(Press release from Icelandic Prime Minister’s office)
The President of Iceland has declined to sign a law authorising a state guarantee for repayment of loans provided by the UK and the Netherlands to the Depositors‘ and Investors‘ Guarantee Fund, intended to cover payment of the minimum deposit guarantees to depositors in the UK and Netherlands branches of the failed Landsbanki Íslands hf. The law was approved by Althing, the Icelandic Parliament, on 30 December 2009. According to the constitution, the President’s decision not to sign the law requires it to be put to general referendum as soon as possible where it needs to be supported by a simple majority of voters in order to remain in force. In the interim, the law enters into force as passed by the Althingi. The Government will now reflect on the decision of the President and review the situation.
Despite the President‘s decision, the government of Iceland remains fully committed to implementing the bilateral loan agreements and thus the state guarantee provided for by the law.
The government views the loan agreements with the UK and the Netherlands as an integral part of Iceland‘s economic programme, as a solution to the uncertainty regarding repayment of deposit insurance required under Icelandic law. It constitutes an important step towards normalizing the external financing of the country. The government’s economic plan, developed in cooperation with the International Monetary Fund and with financing from the IMF and governments of the Nordic countries and Poland, remains in effect.
Economic data indicates that the economy is performing better than previously projected and is already showing signs of recovery from the financial crash of late 2008. “The government is committed to ensuring that Iceland honours its international obligations and continues the important work of regaining forward momentum thus ensuring significant new job creation and renewed economic growth,” Prime Minister Johanna Sigurdardottir said in a statement today.
Ah, I see. I think we’re destined to circle each other on this Knowless. And, whilst you think I was being silly with the trolling comment, I was not as it seems unlikely to me that you just don’t understand my position.
As far as I can see, this is simply not true:
“the Iceland state has accepted their responsibility to be the guarantor of the Icesave debt.”
Sure, they’ve *conditionally* accepted responsibility. The first Icesave law did that. Likewise, they’ve accepted responsibility if they can get the right deal on the loan.
That’s not the same as accepting responsibility to be the guarantor. If the UK does not offer them sufficiently good terms, they will walk away from the negotiating table and go to court. In that court they will state that they do not accept the responsibility. If the court rules in their favour, they won’t have to accept responsibilty. I admit that, at this point, I make an assumption that they would not accept responsibility :) .
All of which is confirmed in the quotes I gave. The quotes you supply merely confirm that Iceland is negotiating, which no one would dispute.
Bromley “Let’s assume for the moment that you’re not trolling.”
What an utter silly thing to write.
“Perhaps you’d like to summarise your position?”
I have stated quite clearly that the Iceland state has accepted their responsibility to be the guarantor of the Icesave debt. Iceland has not accepted that they are legally or morally responsible. They do NOT have to. There is NO requirement for them to wear sackcloth and ashes. All that is required by the UK/NL, is that Iceland accept the responsibility as guarantor and act on it. And Iceland has every right to negotiate the terms of the settlement. The process is ongoing.
The links which you have bizarrely offered as some part of an argument to counter what I have written – in fact support exactly what I have written.
The first of which from 26May 2010
http://www.eftasurv.int/media/internal-market/LFN-Icesave.pdf
“The Icelandic Governmenton the one hand and the UK and Dutch Govemmentson the other, have been negotiating the reimbursements of the part of the UK and Dutch pay-outs to the depositors of Landsbanki that were within the responsibility of the Icelandic deposit guarantee scheme. To date, these negotiations have not resulted in an agreementbeing reached”
Then secondly you offer the link to the Business Week article which also supports what I have written
http://www.businessweek.com/news/2010-09-08/iceland-won-t-settle-icesave-dispute-at-any-price-.html
Which states clearly the negotiations have been ongoing, Iceland are negotiating a settlement, but
“We want to find a negotiated solution, but we aren’t willing to negotiate at any price,”
“It’s a bilateral dispute which we are in the process of solving, either through negotiations or other means,” Arnason said. “And it will be solved. Iceland is going to participate in the wider world.”
>For example, the relevant extracts from that Business Week article do not support your opinion.
Let’s assume for the moment that you’re not trolling.
I linked to that with the, I would say, reasonable assumption that we were all on the same page. Even those of us who have such divergent opinions as myself & Fisy.
Clearly this is not the case.
Pretend that I didn’t mention the BW article. Perhaps you’d like to summarise your position?
Bromley86 says: “Bull. I’ve provided plenty of evidence for my position. Unlike you.”
You have provided plenty of information, some/much of that information is indisputable, but that information does not vindicate the opinion you have offered.
For example, the relevant extracts from that Business Week article do not support your opinion.
You deduce that it supports your opinion, that deduction you make, is defective.
As long as you vehemently claim that the BW article supports your opinion, then on that alone, the rest of your debate that you offer as a rational argument, remains dubious.
>Instead of dealing in the actual factual content of an article you presented to support your point, you persist in presenting your own surmises as the valid truth.
Bull. I’ve provided plenty of evidence for my position. Unlike you.
Bromley . .” is nonsense. If Iceland is responsible, then that’s the end of it. It doesn’t get to force anyone to lend it anything.”
“If Iceland is responsible, thats the end of it”
You are beginning to sound like a preacher pumping the bible on the pulpit.
Instead of dealing in the actual factual content of an article you presented to support your point, you persist in presenting your own surmises as the valid truth.
Terry says:
November 12, 2010 at 5:04 pm
“There is no obligation for UK/NL to offer a loan to repay – what you acknowledge is a debt. So how can this issue be subject to legal consideration?”
