“Icelanders are not going to pay their debts generated at the time of the fall of the banks in 2008.” This is a common misunderstanding of the facts being played in the foreign media after the president of Iceland decided to send Icesave to a public vote.
News of the president’s ‘veto’ on the Icesave Bill travelled quickly over the globe, and it seems that many journalists are under the wrong impression that Iceland does not intend to pay the Icesave bill. Sky News was the first to come out with this misunderstanding that Icelanders did not want to pay the British and Dutch.
Beside Dutch and British media, German media have been quite active and there this misunderstanding lingers, as many German news channels continue to state that Icelanders have rejected paying back the Icesave debts. Among the strongest headlines seen in German news media was in the Financial Times Deutschland, where the headline stated that the President of Iceland has called new a crisis down upon Iceland.
The Guardian is closest to the Icelandic government’s stated truth, saying that an argument has been ignited between the President and the heads of the Icelandic Government. By his action the president had put Iceland in further uncertainty, but the Prime Minister has promised that the debt will still be paid.
Most media agreed that this action will have unforeseen long-term implications, both politically and economically.
RUV.is reports
This is a cold economical war. The Icelandic media should try to correct this. Now they can play an important role in this war. I am happy to read this article, there should be more of those.
What a shame.
Your country is not better than the SouthAmerican defaulting crooks.
“Icelanders have rejected paying back the Icesave debts”
Well, that’s what the whole InDefence petitition is about! Why a referendum if people support the deal? Makes no sense! Obvviously, the overwhelming majority of Icelanders who want a referendum want to vote no. That’s the truth, no matter how much you spin it.
And at the same time, despite all their whining about having too pay too much for their nation’s stupid legal guarantee for Icesave, Icelanders have done NOTHING to press the millions out of their greedy billionaires! The moneys are there, just implement a 90% property tax on everybody owning more than 10 million Euros and you’ll have no problems to pay the debt. Simply hold the offenders accountable, and nationalize their stolen goods! But don’t tell the broke Icesave customers that Iceland has no money. That’s ridiculous.
Iceland should fight back with pen at least, like the Chinse government always did to correct the usual distorted British media
I think that there’s a fundamental misunderstanding of the issue in Iceland which is not dissimilar to that back in Oct 2008 with all the talk of did they/didn’t they say that they’d back the guarantee.
As it stands, after the referendum votes against this current deal and assuming that the previous law stands, Iceland has issued a conditional acceptance of the debt. The condition is that the terms of the loan that will enable Iceland to repay the debt are acceptable to Iceland. Currently, that includes the write off of everything unpaid by 2024.
This conditional offer has been refused by the UK/NL and they show no signs of moving on that. Therefore, Iceland has not accepted the debt.
“Icelanders are not going to pay their debts generated at the time of the fall of the banks in 2008.” — Well, that’s not true. We don’t mind paying our debts. It is paying other people’s debts that we are not thrilled about.
“Sky News was the first to come out with this misunderstanding that Icelanders did not want to pay the British and Dutch.”
— Again, why would we WANT to pay them back. Our Icelandic banks should not have written a check their asses couldn’t cash (guarantees, etc) – but we are too small a country to shoulder so many billions on the backs of our citizens. These are criminals, go after THEM.
Who has the facts? What does the actual agreement say? What is the amount owed stated in? Icelandic Krona or Euro or Dollars or what? Was it pegged to a particular currency on a particular day? If it was agreed in krona, non-pegged: Print like mad, devalue it to nothing , pay it all out in day (print electronically, like the Bank of England does these days, saves on paper and you can print the whole debt off in thirty seconds), then join the Euro and get on with life.
: )
“We don’t mind paying our debts. It is paying other people’s debts that we are not thrilled about.”
Then “follow the money”, and take it away from your ultravikings, or how you call them! That’s YOUR job, not that of the British or Dutch people. Stop whining, confiscate that money and pay the debts!
