(Press release from Icelandic Prime Minister’s office)
The Icelandic Parliament, Althingi, convened today to debate a Government bill regarding the preparation for a national referendum on the so-called Icesave legislation. This comes in the wake of the President of Iceland´s decision on 5 January not to sign into law a bill which provides for a state guarantee of loan repayments to the British and Dutch governments. According to Article 26 of the Constitution, a national referendum must take place should the President not sign a bill into law.
Prime Minister Johanna Sigurdardottir emphasized to Parliament the importance of respecting the Constitution, adding that all political parties agree that national referendum should take place as soon as possible.
“The draft law is simple and without restrictions. I am confident that the majority of eligible voters will make up their minds and participate in the referendum. I have full trust in the Icelandic voters and know that they will make the right decision. The government will prepare a vote and inform voters carefully, and by that bring the Icesave issue to a close. This is necessary to continue the ongoing economic recovery in Iceland”, she stated during the parliamentary debate.
The draft law before Parliament states that a national referendum should take place no later than Saturday 6 March 2010. The government suggests that the vote should take place on 20 or 27 February, or 6 March, 2010.
Despite the President´s decision not to sign the bill it nevertheless enters into law and remains in force unless rejected in a national referendum.
The Icelandic Government has clearly stated its intention to honor its international obligations and remains fully committed to implementing the bilateral loan agreements with the UK and the Netherlands and thus the state guarantee provided for by the law. Iceland has been in close contact with the Governments of the UK and the Netherlands, other partner countries and the EU and the IMF, to inform counterparties about the latest developments and explain the process triggered by the decision announced by the President on Tuesday.
Reykjavik 8 January 2010
Brumley did write :
>2. The UK had a reasonable concern that Icesave assets in the UK would be transferred to Iceland.
Not only has that not been proven, it has not even been *hinted * at by the UK Treausury, Darling or Sants why the decision was made. Let alone if that decision was reasonable .Landsbanki Freezing Order 2008 No. 2668 is extemeely vauge and no explanation for actions has even been given ( all it does is talk about the laws it refers to. WE have never seen any explanation in any detail of the reasoning to get to that under those ).
In fact doing what Darling and Brown did to make an example of Icelandic banks that must have been planned for some time.
As we know that week, the UK bank system itself was within 3 hours of total collapse ( according to the City Minister Paul Myners ):
http://www.thisismoney.co.uk/news/article.html?in_article_id=470349&in_page_id=2
In fact Landsbanki publicy and categorically denied they were transferring anything away ( in fact exact opposite ) on 10th October :
http://www.landsbanki.is/english/aboutlandsbanki/pressreleases/?GroupID=720&NewsID=13336&y=0&p=1
“News and Notifications – Friday, October 10, 2008 6:08 PM
Statement from Landsbanki Íslands hf
Landsbanki did not transfer funds from the UK to Iceland
Due to press reports and claims concerning fund transfers between Landsbanki subsidiaries and the parent company during the period leading up Icelandic financial enterprises being placed in receivership by the Icelandic FSA, as provided for by newly adopted legislation, Landsbanki would like to state the following:
1. No such transfers were made between Heritable Bank and Landsbanki during the period in question and Heritable Bank remained fully financed.
2. No transfers were made from Landsbanki London Branch to the parent company in Iceland during the period in question; on the contrary, Landsbanki Íslands hf. transferred substantial funds to its UK branch during this time to fulfil its Icesave commitments.
Landsbanki would like to emphasise in particular that reports of this matters and statements to this effect by UK Government officials do not apply in any way to Landsbanki.”
ie Darling ” you were lying”.
>3. The Icelandic government mismanaged the communications side. If they had been more honest and open (with the UK government, not the media), then perhaps the UK would not have reacted the way they did.
There is no doubt that Icelandic government of that time were not world best international crisis managers. But unlike Darling they were open and honest and asking for help for a long time.
It seems nothing they would do or say would have made a difference to Darlings actions. But what they did say in letters and also in phone conversation is matter of public record.
Instead Darling and Brown wanted to crush Iceland, fair or not, facts or not, to make an example of them and for other reasons of Falklands Moment as he Brown was about to lose an election at home.
If perhaps UK still had a Foreign Office, instead of just the all power ful UK Treasury the whole tragedy might have been averted. But the problem is that Darling was * not * trying to come to a mutually helpful and cooperative decision.