————–
There is an obligation on the UK/NL to work together with the Iceland state to reach a solution just as there is an obligation on the Iceland State to meet the deposit guarantee Icesave debt. The Iceland obligation is as guarantor that debt.
An alternative to not negotiating with the Iceland State, is for the UK/NL to take the ample assets of Landsbanki in the UK and call it quits. The assets of the failed should meet the amount of the first claimants, aka the Icesave debt.
The Iceland state have every right to negotiate their corner over the terms of the agreement.
I have no idea why the Iceland Finance Minister is mentioning going to court over the terms of the agreement. I have no idea because it is not explained.
The Business Week article is sparse with actual details.
Now I think you’re just being bloody-minded, Knowless.
Sure, I concede, it is possible that Iceland would force a court case in order to somehow try to get a loan directly to the TIF from the UK government at a certain rate. Note that I say “TIF” and not “Icelandic government”, as that was one of the arguments that I’ve seen here (although not a compelling one to me, insofar as I understood it) that the UK government should be compelled to loan the Icelandic TIF at the same rate it loans to the UK FSCS. Of course, no court in existence could force a sovereign state to offer a loan to another at a set rate.
But far more likely would be the situation that I’d wager everyone other than you thinks of when they hear Fisy say “To court!”. That is:
1. The Icelandic government does not accept that they are legally responsible.
2. They do accept that they are morally responsible and will take on the debt, although only at the right cost to Iceland.
3. So, if it goes to EFTA court, Iceland’s first argument will not be that they want X% with Y years grace, but rather that they are not legally responsible and don’t have to pay a penny.
The EFTA SA (the people responsible for initiating the court proceedings, if it happens) letter makes it quite clear that Iceland is currently in breach of its obligations, not because it hasn’t agreed a rate for some loan but because it hasn’t honoured the guarantee. This is the last formal reply by Iceland to the EFTA SA (note the relatively recent date):
“In its letter of 23 March 2010 to the Authority, the Icelandic Government stated after having described the implementing Act no. 9811999 “The Icelandic State has therefore fully complied with its obligations under Directive 94/19/EC. The Government has no further obligations based on the Directive than to set up a Guarantee Scheme in line with the Directive.”
http://www.eftasurv.int/media/internal-market/LFN-Icesave.pdf
So I think my interpretation of what Iceland would try to do in a court case is closer to the mark than yours. This comment “That is not on the table” is clearly not the case.
BTW, at the risk of flogging the issue, this . . .
“That Business Week article supports the view that Iceland is not arguing responsibility, they are arguing about the contract terms of that responsibility.”
. . . is nonsense. If Iceland is responsible, then that’s the end of it. It doesn’t get to force anyone to lend it anything. On the other hand, if the responsibility element is part of the negotiations, then Iceland has a bargaining chip.
So clearly the negotiations, for Iceland, are all about conceding responsibility in return for exceptionally good loan terms. The alternative is to go to court where Icland has a possibility of winning, in which case it gets out of jail free, but also a possibility of losing, in which case there is no obligation for the UK/NL (or the IMF/EU/China/markets) to loan Iceland anything at less than market rate. Market rate for Ireland is currently over 9% with no grace, and I suspect (but have no knowledge) that markets would prefer to lend to Ireland today than Iceland after a contrary ruling re. Icesave. In that situation Iceland would be facing immediate sovereign default.
Knowless said –
“The reported lack of agreement has to with the terms of the loan, not the loan in principle, or the requirement of the Iceland state to honour the Icesave debt.”
“The clear line outlined in the article you linked
http://www.businessweek.com/news/2010-09-08/iceland-won-t-settle-icesave-dispute-at-any-price-.html
is that Iceland won’t settle at any price and could go to court in pursuit of better terms of repayment.”
There is no obligation for UK/NL to offer a loan to repay – what you acknowledge is a debt. So how can this issue be subject to legal consideration?
Bromley “I don’t know what to say to you Knowless. Everything I’ve read where a UK or NL representative has expressed an opinion indicates that they would have liked the situation to be resolved back in Oct/Nov 08. And that they are not satisfied with Iceland’s subsequent behaviour.”
The reported lack of agreement has to with the terms of the loan, not the loan in principle, or the requirement of the Iceland state to honour the Icesave debt.
“You seem to be saying that Iceland has accepted responsibility, but ignore that they have yet to actually pay the money to the UK/NL. If it is contingent on the loan negotiations, then they have accepted nothing. That article supports this by confirming that Iceland still considers going to court to get a ruling on their responsibility or otherwise as an option. If they go to court, and if the ruling is that the state is not responsible, then all the talk of moral responsibility will be worthless as there’s no chance that Iceland will honour the guarantee”
Iceland has accepted to (and are engaged in) negotiating the terms of repayment. They are not negotiating the principle of repayment. That is not on the table.
You are assuming that the mention of going to court by Iceland’s Economy Minister to resolve the Icesave negotiations has to do with a last ditch attempt to avoid the principle of repayment. There is nothing in that article to suggest that.
The clear line outlined in the article you linked
http://www.businessweek.com/news/2010-09-08/iceland-won-t-settle-icesave-dispute-at-any-price-.html
is that Iceland won’t settle at any price and could go to court in pursuit of better terms of repayment.
That Business Week article supports the view that Iceland is not arguing responsibility, they are arguing about the contract terms of that responsibility. Those contract terms are not to do with the principle amount but it would appear to be the interest terms on the principle amount..
>To court !
Yep Fisy, we agree on that :) .
I don’t know what to say to you Knowless. Everything I’ve read where a UK or NL representative has expressed an opinion indicates that they would have liked the situation to be resolved back in Oct/Nov 08. And that they are not satisfied with Iceland’s subsequent behaviour.