@ryan
The reason you are expected to pay them back is because your government implemented a deposit guarantee scheme, years ago. Without that scheme, the Icelandic banks would not have been allowed to operate in the UK and the Netherlands. And thus, no Dutch/UK savings would have been lost in a collapse, if that scheme had not existed.
And because of that scheme that the government of Iceland created, you are now liable for the losses of Dutch/UK savings.
So I think its no more than logical for the UK/Dutch to expect you to actually honour your commitments as a country.
And if they are criminals, you should go after them. I am pretty sure the UK and Dutch governments don’t care where you get to money to pay them back, as long as you pay it back. And all of it. So no silly business of refusing to pay anything after 2024.
“These are criminals, go after THEM.”
It’s your laws, your justice system, your police, your government and parliament! Right or wrong, your nation, and the responsibility falls on all citizen. Don’t expect others to do your job.
I am a British taxpayer, about to send a several thousand pounds of income tax to the government, I would like someone to explain to me why the people of Iceland feel it is OK not to repay my money. Note, not money that originated anonymously from the UK government, it was taxpayer’s money, presumably lent in good faith. If the terms were not acceptable, the answer was not to accept it.
I would like to see a referendum of UK taxpayers to see what they think about this.
As Ruv.is puts it. Indeed there is alot of misunderstanding and how the who story has been fabricated and still misunderstood by those that are not concerned with this debt. I do not see myself to pay the debt which I never contributed to, as it well known in Iceland what caused the collapse of the BANKS! So let us wait for Eva Joly’s finding and add it with the referendum.
Gray, of Germany:
I understand your frustration, but I don’t think implementing 90% property tax on people owning more than 10 million EUR would bring us anything, since I believe they have all put their assets up in Tortola or other “tax paradises”, where the Icelandic government can’t get to it. But believe me, nationalizing the culprits’ assets would be a dream come true (to me).
I’m not sure of the whole amount of money Icesave owes the British and the Dutch, but the latest number I heard is 5 billion USD, not incl. 5,5% interests (to be paid back by 300.000 Icelanders), which can be compared to the 400 billion USD (132 billion marks at the time, roughly recalculated to 2007 equivalency/constant dollar*) the Versailles Treaty in 1919 demanded that Germans pay back. (Population of Germany 62.000.000 in 1922**).
If these numbers are correct, then Icelanders are required to pay more than twice the amount (per person) of the Versailles Treaty, which was never paid back in full.
Bromley86:
The September 2009 “agreement” state that anything not repaid by 2024 would have to be renegotiated (not written off), but the “agreement” the Icelandic president refused to sign stated that if any amount be left by 2024, the agreement would automatically be extended to 2030, and then by 5 years, and another 5 years, etc., until paid back in full.
*http://en.wikipedia.org/wiki/Treaty_of_Versailles
** http://www.tacitus.nu/historical-atlas/population/germany.htm
I watched skynews sometimes, my opinion how they bring the news is not that profesional like BBC.
I did read BBc article about Iceland, they are much more positive and telling the truth to the public.and as a Icelander why should I pay those money to the british as they did treated us like terorist and unfair. This gordon brown goverment should be more wise and diplomatic to take care of this matter, did you forget how the Icelandic peoples was helping you in cold war by providing fish so your soldier could have food to eat???
May God Bless Iceland and Give His wisdom to their Leaders.
Iceland is paying the national dept, but ice save is not national dept. It is not a loan that Icelandic state has take. This is a result of criminal activity by private banks originating from iceland, and ministers from Icelandic government who are trying to nationalise this as a national dept and give legality to this crime. This crime is truly speaking very big, and probably involve UK and NL governments too, which could be reason of avoiding any court arbitration. however, it shall be understood, the banks were doing private business, and Icelandic citizens and state should not pay a dime for personal crimes. On the same way and Italian state should be forced to pay for all crimes of Italian mafia crimes, and so on. Clearly, this crime was organised by Icelandic ministers and banksters, very personal, with personal names, and shell stay and be punished as personal, not collective.
why the USA never pay for those victimized by LEHMAN brothers, they forced iceland because its a small country.why not imprisoned the head of those banks not the innocent people of iceland. hunt them and take their belongings. innocent from iceland:)
As someone with a russian wife, as I see it,rather than Icelanders worrying about their possible rejection from the EU ‘club’, they would be far better advised to form closer ties with Russia – a country with no debts, and huge reserves of oil and gas.And a country with an economy that can only go from strength to strength,due to the possession of these dwindling resources.
