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.
Britain and the Netherlands have already offered easier repayment terms, so there is no reason for voters on the island of 320,000 to agree to the existing deal, which was drawn up late last year, on repaying about $5 billion.
But in addition to thumbing their noses at the British and the Dutch, the referendum gives Icelanders a chance to vent their anger at greedy bankers and politicians in Reykjavik who are widely blamed for bringing down the island’s economy.
The Icesave debt amounts to more than $15,000 for every Icelander, although most of the money is likely to be raised eventually by the sale of assets of Landsbanki, which operated the accounts before folding late in 2008.
BURDEN
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.
It is hoping for speedy accession talks, since it is far better prepared than other EU hopefuls and already belongs to the EU’s single market and its Schengen borderless zone.
But its aspirations are now tied partially to a dispute with the Netherlands and Britain over $5 billion in debts lost in the country’s banking collapse in late 2008.
Officials from the three countries are holding talks this week to try to agree a deal on how Iceland should repay the money. Any progress will be key to pushing EU talks quickly.
Dutch central bank chief: Iceland lied about bank woes
AMSTERDAM, Feb 4 (Reuters) – Dutch central bank President Nout Wellink accused Iceland’s government on Thursday of lying about the health of the country’s banks before their collapse in October 2008.
Wellink, in televised testimony before a Dutch commission investigating the credit crisis, said he had spoken to the head of Iceland’s central bank in early September 2008.
At that time, Wellink said, he was told that the Icelandic central bank had warned its government about six months previously about potential dangers for the banks.
“I’ve been hoping for a long time that they just didn’t see it, but to be honest after the words of my colleague that it was several months before that he had warned them, I thought they have lied to us,” Wellink said.
The effects of the collapse of Iceland’s banking system in October 2008 rippled round the world. One bank, Landsbanki, had an online arm, Icesave, that attracted hundreds of thousands of customers in Britain and the Netherlands by offering rates of more than 5 percent on deposits.
The two countries lent Iceland $5 billion to compensate customers who lost their savings when Icesave collapsed, but the terms for repayment of that loan have caused a big political dispute.
Iceland’s parliament passed a repayment law last August, but the British and Dutch governments rejected it because of its restrictions. Iceland’s parliament passed a new law in December but the president refused to sign it, triggering a national referendum on the law, set for March 6. (Reporting by Harro ten Wolde and Ben Berkowitz, writing by Ben Berkowitz, editing by Tim Pearce) ((ben.berkowitz@thomsonreuters.com; +31 20 504 5011; Reuters Messaging: ben.berkowitz.reuters.com@reuters.net))
Iceland plans Feb 20 for Icesave vote -draft bill
REYKJAVIK, Jan 6 (Reuters) – Iceland’s government is proposing a national referendum be held on Feb. 20 on a bill to repay Britain and the Netherlands more than $5 billion their savers lost when Icelandic banks collapsed, according to a draft bill seen by Reuters on Wednesday.
Iceland’s parliament had approved a repayment bill late last year, but Icelandic President Olafur Grimsson said on Tuesday he would not sign the bill into law.
The rejection means Iceland must hold a referendum, according to the country’s constitution.
((Reporting by Omar Valdimarsson in Reykjavik via Stockholm Newsroom, tel: +46-8-700 1017, e-mail: stockholm.newsroom@thomsonreuters.com))
IMF approves Iceland review, to disburse $167.5 mln
By Lesley Wroughton WASHINGTON, Oct 28 (Reuters) – The International Monetary Fund on Wednesday approved a long-delayed review of Iceland’s economic performance under an IMF loan program and said the crisis-hit economy could begin to turn the corner by the middle of next year.
Iceland says has new repayment deal with UK, Holland over deposit losses
By Omar Valdimarsson REYKJAVIK, Oct 18 (Reuters) – Iceland said on Sunday it had agreed to a new deal to repay Britain and the Netherlands billions of dollars of deposits lost when the island’s banks collapsed in 2008, paving the way for new aid from international lenders. (more…)
Iceland sets plan for lifting capital controls
By Niklas Pollard and Adam Cox STOCKHOLM, July 31 (Reuters) – Iceland’s central bank on Friday outlined plans to lift capital controls in the next few months to get the economy functioning more normally, roughly 10 months after the island country’s financial system tottered amid fallout from the global financial crisis. Also on Friday, the International Monetary Fund and Iceland reached an agreement on economic policy measures under the country’s IMF loan programme.
Iceland strikes deal to clean up banking mess
STOCKHOLM, July 20 (Reuters) – Iceland took a step towards clearing the debris of its financial meltdown on Monday, unveiling a deal with creditors of its failed banks and plans to capitalise the new ones. (more…)
Iceland eyes deals with creditors of failed banks
By Omar Valdimarsson REYKJAVIK, July 8 (Reuters) – Iceland’s government hopes to secure a deal next week with creditors of its failed banks which would allow it to capitalise its new banks and start to compensate foreign lenders for their massive losses. A deal would likely come ahead of a July 17 deadline to finalise the capitalisation of the so-called “new banks” which were created following the country’s financial meltdown, Indridi Thorlaksson, Permanent Secretary at the Ministry of Finance, told Reuters on Wednesday. (more…)
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