This link does have details and at its bottom links to the dispute between Brumley and Fisy over the guarantee before actions of Darling next day in October where Brumley does make some quite unusual stretching interpretations of the October 7th conversation as justification for what Darling did on October 8th :
https://www.icenews.is/index.php/2010/01/07/bbc-newsnight-interview-with-the-icelandic-president/comment-page-1/#comment-109657
>4. The High Court review of the transfer of KE to ING has said that KE was in deep trouble even before Landsbanki shut it’s doors in the UK.
All banks at that stage ( with few exceptions ) in ” deep trouble “. What KSF was * not * is insolvent at that stage unlike many of the other UK based banks,
It was just taken for no good reason. And that was after it was refused to be part of the ” liquidity ” given to all other UK incorporated and regulated banks on that day.
As Hector Sants head of UK SFA did tell them on phone on the day when the bank was taken ( October 8th 2008) : ” This money is not for you. ”
With some short term liquidity assistance you will notice all other subsidiary and branches of KSF not only survived in the other countries but are prospering and profitable.
You will notice all of the German Edge depositors for example got their money back quite quickly despite the administration. All other branches that were sold in firesale are fine and profitable.
But talking in more detail of the horrible action of Brown and Darling over Kaupthing Singer and Friedlander ( and of course the taking of the GBP 550 millions that from Kautphing SInger and Frieldander Isle of Man ) is for another discussion thread.
This is about Landsbanki and IceSave.
For new readers here, and due to poor search facilitiy here at IceNews, etc. here are two particualrly meaty threads of current discussion to follow :
https://www.icenews.is/index.php/2010/01/07/the-emergence-of-icesave-empathy-for-iceland-in-uk-media/comment-page-1/
https://www.icenews.is/index.php/2010/01/06/iceland-and-uk-ministers-to-hold-meeting-this-evening/comment-page-1/
And here is a comprehensive link list of much earlier threads where a lot of basic facts about whole IceSave matter and UK and Icelandic actions is discussed ( we are talking about 100s of relevant posts ) :
https://www.icenews.is/index.php/2010/01/05/icesave-agreement-rejected-by-icelandic-president/#comment-108800
If I to designate the ** best ** overall example ** of threads where new ground was broken in understanding of issues of this dispute it is this thread :
https://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/ ( an IceNews classic discussion )
Congratulations from the Netherlands ;I wish we where as strong as the people from Iceland .Dont pay it back and dont worry about joining The Eu because Europ is also collapsing.Prices here a sky high and also a the unemployment is going sky high here so no benefit to join the EU Good luck to the people from Iceland.
To Mike (UK Nordic analyst):
>>>>A referendum asking do you accept the current Icesave deal “yes” or “no” is not useful, since the two possibilities are not symmetric. One has a defined outcome while the other is almost totally undefined. What does it mean to say “no” yet admit the debt stands?
I agree with you, the biggest problem with the referendum, is the uncertainty. NO ONE knows what will happen next if the answer is “no”.
>>>>So taking Bjarni’s analysis, the government should frame the referendum as two options both of which settle the debt: either (i) accept the Icesave deal, or (ii) use the assets of Landsbanki winding-up to pay off the debt directly.
Unfortunately, although the original idea is actually quite good, this would definitely not be allowed according to the constitution. Only “yes” or “no” answer is allowed in the referendum, in regards to the original laws.
>>>>It would require a 5 minute conversation with the British and Dutch to get their agreement on (ii). The NBI bond could be handed over and then some acceptable independent third-parties (the Nordic central banks plus various international accountants working within Iceland right now) could value the assets up to the limit of 5.5 billion USD. End of story!
It is likely that the general idea behind solution (ii) would probably be quite acceptable to the Icelandic population. In fact, from what I understand, this was actually offered by Iceland right at the beginning of the negotiations, but it was turned down by UK/Netherlands. The details on this are very murky, just some answers to reporters questions months ago, so possibly the offer was not clear enough.
The only realistic way to introduce a new solution like this, would be to figure out the exact deal over the next week between the governments. Then check with the opposition in Iceland to see if it would be acceptable (step sadly skipped the first two times around).
If they agree, then withdraw the December laws from the referendum (which will void them), and then pass the new laws (the third version) with the new deal. This is the ONLY constitutional way to do this.
It would be important to do this BEFORE the referendum, since as I mentioned earlier, if there is a “no” answer, big confusion will be the order of the day, and now one knows what will happen next.
The main obstacle I see to this solution, is that the current government seems now hell-bent on going to the referendum (“you asked for it, you are therefore going to get it!”), threatening everyone that it will resign if the laws are not accepted. This is the same method they used to get the EU application through the parliament last year.
Everyone else seems to realize, that the only way to resolve the matter is through immediate renegotiation, before the referendum takes place.