Oh – and also the largest country in Europe.
From a different news source: “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.”
I agree with David Fergus. Iceland deserves Russia. The President can become Putin’s governor of Iceland.
Forget getting closer to Russia, the strings that would be attacted to that would be brutal. Instead join… …CANADA!!! We would welcome Iceland as a brothers!
Check out the comments at: http://www.cbc.ca/money/story/2010/01/06/iceland-icesave-debt-eu.html#socialcomments
We are way better off than the Russians here in Canada and we have the least dept of the G-8.
Join Canada! We have better hockey!
@Greta
The nominal sum of the debt at the moment is 3.8 billion Euro. Which is indeed a lot of money. However, the real debt that will need to be repaid will in all likelyhood be a lot lower. Because before Iceland has to pay the debt through its government, they can use recoveries from the failed banks to pay for them. Some people estimate those recoveries to be between 75 to 90% (which is rather much, but not impossible) of the nominal sum. But even with a recovery of 50%, it would substantially lower the obligation of Iceland.
To Bromley86:
>>>>I think that there’s a fundamental misunderstanding of the issue in Iceland which is not dissimilar to that back in Oct 2008 with all the talk of did they/didn’t they say that they’d back the guarantee.
>>>>This conditional offer has been refused by the UK/NL and they show no signs of moving on that. Therefore, Iceland has not accepted the debt.
Yes, I do agree there seems to be a major misunderstanding on what exactly Iceland is doing/thinking/deciding, both now and in many ways similar to Oct 2008.
1. Vast majority of Icelanders, do not think they bear LEGAL responsibility to pay for IceSave, for the many reasons that we have discussed here repeatedly during the past year, AT LEAST NOT until an independent court has taken the matter up and resolved it. If the matter were to go to court and we were to loose it most people would probably then accept it (there are always going to be some diehards).
2. Even Icelanders do not believe they bear the legal responsibility, they are sophisticated enough to understand that at least some of the MORAL responsibility for what happened definitely lies with Iceland. The degree varies of course a lot depending on who you talk to.
3. This acceptance of moral responsibility does not necessarily include the government officials (former and current), regulators, the bankers and the vikings, most of which believe that they did absolutely nothing wrong or that they just couldn’t do anything about it.
4. Most people here also do know and understand, that the Icelandic government made the commitment to guarantee Icesave payments back in November 2008. But an important part of that commitment were the so called “benchmarks” (viðmið), that stated that any subsequent deal with UK and Netherlands should take into account the special financial circumstances Iceland finds itself in. There is a wide-spread believe here in Iceland that the current Icesave agreement DOES NOT adhere fully to those benchmarks.
5. There is also full understanding by most people here in Iceland, that the Icesave guarantee that was passed into law August 2009 (with the amendements), commits Iceland to pay for Icesave.
6. The subsequent changes to the August 2009 laws demanded by UK/Netherlands are deeply unpopular here. This is NOT because of the 2024 time-limit removal, which probably most people could live with.
7. Instead real issue with people here, is the “Ragnar Hall” issue (regarding Landsbanki being handled according to standard laws on bankrupty), and the high 5.55% interest that is being charged, not on the Icesave guarantee payments themselves by Iceland, but the whole 4B Euros Landsbanki Icesave debt for the full term of the loan. These two issues will likely add about 1-2B Euros extra to Iceland’s payments, which can ill afford it. This extra payments are on top of the Icesave guarantee and clearly not required by the EC directive nor do they adhere to the Brussel benchmarks.
This is THE REASON for the fierce opposition here in Iceland to the current laws, and why the President subsequently decided that they have to go to a national referendum.