Frankly, I find it incredible that you can claim that this is not the case. Perhaps you can supply the evidence you mention to support your position? In case you say “you first”, a quick google gave:
“A spokesman said the UK Treasury was “obviously very disappointed” by the veto and expected the money to be repaid. The issue, he added, would be taken up with the EU.”
“Cameron said, “This country should be a good friend to Iceland and a strong supporter of continued EU enlargement.” But Britain must get its money back, he said.”
“The initial reaction in the Netherlands was harsh. The Dutch minister of finance, Wouter Bos, said he was “very disappointed.” Dutch European parliamentarian Hans van Baalen even threatened to block the nation’s entry into the European Union.”
“The Dutch finance minister Wouter Bos said he expected a “quick explanation” of the next steps, adding that “the lack of a solution for Icesave is unacceptable”.”
etc.
>There is nothing in that article to support your points.
Again we bump into the inability to understand what a guarantee or obligation is. If negotiations are ongoing, there is at least a possibility that no deal will be reached. Therefore there is no guarantee, no obligation nor any acceptance of (moral) liability by Iceland.
You seem to be saying that Iceland has accepted responsibility, but ignore that they have yet to actually pay the money to the UK/NL. If it is contingent on the loan negotiations, then they have accepted nothing. That article supports this by confirming that Iceland still considers going to court to get a ruling on their responsibility or otherwise as an option. If they go to court, and if the ruling is that the state is not responsible, then all the talk of moral responsibility will be worthless as there’s no chance that Iceland will honour the guarantee.
” We’re two years (!) on and still Iceland has not honoured the guarantee. Sure, it’s said that it intends to, but that’s worthless if it refuses to accept the loan terms offered ”
As we currently stand the August 2009 law stands that was passed by parliment and signed by our President, but it was rejected by the British and Dutch.
That is where we are are Brumley — law is on books making the state guarantee for Landsbanki debts that did not exist before law was passed.
This last posts here is bit of a strange rehash of discussing that did happen in January here around time that doom and gloom was warned about consquences of Ólafur Ragnar refusing to sign second ” IceSave” bill and so — because Jóhanna Sigurðardóttir would not with draw bill it was sent to referndum where predicibly it was crushed with 98.5% voting against it.
As I said at time merely voting against does not remove the responsibility — what desparately needs to happen for it to be in impartial court as has been avoided by UK and to lesser degree Holland since November 2008 and that ” kangeroo court ” arbitration opinion on behalf of EU commission.
From that Bloombergs link :
” >[ In September Icelandic Economy Minister Arni Pall Arnason ] said the dispute over $5.1 billion Iceland owes the U.K. and Dutch in depositor claims may need to be resolved through the European Free Trade Association’s court in Luxembourg. ”
To court !
Bromley86 says: “So I very much doubt that the UK or the NL are satisfied. Likewise the EU. Who exactly do you think is satisfied?”
Apart from your presumption, what evidence is there for your “very much doubt” that those in negotiation are not satisfied that the Iceland State has not already decided to honour the minimum deposit guarantee?
All the evidence points to, contact between the Icelandic, British and Dutch representatives have been ongoing, negotiations have continued and all the indications are pointing to an acceptable resolution on how this should be done are being negotiated.
“But back to my point. Iceland has not in reality accepted anything regarding the responsibility. Not until they actually sign something that sticks. If you think I’m wrong, you’ll need to argue with Arni Arnason as well:”
There is nothing in that article to support your points.
There has been no final agreement to these round of negotiations, so naturally there has been no signature. What nonsense it would be for Iceland to sign any old agreement thrown over the negotiating table. And not unrelated, are how the assets of the failed bank will be sliced up? It is of vital importance that there be no hanky panky, trying to divert the failed bank’s assets towards bond debt holder claimants.
>And they have done this to the satisfaction of those they are engaged in discussion with.
Hmmm, nope. We’re two years (!) on and still Iceland has not honoured the guarantee. Sure, it’s said that it intends to, but that’s worthless if it refuses to accept the loan terms offered (which are now better than any of the loans from Nordic friends) or to secure financing elsewhere (which it can’t, at least not at more than double what’s being offered by the UK/NL). It’s passed one law that was not acceptable because it did not include state liability for the guarantee. It’s passed another that the people of Iceland said no to. It has failed to accept and pass into law the most recent, “final”, offer.
So I very much doubt that the UK or the NL are satisfied. Likewise the EU. Who exactly do you think is satisfied?
But back to my point. Iceland has not in reality accepted anything regarding the responsibility. Not until they actually sign something that sticks. If you think I’m wrong, you’ll need to argue with Arni Arnason as well:
“We want to find a negotiated solution, but we aren’t willing to negotiate at any price,”
http://www.businessweek.com/news/2010-09-08/iceland-won-t-settle-icesave-dispute-at-any-price-.html
Bromley86
“Not by the Icelandic government it isn’t. Not if you mean “legally responsible”, as they’ve been quite clear that their position is that there is no legal responsibility. And that the moral responsibily is not absolute – i.e. they want to argue the terms of the loan that is necessary to cover the guarantee and, preferably, also go to court.”
I have already replied to you on this point. There is no requirement that Iceland should agree to accept legal responsibility. There is a requirement that they agree that they are responsible for the Icesave debt and this they have done. And they have done this to the satisfaction of those they are engaged in discussion with.
Peter –
“The problem being that the position, in effect, places the Icelandic state above other creditors.”