Bjarni has written some relevant posts previously:
https://www.icenews.is/index.php/2010/01/07/the-emergence-of-icesave-empathy-for-iceland-in-uk-media/
His analysis on the winding up of Landsbanki is excellent. I absolutely agree.
I believe that there is no real problem here. The priorities in a winding up situation are well understood. In simple terms (and descending order):
1. The winding up company gets paid (otherwise no one would do the job!),
2. The tax man gets paid (often recast as “the state” or its agencies),
3. Secured creditors,
4. Unsecured creditors,
5. The owners (equity, or shareholders).
The assets being recovered from Landsbanki are pretty obvious now, and there is no doubt that they are enough to clear most of the money owed from the Icesave deposits. There is a clear case for “force majeur” to be invoked by the Icelandic state to promote its own priority w.r.t. TIF.
I would imagine that the British and Dutch governments would be only too happy to take over assets amounting to the total owed. That would be the $2 billion bond issued by NBI to old Landsbanki plus a proportion of the assets held outside Iceland. As a financier I would accept that deal quite happily. Debt cleared, no effect on Icelandic tax payers, and the effect on Iceland’s international position would be extremely positive.
So here’s suggestion for the Icelandic politicos:
A referendum asking do you accept the current Icesave deal “yes” or “no” is not useful, since the two possibilities are not symmetric. One has a defined outcome while the other is almost totally undefined. What does it mean to say “no” yet admit the debt stands? So taking Bjarni’s analysis, the government should frame the referendum as two options both of which settle the debt: either (i) accept the Icesave deal, or (ii) use the assets of Landsbanki winding-up to pay off the debt directly.
It would require a 5 minute conversation with the British and Dutch to get their agreement on (ii). The NBI bond could be handed over and then some acceptable independent third-parties (the Nordic central banks plus various international accountants working within Iceland right now) could value the assets up to the limit of 5.5 billion USD. End of story!
To Bromley86:
>>>>The UK had a reasonable concern that Icesave assets in the UK would be transferred to Iceland.
As far as I know, this “fact” has never been backed up with any real documentation. There were public accusations made by the UK government, but they were also strongly disputed by the KSF bank management and others in Iceland (see for example the books Frozen Assets by Armann Thorvaldsson, and Umsátrið [the siege] by Styrmir Gunnarsson).
Until we get to see what actual money transfers were performed and in which direction, it will be impossible to know if this accusation has any legitimate foundation.
Iceland shouldn’t pay. There is no law that says the debts of a failed private bank are the responsibility of the country.
Incidentally, the Times Online has an opinion piece stating exactly that today:
http://www.timesonline.co.uk/tol/news/world/europe/article6981623.ece?openComment=true
Believe that if you want Sillinn, but it in no way resembles the truth. Non-partisan facts would be:
1. Glitnir & Landsbanki collapsed before the UK did anything.
2. The UK had a reasonable concern that Icesave assets in the UK would be transferred to Iceland.
3. The Icelandic government mismanaged the communications side. If they had been more honest and open (with the UK government, not the media), then perhaps the UK would not have reacted the way they did.
4. The High Court review of the transfer of KE to ING has said that KE was in deep trouble even before Landsbanki shut it’s doors in the UK. “For my part, I have difficulty in seeing what other decision the Treasury could reasonably have taken in the circumstances.”
http://www.bailii.org/ew/cases/EWHC/Admin/2009/2542.html
“Nope. Icelandic banks, regulators and government made the disaster.”
I am sorry that I just copy/paste (comment by “dagnsignet” on http://www.independent.co.uk) but I could not agree more:
“….Due to your governments (UK) inability to govern your country and your financial system, your government imposes a terrorist law against Iceland to show how powerful your country is… that action caused our banking system to fail, before the law was applied there were only one of our banks in trouble. Because of the terrorist law the other banks were shut out of the financial system and caused their collapse.”
Cheers!
“Nope. Icelandic banks, regulators and government made the disaster.”
Indeed, I dont understand why many people talk like is their fault and even speak as if they were involve in what was going on. I guess is the undetectable mind control.
“Iceland has always played the tyranny of the weak card. If you don’t like being small, you could always join a bigger entity”
Im sorry to say this but you are VERY right at first.
I do not see a reason to join a bigger entity but sounding a bit vulgar Iceland needs to GROW SOME BALLS!! as well as to learn how to exploit the fact that they are a small ” first world” nation with a lot of natural resources desired on this 21 century by many nations.
I dont think we need to build an Army as you can always rent one if things get dangerous.