People in Iceland are willing and committed to pay for IceSave, so long as it is done in fair and equitable manner where everyone’s interest is taken into account, and they can have their own say in the matter (through the referendum).
To Leo:
>>>>The nominal sum of the debt at the moment is 3.8 billion Euro. Which is indeed a lot of money. However, the real debt that will need to be repaid will in all likelyhood be a lot lower. Because before Iceland has to pay the debt through its government, they can use recoveries from the failed banks to pay for them. Some people estimate those recoveries to be between 75 to 90% (which is rather much, but not impossible) of the nominal sum. But even with a recovery of 50%, it would substantially lower the obligation of Iceland.
You are correct, that Landsbanki recoveries of 75-95% will lower the amount that Icelandic government will have to pay for Icesave.
BUT, during the next 7 years, the full 3.9B Euros loan will likely collect interest amounting to about 1.4B Euros and then another 0.6B Euros for the following 8 years. The interest payments will only be lower, if the Landsbanki bankruptcy payments come in very quickly, which is not very likely due to multiple lawsuits that are likely.
Icelandic government cannot get interest paid from the bankruptcy, since this is not allowed according to the existing bankruptcy laws.
So even if Iceland has to pay only between 0.5 and 1.0B of the original 3.9B Euro loan, when you add another 2.0B in interest payments we are definitely back in the trouble area.
Gray, Germany wrote :
>“Icelanders have rejected paying back the Icesave debts”
Well, that’s what the whole InDefence petitition is about! Why a referendum if people support the deal?
Don’t let the facts get in the way there Gray :
http://news.bbc.co.uk/2/hi/europe/8438178.stm ( video interview with indefense)
No Greg, I don’t want Iceland to be part of Canada. We can’t afford it. I would want a referendum of all Canadians before Iceland could become part of Canada and it would never pass once all facts about Iceland were presented. Like I said, Iceland deserves Russia.
Gray Germaty wrote :
>Makes no sense! Obvviously, the overwhelming majority of Icelanders who want a referendum want to vote no. That’s the truth, no matter how much you spin it.
The majority Icelander do not want 5.5% interest uncapped against our GDP growth.
The August law supported by most and that is what a NO vote in referendum will mean. Not rejecting IceSave paying back but instead that Icelanders want the already passed August law.
ie If NO vote in the referendum then it measn that voters do support the August amendments to the IceSave “deal ” which are as following :
1) clear up the “Ragnar Hall ” technicaliy issue that come from poor drafting of original agreement text ( let us be generous to Uk and Holland here ) that would result in more payments being made than the intent of the agreement ( notes 1 ).
2) payments to UK and Holland not to be more than 6% of year on year growth of Icelandic GDP each year (4% being for repayments to the UK, and 2% to Holland ).
( Compared each year to 2008 in Pounds and Euros, GDP growth numbers to be based on reports published by EuroStat )
3) principal monies and 5.5% interest not repaid by 2024 would have to be renegotiated (not immediatrely written off as some beaners keep on saying ) then in 2024.
4) reserve Icelandic government its sovereign rights and rights to any aprproriate defenses in any court cases that might come up .
http://www.icenews.is/index.php/2009/09/02/icelandic-president-signs-icesave-deal/#comment-92584
(notes 1)
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87014 ( 4. Icelandic bankruptcy laws ) and
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87111 ( Ragnar Hall writes: )
I THINK THAT THE GOVT IF ICELAND SHOULD DECLARE NATIONAL EMERGENCY LIKE MARTIAL LAW, THOSE PEOPLE WHO ARE INVOLVE IN THIS MESS SHOULD BE ARRESTED AND INTERROGATED IN ORDER TO SPILL OUT WHERE THE MONEY ARE.THEY MUST SEQUESTERED ALL PROPERTIES AND ASSETS OF THE OWNERS OF THAT BANKS.
“News of the president’s ‘veto’ on the Icesave Bill travelled quickly over the globe, and it seems that many journalists are under the wrong impression that Iceland does not intend to pay the Icesave bill. Sky News was the first to come out with this misunderstanding that Icelanders did not want to pay the British and Dutch.
