Fisheries Commision.