The position that places the secured depositers first, is the default position when a bank fails. The fact that the UK Gov have already covered those secured deposits does not change that default position neither does the fact that the Iceland State is responsible for the Eur20k.
The problem with this, is for the the claimants who are further down the queue and have little or no hope of getting recourse.
The State is not responsible for unsecured debts or bonds. The State is responsible for sovereign debt. The PIGS (Portugal Ireland Greece Spain) are attempting to make their citizens responsible to repay near EUR 1,000bn of non-sovereign debt owed to German Banks etc. Quite insane.
>but it is accepted that the the Iceland state is the ultimate responsible party for that €20k limit.
Not by the Icelandic government it isn’t. Not if you mean “legally responsible”, as they’ve been quite clear that their position is that there is no legal responsibility. And that the moral responsibily is not absolute – i.e. they want to argue the terms of the loan that is necessary to cover the guarantee and, preferably, also go to court.
Not by the Icelandic people either who, as you’d expect, are on average more against any Icesave settlement than any Icelandic government (right or left) would be.
“Those claimants do not have any claim against the Iceland state for compensation. But they are reluctant to take their place in that orderly agreed and legal queue.”
The problem being that the position, in effect, places the Icelandic state above other creditors.
Tour says: “I´m so fed up of hearing and reading that the government of Iceland (which will equal the tax payers having to foot the bill) is obligated to pay the Icesave debt.”
That obligation on the Iceland state to pay the Icesave debt is not the main problem. The core of the problem is centered on who has first claim on the assets of the collapsed bank, Landsbanki.
The burden on the Iceland state depends on how the collapsed Bank’s assets are sliced up. The depositers (up to a €20k cash limit) are to be paid. The UK Gov has already taken that burden, but it is accepted that the the Iceland state is the ultimate responsible party for that €20k limit. There appears to be enough in the assets of the bank to cover this €20k responsibility, if so, the burden on the Iceland state is tolerable. Those guaranteed deposit claims would have a first claim on the assets and the sale of the assets would cover most if not all the minimum deposit claims that the iceland State is liable for.
There are other claimants to the collapsed bank assets, non secured deposits, bondholders, subordinated debt bondholders. According to procedures they are required to take their place in the queue to get a slice of the sale of the collapsed bank’s assets. Those claimants do not have any claim against the Iceland state for compensation. But they are reluctant to take their place in that orderly agreed and legal queue.
Not so. Deposit insurance is vital in preventing unnecessary bank runs. So those greedy baffoons only deposited money with Icesave because they knew that the deposit insurance would cover them if the bank failed.
There’s an argument that what works for a “proper” country (and I’m not trying to be offensive there, just highlighting the extremely small size of Iceland) should not be applied to a micro country, and that’s a fair point. There’s no way that Iceland should have been allowed acccess to markets as if it were a “proper” country.
At the time the Icelandic government was happy to create the impression that the Icelandic deposit insurance scheme was the equivalent of that offered in a “proper” country. That they might subsequently escape that presumed obligation is more a function of poorly worded EU regulations than anything else.
Tour
Whatever the legal situation, the Icelandic govenment did publicly promise to guarantee the Icesave deposits while the banks were collecting money, on an internation publicity tour to promote Icesave. The Icelandic govenment actively marketed Icesave to Britiish consumers.
I think icesave will become a issue for the future, this legal action could stop it for years.
http://www.guardian.co.uk/business/2010/nov/07/iceland-banks-bondholders-legal-action
I´m so fed up of hearing and reading that the government of Iceland (which will equal the tax payers having to foot the bill) is obligated to pay the Icesave debt. The government of Iceland did NOT create this debt, it was a bunch of greedy baffoons who promised investors/depositors what they couldn´t deliver & like in any business it was upto individuals to take the risk knowing if the bubble were to burst they would lose their cash.
@ Leo :
On Jan 6, 2010, Leo said:
@Petros
and what terms are unacceptable?
They don’t have to start repaying for the first 7 years. That seems very generous.
– it is extremely hard for us. They are raising taxes, and at the same time lowering our salaries, we will be struggling to survive whereas the shops are also raising the prices on their products. This is a circle that we have to get out of. If the nation accepts this agreement, we are screwed, or well at least a lot of people will be. And I’m sure that you wouldnt want to live on rice and water and a little bread like some families might have to do, it will become like in the world war.
Why not give us more time to build up our economy and IF we manage to build it up before that deadline, we’ll start repaying you earlier. But I still don’t understand why WE, the nation, have to pay for something that a few individuals are responsible for. Why do the people of Iceland have to suffer whilst the few individuals who are responsible are living happily in the UK for example. While our governments has been trying to find a solution these men have managed to safe their own arses and move away so they wont go out of this as badly as the rest of us.
I really hope we can work this out soon, but with ALL parties interests in mind. Come on, we live on the 21st century nobody wants to go back to “the olden days”
“n Jan 6, 2010, Norwegian said:
Those who put their savings in Bernard Madoff’s funds didn’t know it was a Ponzi-scheme either.”
Madoff was not a bank and never claimed to be a bank. IceSave was a bank chartered by the Icelandic government and “the savings of Iceland’s own citizens were protected from the collapse of its banking sector in October 2008 by an unlimited domestic deposit guarantee.”
To Leo:
>>>>No, this is not about what is acceptable to the Icelandic population. It is about what is acceptable to Iceland, the UK and Holland.
I am not sure if you actually read the rest of my comment:
>>>>Until a fair and equitable agreement to ALL parties can be reached you will always have fierce opposition to it here in Iceland.
When I said ALL parties, it should be clear this of course meant all countries, including Iceland, UK and Holland.