Beside Dutch and British media, German media have been quite active and there this misunderstanding lingers, as many German news channels continue to state that Icelanders have rejected paying back the Icesave debts. ”
It is very inconvenient that this new media does exist for progogandist because sources like IceNews do allow details of the truth to come out.
And unlike pure progoganda sites like SkyNews.com and Times.co.uk ( both owned by Murdoch who ) that want only they editorial line to be seen+ this place does give possiblity of people interested to find the truth about things.
And I think more and more people do that.
That is why we do see so many hired pens here. You will notice the increase in nonsense troll posts since this veto as to the mind of the online progandist hired pen it is ideal time to try and seed and sow false facts here.
( I have mostly given up with BBC News website because comments sections there are basically New Labout focus groups .)
+If you try and post any detailed rebutting to false hood on SkyNews.com or TimesOnline.co.uk about Icelandic banks or this issue of IceSave it is just deleted.
Telegraph.co.uk is bit better.
othie c, good suggestion, but it won’t work in Iceland because the politicians and the people involved in this mess are all related.
icelander, don ´t pay a single krona. cunny bankers and greedy english and german customer are to blame. Bankers, right to jail. icesave clients, you bet and fail. you are responsible for your money. when you got a 12 % benefit you boast about it. Now you lost everything. i am not sorry for you. anyone is to blame: Mr. haarde, bankers, crisis…
Some Dutch people started a petition to support Iceland!
http://www.petitiononline.com/NLforIce/petition.html
It is open for everyone to sign. Please forward the link to as much people as possible.
Never should an innocent bystander wherever in the world be forced to pay for the faults of others, in particular (central) banks and failing politicians.
The editorial in this morning’s City-AM (a free-market news-sheet given out at tube stations in central London)carried the headline:
“Iceland sees the first anti-bailout revolt”
I think it is quite a good item -
http://www.cityam.com/news-and-analysis/allister-heath/iceland-sees-the-first-anti-bailout-revolt
What I like is the lack of nationalist posturing, good on Grimsson for vetoing this and for the 25% of the population who urged him to do so.
What I want to know is what Icelanders now think of the Left-Greens? Barely in power a few months and they appear to have tried to sell Icelanders into slavery just to prove to the financial elite what trustworthy ‘managers’ they could be. Surely it is the end for them now?
“the Prime Minister has promised that the debt will still be paid”
Without a state guarantee, it is totally irrelevant what Johanna promises. Her promise is not legally binding in any way and she will be out of office long before the first repayment is due…
Zach wrote:
“Never should an innocent bystander wherever in the world be forced to pay for the faults of others, in particular (central) banks and failing politicians.”
Well, if we agree on that, iceland needs to pay..
The agreement (before the icesave crash) was that in case of bankruptacy the first 20k of each account was paid by iceland, the second 20k by other dutch banks, the last 60k by dutch government.
Now, the first 20k is now lended to iceland by the dutch government, so at this very moment, up to 80k euro per account is paid by dutch citizens (me).
It is the icelandic supervission on the bank failing, Netherlands National Bank saw the problem but was not allowed to do anything because of the agreements.
I did not have any iceland bank accounts, but still I am paying for it.
My only fault is that we elected a government that made agreements with iceland in the first place, allowing icesave on the dutch market.
I don’t really understand why there needs to be any agreement or law on paying back, it was allready agreed. Why time to 2024?, in the netherlands everything was settled in 2 months (including the 20k per account lended by dutch government).
To rene(nl):
>>>>I don’t really understand why there needs to be any agreement or law on paying back, it was allready agreed.
Actually, it was NOT already agreed. The laws are therefore needed, because that is the only way the guarantee can be issued.
The existing laws on the guarantee fund in Iceland (TIF) specifically said the that the guarantee was a private foundation, funded by the banks, not by the government:
http://www.tryggingarsjodur.is/modules/files/file_group_26/log/log-98-1999-ens.pdf
Apparently none of the people or governments, that assumed there was indeed a separate government guarantee, actually had read the relevant laws.
