Financial Regulatory Forum

ANALYSIS – Icesave row, Greece feed anti-EU fire in Iceland

By Wojciech Moskwa

REYKJAVIK, March 8 (Reuters) – In the eyes of Icelanders, it seems Brussels can do no right. When it comes to fish, European Union bureaucrats intervene too much. When it comes to debt crises like Icesave or Greece, EU leaders simply don’t do enough.

The result is that on an island which has plenty of good reasons to join the bloc, interest in membership is now waning.

And that increases the odds that Iceland’s long-term future could be that it slips back into being a rocky outpost on the northern fringe of Europe, with its embattled currency prey to the ebbs and flows of financial markets.

“People are growing suspicious of the EU,” said Gudbjorg Andrea Jonsdottir, director at pollster Capacent. “They see the way Greece is being treated and realise that the type of security they hoped to gain as an EU member may not be there for the taking.”

The island nation of 320,000 people sought EU shelter after the collapse of its banks in 2008, seeing membership as a road out of a crisis that has hobbled its small independent currency and plunged the economy into deep recession.

PREVIEW-Angry Icelanders set to reject Icesave deal

REYKJAVIK, March 5 (Reuters) – Icelanders are set to reject the terms for repaying Anglo-Dutch debts in a referendum on Saturday, forcing new negotiations with creditors and delaying financial aid the country needs to fix its shattered economy.

Despite the negative consequences of rejecting the deal, Icelanders are furious about what they see as overly harsh terms from Britain and the Netherlands and they are now certain they can get a much better deal.

“Some will vote ‘No’ to tell the world that Iceland won’t accept this treatment, but studies have shown more than half believe that Iceland is ethically bound to pay back the debts,” said Gudbjorg Andrea Jonsdottir, director at pollster Capacent.

EU to recommend start of Iceland talks – EU official

By Justyna Pawlak

BRUSSELS, Feb 16 (Reuters) – The European Commission will recommend next week that the European Union begin accession talks with Iceland, an EU official said on Tuesday, launching a process Reykjavik hopes will lead to EU membership by 2012.

Iceland, an island of 320,000 people in the far north of Europe, had been reluctant to join the bloc for decades and only applied last year when the global financial crisis devastated its banking system.

“On Feb. 24, the European Commission will issue its opinion recommending the start of accession negotiations,” the official told Reuters.