This national referendum, is actually the FIRST TIME the Icelandic population gets to have their own say in this matter, not what others have decided or demanded from them.
No matter what the outcome will be in the referendum (the result might actually end up being much closer to 50/50 than most people now realize), having it is the only way the final result will be accepted by the population.
If you read the actual statement by the President:
http://www.forseti.is/media/PDF/10_01_05_declaration_w_sign.pdf
it contains the following:
“It has steadily become more apparent that the people must be convinced that they themselves determine the future course. The involvement of the whole nation in the final decision is therefore the prerequisite for a successful solution, reconciliation and recovery.”
and
“Now the people have the power and the responsibility in their hands. It is my sincere hope that this decision will lead to permanent reconciliation and prosperity for the people of Iceland, at the same time laying the foundations for good relations with all other nations.”
No matter what the what the outcome of the referendum, Iceland faces difficult road ahead with many danger and pitfalls. If things go wrong and we suffer a full-blown sovereign default, at least it will be because of decision we made ourselves, not someone else.
”On Jan 6, 2010, Milena said:
@ C H Ingoldby: how were those debts guaranteed by the Icelandic government?”
The depositor insurance scheme.
The Icelandic government made public, legal commitments that all deposits in Icelandic banks were safe because they were guaranteed by themselves.
Now the banks have gone bust they have to honour that guarantee. It’s painful, but they should have thought about that before making the guarantee and then failing to supervise or regulate their banks.
”Alexander E. said:
From two of your phrases I came to the conclusion that it is you, C H Ingoldby, who didn’t know facts.
It’s either deposits or investments but never both etc.
And you can say “anti-british insults” only if you are member of UK government cause there is no anti-british sentiments among Icelanders. But as you know – government and people are not same things.”
Alexander E, your stupid pedantry aside, the fact is, the deposits made by British and Dutch investors (and investor does not necesarily mean a stockholder, it can refer to someone who deposits money in a bank) were guaranteed by the Icelandic government.
Therefore the Icelandic government has a responsibility to make good all the losses. With hindsight, the Icelandic government should have been much more careful about regulating those banks.
Iceland mucked up and now Iceland has to pay up. It’s the only moral and legal response.
As for the Anti British sentiments, maybe you are selectively blind? I’ve seen quite a few anti British slurs and to try and wiggle out of it by saying that ‘of course’ those just refer to the British government and not the British people is just dishonest sophisty.
Those who put their savings in Bernard Madoff’s funds didn’t know it was a Ponzi-scheme either. And if the governments in UK and Holland were sure about their claims, why was Iceland denied to bring the case to court? The fact is that EU liberalized the banking system, but started to make a better bank security funding system AFTER the Icesave bankruptcy. Even with this new system, EU will have a much lower guarantee limit than what we have in Norway. And the bank control authorities in Holland and UK, what did they do? Nothing, I suppose! They should know what Adam Smith said long ago; that a free marked must be controlled.
@Bjarni
No, this is not about what is acceptable to the Icelandic population. It is about what is acceptable to Iceland, the UK and Holland.
And failure to come to an agreement quickly only hurts Iceland really.
You are running out of money, your country is getting downgraded in the financial markets, which means you pay more interest on any new loans you take out and you won’t get IMF support, Nordic support or EU-membership until you accept the responsibility to pay this money with conditions that are acceptable also to the UK and Holland.
1. Iceland warned the Brits for Landskibank and Icesafe that it was a private bank and that Iceland was not in a position to cover it’s potential losses.
2. The British authorities did not undertake anything to check or supervise.
3. When Landskibank collapsed, the Brits confiscated foreign Icelandic assets and used their terror laws to blacklist Iceland.
This was an evil deed and it caused great harm to the entire economy of Iceland.
4. How far can a Government go in support of financial institutions diverting all the risks to the taxpayer?
5. The President of iceland has a case here.
The amount of debt is too high for Icelands small population.
6. Stay away from the EU.
It will cost Iceland it’s sovereignty.
7. Stay independent like Switzerland and develop your geothermal energy technology for export to countries like Panama who are now screwing around with useless wind mills.
8. Stay far away from the EU apparatchiks (Kommisars) with their socialists plans and crazy Wolrd Government aspirations.
9. Be a free and proud people and never allow your country and your freedom taken away from you by a bunch of burocrat rats who totally lost it.
The EU is a rat hole.
To Leo:
>>>and what terms are unacceptable? They don’t have to start repaying for the first 7 years. That seems very generous. The interest rate on the loan is 5.5%, while if Iceland borrows on the financial markets, it has to pay 8% interest. What is the problem with the loan? It is more generous than anything Iceland could ever get on the financial markets.
The issue is not whether YOU think it is generous, it is whether the Icesave agreement is acceptable to the Icelandic population. That is what the referendum will decide democratically. Until a fair and equitable agreement to ALL parties can be reached you will always have fierce opposition to it here in Iceland.
“What loan? British and dutch citizens invested in Icesave, like some people did in Bernard Madoff’s Ponzi-scheme in New York”
They were depositing money in a bank chartered by the Icelandic government. The depositors had no way of knowing that the Icelandic banking system was a Ponzi scheme.
Those who put their savings in Bernard Madoff’s funds had even more reason to trust him. He was american, vell reputatet over a long periode, and he was even jewish. When you move your money from a bank you know to a bank just established, owned by foreigners, and with interest rates far above what you can get in any other bank, you should at least check if the bank is a member of your national bank security funding system. And if it is, you should not exceed your national guarantee limit. This we knew in Norway. Maybe this is a lesson we learned when we had a bank crise some years ago. Icesave had 425000 depositors in Holland and UK. The total number of taxpayers in Iceland is approximately half of this. So to pay the losses, without interest, will cost the average icelandic taxpayer twice as much as the average loss!