“Never should an innocent bystander wherever in the world be forced to pay for the faults of others, in particular (central) banks and failing politicians.”
So why are you demanding that Dutch and British taxpayers be made to pay for the faults in the Icelandic banking/regulatory/political system?
Why should Icelanders have their deposits protected and not other nationalities?
rene (nl) did write :
>I don’t really understand why there needs to be any agreement or law on paying back, it was allready agreed.
With most of respect, please will you read these posts at least. They should answer your questions :
http://www.icenews.is/index.php/2010/01/06/icesave-misunderstanding-in-the-foreign-media/#comment-109052
http://www.icenews.is/index.php/2010/01/04/icelandic-president-under-pressure-for-icesave-decision/#comment-108658
The bottom line is that for the goverment of Iceland or any official to take on a state guarantee it is reqiured by the Icelandic constitution that he or she do get specific authorization from the Icelandic parliament.
( There is good explaining post about it by Bjarni but for now because of useless search facility here at Ice News I cannot find it for you. )
Misunderstanding? there is only to pay and not to pay.
as Rene already explained the Dutch goverment already payed a large %. It would be only more then fair if the Island tax payer pays the rest.
It sucks that the bank was poorly supervised, by the goverment in iceland. But if the goverment messes up as well. In this case or if a goverment does expensive things people have to pay. The dutch goverment has also spend something like € 1.000.0000.0000,- in afganistan. guess who has to pay? If you dont like your goverment elect a new one.
@Bjarni,
I hope you will read this. I am a foreigner living in Iceland and cannot understand good level of Icelandic. You seem to know a lot about what is happening. May be you can suggest me (and perhaps others like me) a source in English where I can read the details of both August(accepted) and December(rejected) versions of Icesave deal. Or you can sum it up for me if you don’t mind :) no1charlie@yahoo.com is the address. I really appreciate it if you could help.
Cheers.
Perhaps it is time for some fundamental truths to be pointed out to the Icelandic people.
1. HM Government claims that extensive discussions were held between senior UK officials and their counterparts in Iceland in the months prior to October 2008 in efforts to address and avert the impending disaster in respect of Landsbanki, Kaupthing Singer & Friedlander and Heritable Banks trading within the UK.
2. Both jurisdictions appear to have a different version of their discussions and events, however, the outcome indicates that whatever conversations took place, all meaningful negotiations failed.
3. on 6th October the Icelandic Government rushed an emergency bill through the Althing which guaranteed domestic commercial and savings banks.
4. that same day the Guernsey FSC ‘approved Landsbanki’s Guernsey branch directors’ decision to place the branch in voluntary administration.’
5. on 7th October the Icelandic FME placed the bank in receivership, announcing that all Landsbanki’s Icelandic deposits would be protected in full.
6. at 10:10 on 8th October the Landsbanki Freezing Order 2008 came into force, freezing all assets of Landsbanki, the Central Bank of Iceland and the Government of Iceland.
7. on 9 October, the Icelandic assets and liabilities of Landsbanki were transferred to a new government-owned bank, Nýi Landsbanki. As Landsbanki had been acquiring assets in Iceland with foreign loans and deposits, the assets of Nýi Landsbanki exceeded its liabilities (domestic deposits and government equity capital) by 558.1 billion krónur (€3.87bn, £3.06bn) even after Nýi Landsbanki had made provisions for over half its loans to customers. Icesave deposits, along with all foreign borrowings, remained in the old Landsbanki, which was left with 1743 billion krónur (€12.1bn, £9.56bn) in assets to face up to 3197 billion krónur of liabilities (€22.2bn, £17.5bn). [Source: Wikipedia]
8. While the ultimate use of Part Two of the Anti-terrorism, Crime and Security Act 2001**, to justify the Landsbanki Freezing Order 2008 and thereby paralise movement of Icelandic banks’ funds held in UK; together with the threat of legal action by Great Britain, may or may not have been ‘heavy-handed’ and ‘highly offensive’, there appears to be little doubt that these banks were in serious trouble with some extremely questionable practices taking place, if recent reports regarding UK-SFO investigations are to be believed. believed.
