Iceland Refuse To Accept Debt

On Iceland the voting have just closed. A preliminary result in expected in a few minutes. Polls show they will reject to cover the losses triggered by the failure of private banks.

“Ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers.”

Olafur R. Grimsson

Icelanders are voting in a referendum on a bill that would saddle each citizen with $16,400 of debt. According to Bloomberg News, polls show they will reject the measure in protest at U.K. and Dutch demands that they cover losses triggered by the failure of a private bank.

Polling ends at 10 p.m.  (local time) and first results will be available shortly after, with a final count to be published early tomorrow.

The bill obliges the island to take on $5.3 billion, or 45 percent of last year’s economic output, in loans from the U.K. and the Netherlands to compensate the two countries for depositor losses stemming from the collapse of Landsbanki Islands hf more than a year ago.

A March 1th poll showed 74 percent of the electorate of 230,014 people will reject the bill.

Olafur R. Grimsson

“Ordinary people, farmers and fishermen, taxpayers, doctors, nurses, teachers, are being asked to shoulder through their taxes a burden that was created by irresponsible greedy bankers,” Iceland’s president Olafur R. Grimsson said in a Bloomberg Television interview Friday.

Failure to reach an agreement on the so-called Icesave bill has left Iceland’s International Monetary Fund-led loan in limbo and prompted Fitch Ratings to cut its credit grade to junk.

Moody’s Investors Service and Standard & Poor’s have signaled they may follow suit if no settlement is reached.

Prime Minister Johanna Sigurdardottir, who in a March 4 interview called the referendum “pointless,” said she won’t cast a ballot today.

Finance Minister Steingrimur Sigfusson has also said he sees no point in voting.

Political leaders have already moved on and are trying to negotiate a new deal with the U.K. and the Dutch, making the bill in today’s vote “obsolete,” Sigurdardottir said.

“This referendum is very peculiar and without any parallel in Iceland’s history,” said Gunnar Helgi Kristinsson, a professor of political science at the University of Iceland, in an interview.

The Icesave deal being voted on today passed through parliament with a 33 to 30 vote majority. Grimsson blocked it after receiving a petition from a quarter of the population urging him to do so.

The government has said it’s determined any new deal must have broader political backing to avoid meeting a similar fate.

Even so, signs of disunity across the political divide have emerged, prompting concerns that the government may be forging ahead without the backing of opposition parties.

“It’s extremely important that we try in full to complete the negotiations in harmony with the opposition,” Sigurdardottir said.

“If that’s not possible, we will have to try to resolve this by ourselves.”


Iceland rejects plan to repay Icesave debts

Related by the Econotwist:

Iceland Refuse To Accept Debt

Iceland Debt Talks Collapse

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1 Comment

Filed under International Econnomic Politics, National Economic Politics

One response to “Iceland Refuse To Accept Debt

  1. Unfortunately, for Icelanders, this is not the end of the story. The Iceland government, in a desperate attempt to gain approval of the global elite, are busily attempting to negotiate a new plan that will force Icelanders to cough up the bucks to pay to the U.K.