It is a complicated issue, and I am not sure which side I sympathise with the most.
However – people should remember the difference between ‘investments’ and ‘savings’.
If I invest into a company, and things go wrong, then tough luck on me. It was the risk I knowingly agreed to take, in return for potential high returns.
If I choose to save my money in any bank, I will expect to be able to withdraw it at any time I like – especially if my deposit has been guaranteed by the government of a respectable nation – this is the agreement of trust that the concept of banking relies on.
Two separate things entirely.
However, I can see why the Icelandic people are so angry. It is the wrong group of people being made to pay for other peoples’ crimes (yes, crimes), and the normal hardworking people in Britain are being made to pay just like they are in Iceland.
It would be a shame for this problem to degenerate into childish nationalistic name-calling and goading from the general public(which I have already seen from both sides) when really it is the amazingly short-sighted and self serving policies of our respective governments to blame.
Hmmm, still don’t know what I would do about it, though :-/
@Petros
and what terms are unacceptable?
They don’t have to start repaying for the first 7 years. That seems very generous.
The interest rate on the loan is 5.5%, while if Iceland borrows on the financial markets, it has to pay 8% interest.
What is the problem with the loan? It is more generous than anything Iceland could ever get on the financial markets.
@Easy
Yes, the Icelandic bank did ask for the money. Its why they pay the high interest.
If you go around yelling: I will give you 5.25% interest if you put your money in my bank!, then guess what, you are asking for a loan.
TWR:
“May I ask why, if you so much want your $$$ back, your govt declined previous version of the bill (Sep 2009)?”
Becuase you don’t haggle with a guarantee, you pay your debts in full. The reason the EU countries can do this is because Iceland will pay the many back, fair means or foul. The 5.5% rate is hardly penal, its far less than the Icelandic base rate, below the state bond rate 8%, only a little over the CDS insurance rate (4.25% at present) which is added to the interest rate and the same as your good friend the Faroe Islands lent money.
The reason for Icelanders complaining about this bill is because they think they can haggle a better deal by defrauding UK and Dutch tax payers.
Its like thieves haggling over what property they will return after being caught. Despicable.
@Leo: Nice example. But the Iceland government and the Icelanders in general do not refuse to pay back, It’s the terms that are unacceptable.
Check this surveys:
http://mbl.is/mm/frettir/innlent/2010/01/06/eiga_islendingar_ad_greida/
@Leo
That was quite a stupid analogy, because nobody asked for a loan, the depositors came willingly to put momey into a high interest rate account, which means high risk.
> We don’t, we just want our money back
May I ask why, if you so much want your $$$ back, your govt declined previous version of the bill (Sep 2009)?
Yes, in case of long lasting economical disaster you wouldn’t get everything but most part of it.
If you so much want your money back, why are UK and NL trying to make an additional $$$ on IS trouble pushing a ‘deal’ under almost 6% of interest?
No, it seem what you don’t want your money back. Then what do you want?
@Norwegian
very nice comment, except that it is incorrect. We’re not talking about UK/Dutch investors. We’re talking about people putting their savings into an Icelandic bank account. An Icelandic bank account which falls under the Icelandic government guarantee scheme.
Let me give you an analogy.
My son asks to borrow 100 dollars from you. You are hesitant to lend him the money, but then I step in and say, ‘don’t worry, if my son can’t pay you back, I promise I will’. Then suddenly my son can’t pay you back, and you come to me for the money and then I say:”Sorry, my son is 21, he is not my responsibility anymore and you were a fool to lend him money’. At the same time, my daughter also comes to me, because she also lent 100 dollars to my son. And then I say, don’t worry child, I promised I would take care of any debts of my son, of course I will reimburse you.
Do you think that would be a fair situation?
Axel:
“he problem is that UK/NL dont want money, they want the country, thats why they have presented to us a deal that will ruin us, the collateral is the country and all foreign and domestic assets,”
I can understand why you would think that, after all your people were feted as ‘Vikings’ borrowing money overseas to buy overseas assets (mainly in the UK). With that admiration of raping thieves its logical to think that other countries have the same mindset. We don’t, we just want our money back (not even all of it).
What loan? British and dutch citizens invested in Icesave, like some people did in Bernard Madoff’s Ponzi-scheme in New York. The american government didn’t pay the losses of those investors, so why should british and dutch government give the Icesave investors their money back? And if they did, why should the icelandic people suffer for this? Everyone should know that if the interest rate is high, it is only because the risk is high. It is allowed to be stupid, but you should suffer yourself for your stupidity!
From two of your phrases I came to the conclusion that it is you, C H Ingoldby, who didn’t know facts.
It’s either deposits or investments but never both etc.
And you can say “anti-british insults” only if you are member of UK government cause there is no anti-british sentiments among Icelanders. But as you know – government and people are not same things.
Fortunately, Iceland is a part of the “One World Government”. More exactly – Europe, EFTA etc. and is acting withing its legal framework.
Iceland is supposed to enforce the laws over its banks. That’s correct. And simple. But as soon as UK and NL states stepped in to the process of regulating Icelandic banks – the case is no longer that “simple” as you want to show it ;-)
I also doubt you can argue with that basic principle of democracy
“It has steadily become more apparent that the people must be convinced that they themselves determine the future course. The involvement of the whole nation in the final decision is therefore the
prerequisite for a successful solution, reconciliation and recovery.
Now the people have the power and the responsibility in their hands.”