9. HM Government’s use of these particular measures, where other legislation may arguably have been less emotively and better employed, has merely served to provide Iceland’s Government and people with the extremely useful and much utilised diversionary tool of raucous furore and indignation at the concomitant inference of ‘Terrorism’ to thereby distract its populace and media from the fundamental issues: that inadequate regulatory control meant that these banks were operating at the very least outside accepted international banking practice, if not – as is now emerging in certain instances and possibly with some senior officials’ compliance – illegally. Railing against perceived allegations of terrorism, while allowing Icelanders to vent their understandable rage and humiliation, it would be more accurately directed at the failure of their Government, banks and as a direct result, their economy and monetary system.
10. Despite the findings of the respective banks’ administrators and/or liquidators as to the financial status of the Icelandic Banks, the Icelandic Government audaciously claimed that the UK Government had caused the Icelandic banks’ collapse by its actions and continues to divert attention from the real issues.
The unequivocal facts are:
1. The Iceland electorate democratically voted for their Government, thereby providing its elected representatives with an unequivocal mandate to oversee the control and regulation of Icelandic banks.
2. The Iceland Government, for whatever reasons – and so far speculation has ranged from incompetence, through ‘blind-eye’ and ‘arms length’ management, to outright complicity – clearly completely and utterly failed to effectively regulate or responsibly control its banks, either to local or international standards. The actual reasons and accountability for these failures are currently under investigation and have yet to emerge.
3. During the years prior to 2008, many Icelanders apparently unquestioningly and bizarrely took out a high number of loans in foreign currencies, including US dollars and Japanese Yen and were happy to live an inflated and economically unrealistic lifestyle. With the collapse of the banks and the krónur and the knock-on effects of job-losses, those same creditors have found themselves unable to repay their loans and in parlous financial situations. Their anger is understandable, but misdirected if focused anywhere outside Iceland.
4. Although not a member of the EU Iceland is a member of the European Economic Area and EFTA. It was therefore bound by the regulatory bank compensation scheme under EEA law under Decision 18/94 of the EEA Joint Committee, which Iceland wrote into its national law in 1999.
5. This EEA law is based on and regulated by EU Directive 94/19/EC and Article Seven states: ‘ 1. Deposit-guarantee schemes shall stipulate that the aggregate deposits of each depositor must be covered up to ECU 20 000 in the event of deposits’ being unavailable. Until 31 December 1999 Member States in which, when this Directive is adopted, deposits are not covered up to ECU 20 000 may retain the maximum amount laid down in their guarantee schemes, provided that this amount is not less than ECU 15 000. ‘
6. Known as Tryggingarsjóður [the Depositors' and Investors Guarantee Fund] it was to be funded via a 1% levy on all bank deposits. According to Wikipedia: ‘At the time of Landsbanki’s collapse, the Tryggingarsjóður had equity of only 10.8 billion krónur, about €68 million at the exchange rates of the time and far from sufficient to cover the Dutch and British claims.’
7. Upstreamed funds from Landsbanki Guernsey and personal account deposits in IceSave aside, it is known that ‘wholesale depositors including 123 local authorities and other public bodies had a total of £920 million (€1.1bn) deposited with Icelandic banks. The Audit Commission, the independent body responsible for overseeing local government finances, admitted having £10 million deposited with Landsbanki and its subsidiary Heritable Bank.’
8. Such a shortfall would surely justify an independent audit, comprised of international politically unafilliated experts, of the funds transferred to Nýi Landsbanki to investigate the correlation between the deposits of Icelandic origin, which were allegedly transferred to the (surprisingly liquid) new bank, as compared to the total amount of deposits made over time via upstreaming from international branches and subsidiaries; a large part of which appear to have totally evaporated if the balance remaining in Old Landsbanki is to be believed.