Mandy Himes complains –
>If Icelandic citizens have followed UK news, they will notice hardly any mention of Icesave until last week. It´s like a blanket ban on reporting news, which to me, is extremely unfair on Iceland
It is fact, that Iceland doesn’t register much on the UK richter scale of things to worry about at this moment.
But don’t worry, should the debt not be honoured, and the cost is presented to the UK taxpayer, I’m sure you will gain their attention.
>It´s like a blanket ban on reporting news
Get real! As big as it is for Iceland, it’s small beer for most people over here.
You only have to look at the massive increase in IceNews posts over the past few days to see that the President’s move has made the subject interesting again.
@David.
That directive is oft quoted and equally oft misunderstood. What I’ve found over the past year or so is that when not even lawyers can agree whether the state guarantee is required, laypeople quoting from laws is futile.
That said, the standard response is that “ensured” in this case means that Iceland isn’t off the hook. The more interesting point is that the recitals (of which that is one), apparently just set the scene and are not actually legally binding.
At the end of the day, the guy that wrote the book on EU law (Really. I checked, it was on Amazon :) ) thinks that Iceland is required to support the state guarantee. Equally, there are lawyers with contrary opinions (of course, they all get paid whatever happens :) ).
>and terrible anti-terror laws that made this financial disaster
Nope. Icelandic banks, regulators and government made the disaster.
>the UK has been more of a bully than an EEA partner
You know, I haven’t called Iceland a thief since this started. But if you people keep on with your “bully” comments . . . :)
Iceland has always played the tyranny of the weak card. If you don’t like being small, you could always join a bigger entity.
For new readers here, and due to poor search facilitiy here at IceNews, etc. here are two particualrly meaty threads of discussion to follow :
https://www.icenews.is/index.php/2010/01/07/the-emergence-of-icesave-empathy-for-iceland-in-uk-media/comment-page-1/
https://www.icenews.is/index.php/2010/01/06/iceland-and-uk-ministers-to-hold-meeting-this-evening/comment-page-1/
( Look for the posts from new poster like ‘ Leo’ and ‘james ‘ adding new depth to discussion in addition to usual regulars hope that other new posters will join in discussion here at IceNews becoming thanks to poster like you premier destination for these Iceland based discussions )
If Icelandic citizens have followed UK news, they will notice hardly any mention of Icesave until last week. It´s like a blanket ban on reporting news, which to me, is extremely unfair on Iceland. Also, for anyone reading the UK news throughout 2009, they´d realise that the UK is running an inferior electricity network and due to spend billions on nuclear power plants over the next 20 years. Now, just a wild guess, but if the UK Government could get hold of Iceland´s renewable natural energy, untapped oil and fishing waters, they would prosper more. Much like the UK stating Saddam Hussein had WMD when really it was for their oil reserves (oil is used to make plastic, among other things, not just ´oil´!). The UK Government never does referendums, they make their own decisions as if they do not trust the public. I wish the UK followed rules of governments like Iceland and other European governments. It´s obvious the UK has strong influence over the IMF and other European countries who would otherwise have helped Iceland, but cannot because of the UK´s bullying tactics in their politics.
EU Directive 94/19/EC, on deposit guarantee schemes, says:
“Whereas this Directive may NOT result in the Member States’ or their competent authorities’ being made liable in respect of depositors if they have ensured that one or more schemes guaranteeing deposits or credit institutions themselves and ensuring the compensation or protection of depositors under the conditions prescribed in this Directive have been introduced and officially recognized; …”
This is actually what Iceland, partner in the European Economic Area (EEA), did, legislating in 1999 that a Deposit Guarantee Fund for savings’ owners and investors should be founded, which happened in 2000. The Fund is NOT a state property, nor a governmental institution, but an independent one, upheld by regular, pre-arranged contributions of our privatized banks. Our Republic is thus NOT responsible for the PRIVATE bank Landsbankinn, nor for its deposit accounts.
Now, the British and Dutch cabinets have scared our Government, threatened it to the point of yielding to all their demands, using several hostile actions and scare tactics in the process, such as exerting pressure on Iceland through the IMF, in which both the UK and the Netherlands are shareholders (which action, however, goes against the original aims and regulations of the IMF), and terrible anti-terror laws that made this financial disaster – the UK has been more of a bully than an EEA partner.
This current Icesave Agreement is a brutal act of oppression and lawbreaking – wjere are the EEA rules on equal treatment to stop the British in demanding 5.5% annual interest on the huge Icesave amount who at the same time are making the British Deposit Guarantee Fund pay only 1,5% of their loan from the same British authorities!