For those who doesn’t read originals – this is a quote from the President’s Declaration.
People should be happy and celebrateing this day, but be ready because now comes the full force of the media and the goberment trying to scare the country into voting YES, when they put it to national vote. By that time people will be so scared that they will want to vote yes,(spect the krona going down, and gasoline going up and inflation, and news about how many countries dont like us anymore buaaah, buaaah), but this is the time to show unity and b@lls, it doesnt matter if iceland signs this contract or the one last august or any other, Iceland is going down the drain anyways, but I rather fall knowing that I´m free to get up if I have any chance, than fall knowing that somebody will hold me down whenever I try to get up, and accepting this contract means that, not standing up ever again, signing this contract is not about Iceland falling further down or not, Iceland IS going to fall further down, this contract is about not beeing able to stand up ever again. There is no foring investment coming to Iceland, it doesnt matter if we sign or not, as I read somewhere, the only thing is that if we sign this deal, the forign creditors will accept our resources and companies as part payment, and then goberment with the help of the media will sell the headline: “forign investors willing to invest in Iceland” when in fact they will only be giving our resources and companies away, whis is exactly what IMF and UK want. so be ready and dont let the media scare you.
I think the people of Iceland are being ill-served by their so-called leaders. The fact is Iceland owes the money and is going to have to pay up. Their leaders should really be spelling out the long-term facts of economic life. If they don’t pay up in accordance with the agreed terms, and everyone postures madly saying that these debts will not be repaid all confidence in the country will disappear. Then there will be very much more serious and long-term repurcussions for the Icelandic people as they find it difficult to trade or recover from their difficult economic position.
Yes, Iceland is a democracy, but so are the UK and the Netherlands. Do people in Iceland not understand that thier President having made such a fiasco out of this, the UK and Dutch governments are going to have real pressure on them now to take far less flexible actions and to be seen to protect their national interests?
Congratulations to you all as a people and for the president as a courageous person, for turning down what can only be defined as a blackmail actio. From the UK & Dutch governments.
Just 5 minutes ago Mr. Bos, Dutch minister of finance, stated that it is unacceptable to have Dutch tax payers foot the bill for compensating the Icesave deposit holders.
If that is so, how can he expect the people from Iceland to accept what he himself finds unacceptable??? To then twist the truth by saying “the loan from Holland to Iceland should be repaid” is straight out of the 3rd Reich where Mr. Göbels showed similar mastery in twisting the truth to suit his abject mind. What loan is he talking about??? Or is he referring to his own premature reimbursement of Dutch deposit holders who themselves followed the money driven by so much greedy incompetence that they failed to see the risks…
Furthermore, the Dutch government is only too able to block international actvities such as online gambling, claiming it to be illegal only because they lose out in tax revenues. Holland has the Nederlandse Bank, regulatory institutes and numerous other checks and balances to monitor dubious banks and other financial institutions, as does the UK. Where were they in halting Icesave from operating in Holland?
I once again congratulate all you Icelanders with this just course of events. Stay the course and do not give in to scheming, truth bending, dictatorial blackmail from either Holland or the UK.
With kind regards,
Fried-Jan Unger
Arnhem
The Netherlands
fju0761@gmail.com
Ryan, your comments are not related to what I said, but here is your answer: “Fitch lowers Iceland credit rating to junk”. Nobody is going to lend money to Iceland or to Icelandic companies unless the interest is very high. The President originally wanted to borrow money from Russia, so let him.
@ C H Ingoldby: how were those debts guaranteed by the Icelandic government?
I know it is painful, but Iceland is responsible for those debts.
Dutch and British investors deposited money in Icelandic banks which were guaranteed by the Icelandic government. When those banks went bust it was the obligation of the Icelandic government to stand by those guarantees.
Sorry, but emotional hype and Anti British insults don’t change the facts of the situation.
@ Ryan,
It is logically possible to think otherwise.
It’s not unheard of for citizens of a country to be held collectively responsible for the actions of their government.
Concerning your criminal father (and “every possible parallel and metaphor”) example, consider the principle of unjust enrichment; where one party is unjustly enriched at the expense of another, and has an obligation to make restitution, regardless of liability.
Ask Bernie Madoff’s wife about other possible permutations, like “clawbacks”.
>I understand the emotional response of victims to hold “Iceland” accountable, but the true response is to hold THOSE RESPONSIBLE responsible. Get it?
Unfortunately Iceland is not a part of the One World Government. As an independent and sovereign nation, they are responsible for enforcing their own laws and regulations. So yes, at that level, it’s off to the workcamps for everyone even though the father is responsible.
So they pay the UK/NL what is owed and they chase and prosecute their criminals. As the meerkat says, “Simples”.
Landsbanki assets will cover 80% of what is needed for icesave deposits, the Icelandic state will pay the rest,
the problem is that UK/NL dont want money, they want the country, thats why they have presented to us a deal that will ruin us, the colllateral is the country and all foreign and domestic assets,
Olafur was right to refuse to sign this contract
no matter what the consequences will be.
I am a UK citizen and live in the UK. I am ashamed of my government. They are acting like bullies–plain and simple. If Iceland was anything but a tiny nation, the UK government would be more flexible. I think the UK government is acting disgracefully towards Iceland.
The logic trying to support statements such as West’s is staggering and incorrect.
I understand the emotional response of victims to hold “Iceland” accountable, but the true response is to hold THOSE RESPONSIBLE responsible. Get it?
Every possible parallel and metaphor supports this. If a family benefits over years from what is provided from the father only to one day discover the father was a criminal… does the family now enter workcamps for years to pay back? Or is restitution and justice sought with the guilty party?
I could go on and on but it is often impossible to try and reason an emotional argument with logic. And certainly, both sides are emotional. But if both sides fought hard to bring the responsible parties to justice I think there might be more catharsis than the unproductive nitpicking and bullying that is going on currently.
Unless I am misunderstanding the situation, there appears to be a little revisionism going on here. Landsbanki accepted both domestic and foreign deposits. Those deposits were heavily invested, especially in Icelandic corporations and interests. When Landsbanki failed the government took over the bank, used its assets which were purchased by both foriegn and domestic deposits, and only guaranteed the domestic deposits. While I could certainly understand a system where both deposits suffered equally, Iceland seems to believe the only fair system is one in which the foreign deposits assumed all the risk, while the domestic ones assumed none.
A reminder to the Icelanders who don’t feel that the Icelandic taxpayers should pay off the banks debts; you all benefited from the credit driven booming economy prior to October 2008. Of course some of you benefited more than others, but you all did.
The President as Robin Hood? Get real. nk, why don’t you start a fundraiser in the Netherlands to help Iceland.
Icesave incident in a nutshell: Iceland nationalize their banks, but guarantee only their domestic depositors. This is in a disguised form stealing money from the pocket of foreign depositors into their own, since all depositors, regardless of foreign or domestic, should have equal rights in these nationalized banks.
Iceland’s government may still be committed to debt repayment, but its President and people aren’t. So, what’s the point of Iceland’s government?…
Isn’t it amazing in all this mess how nobody is really going after the Icelandic Banksters whose greed and criminal actions caused the collapse of a whole nation? All the pseudo-investigations will lead nowhere, because of the clubby culture of circling the wagons, and at the end it will be the ordinary citizens of Iceland who will suffer, while the Banksters will continue to fly around in their private jets with their trophy wives. The more things change, the more they remain the same…
[…] View original here: Government: Iceland still committed to debt repayment | IceNews … […]
What a silly amateurism. Ofcourse Iceland has to foot the bill. The whole society profited from the booming period behind us.
Within existing international rules and regulations your (!) Icelandic government had the responsibility to govern also Dutch and UK branches of Icelandic financial institutions. However both these regulatory institutions and large parts of society decided not to be to critical!
So, sorry but either get yourselves a new president or pay the bill.
Rgds from the Netherlands
Tirrah
And no, personally I did not have any money on any of these banks.
This is Great News for Democracy.
The people of Iceland will, hopefully, show that a determined People can challenge the Neoliberal Governments of the World.
Icelandic People know that they do not have to kowtow and pay for the Neoliberal policies foisted on them by the US, UK and EU does. Even if the the UK and EU threaten them, I am sure they will tell them to get stuffed.
Bravo Mr. President! At last a new Robin Hood has stepped forward. What a relief in this age of continuing moneygrabbing by a small minority yet supported by all EU governments.
nk
Netherlands
I´m so fed up of hearing and reading that the government of Iceland (which will equal the tax payers having to foot the bill) is obligated to pay the Icesave debt. The government of Iceland did NOT create this debt, it was a bunch of greedy baffoons who promised investors/depositors what they couldn´t deliver & like in any business it was upto individuals to take the risk knowing if the bubble were to burst they would lose their cash. Both governments of the Netherlands & Britain had the responsibility to regulate whatever businesses existed/were run in their respective countries therefore Gordon Brown being in charge of finance during the good money making days should have had the sense to review the Icelandic banks running their businesses there and regulate them incase of such economic collupse. They failed to do so therefore they should have themselves to blame and should follow those business individuals who owned and conned people, have their assets frozed and get them to stand trial both in the Netherlands & in Britain. Amazingly these very same individuals are still in business & living in Britain yet the tax payers in Iceland are being told to pay for this mess! Americans have brought charges to many individuals who took part in bringing the banks down, why can´t the Netherlands, Britain & Iceland do the same? Why isn´t the British government also going after the American government & have them pay for what the American businesses contributed towards the financial collupse? Lets not be bullies and force a small nation with a population of 320,000 to pay for what they really had nothing much to do with. The rich and corrupt individuals who caused this should be brought to justice and made to refund the governments what is owed. NOT THE ICELANDIC TAXPAYERS!
To Bromley86:
>>>>the UK & NL have already said that the previous offer of a guarantee until 2024 is not acceptable
The 2024 time limit, has never really been the biggest issue for Iceland, and it clearly seems to be for UK/Netherlands. If the other amendments from the laws passed last August 2009 stay in, that would definitely help pacify most of the opposition in Iceland and allow the laws to pass.
Its not really up to the Icelandic government is it?
Loan decisions have to pass the approval of the President and thence go for a vote by the people.
Fair enough, but why bother with the Icelandic parliament if it can be by passed.
A government that cannot enter into agreements with other governments (or any lending insitute) is powerless.
>Despite the President‘s decision, the government of Iceland remains fully committed to implementing the bilateral loan agreements and thus the state guarantee provided for by the law.
Sure, we believe that you’re committed to it. However, that doesn’t change the fact that not only will the state guarantee be challenged in the courts, but that it will likely be withdrawn when the law is overturned in a couple of months time (the UK & NL have already said that the previous offer of a guarantee until 2024 is not acceptable).
Icelanders are thinking as their country was still in the Golden Age of Cold War, ….
Some journalist should tell them that the Cold War ended in 1989, about 20 years ago…
To understand this statement more debate is more detailed on this subject over here on this thread from earlier today :
https://www.icenews.is/index.php/2010/01/05/icesave-agreement-rejected-by-icelandic-president/