9. In this regard, with breathtaking hypocrisy, while blindly ignoring its constitutional obligation to represent and protect Crown Dependencies in its negotiations with Iceland, and repeatedly seeking to defame and discredit UK small depositors in UK offshore Icelandic banks, the British Government has sought to accuse Iceland of a breach of its obligations under Article 4 of the EEA Agreement which prohibits “any discrimination on grounds of nationality”, reflecting Article 7 of the Treaty of Rome.
10. If the UK and Dutch Governments individually or collectively chose to exceed their own predetermined EU or National depositor compensation schemes’ maximum payment limits and/or reimburse savers in full, it is surely a matter for those individual countries, not Iceland, to underwrite. Nevertheless, it cannot be denied that Iceland does have a financial commitment to the extent of its declared liabiity under EEA legislation. Despite such fundamental logic, these governments have sought to bully Iceland into repaying ‘loans’ which were made arbitrarily without prior discussion or agreement, together with a 5% interest charge which is patently excessive by today’s standards. These demands were leveraged via pressure on the IMF and its delivery of loans to Iceland. The result of its economic situation and financial pressure on Iceland has resulted in that island’s reluctant application for EU membership, with the inevitable impact on its historical primary economic resource; its fish stocks.
11. Concurrent with this debate and long after all Icelanders’ interests have been protected, it is apparent that depositors in Landsbanki Guernsey are to be treated as non-preferential creditors by the Iceland Landsbanki administrators. This will place LG depositors’ claims behind those of many other creditors, ie: the British and Netherlands Governments (for IceSave payouts), public bodies etc. This will result in a negligible reimbursement when compared to ‘preferred creditors’.
12. In the event that this course of action is not adjusted to a fair and equal distribution, surely the argument surrounding the interpretation of Article 4 of the EEA Agreement should also apply to LG depositors’ rights. Iceland claims its decision to pursue the legitimate objective of the survival of a banking system complies with the precedent established by the Garcia Avello case brought in the European Court of Justice, which held that: ‘It is in this regard [Articles 12 EC and 17 EC] settled case-law that the principle of non-discrimination requires that comparable situations must not be treated differently and that different situations must not be treated in the same way. Such treatment may be justified only if it is based on objective considerations independent of the nationality of the persons concerned and is proportionate to the objective being legitimately pursued. ‘ If this judicial decision is upheld in Iceland’s case then there is an argument that the failure to recognise that Landsbanki Guernsey depositors have equal claims to those of other parties is discriminatory and also that Iceland completely failed to protect the Icelandic-owned banking entities (surely by definition ‘systems’) in other jurisdictions.
As mentioned earlier, one can empathise with Icelanders for electing the wrong people to government: people who failed to fulfill their entrusted roles with due diligence and selfless responsibility and who have landed them in this ghastly mess by ignorantly or knowingly allowing the bankers free rein to create a false economy with the resultant and inevitable consequences.
The ‘soft touch’ regulatory approach to banking of the various authorities in the UK, Netherlands, Germany, Guernsey, etc: must bear some responsibility for not having acted more strongly and considerably earlier to halt the excesses and possibly salvage not only wholesale and private deposits of their own citizens and possibly, thereby, Iceland’s banking system. The misguided and bullying actions of Gordon Brown and other international leaders was a stark demonstration of too much and too late – BUT, it should be remembered that at the end of the day, full accountability lies with Iceland – its Government of the day and the Icelandic people who elected them, thereby allowing their own bankers to run the Iceland economy into the ground, to destroy the Krónur’s exchange rate and to destroy the reputation of an honest, diligent and internationally respected nation.
** It should be noted that this Act is an unfortunately emotive and inflamatory title for what is largely a reincarnation of its predecessor, which was used against Rhodesia in 1965 and Argentina in 1982, ie: Section 2 of The Emergency Laws (Re-enactments and Repeals) Act 1964 – which itself originated from the Defence (General) Powers Regulations, 1939.
Almost 90% of UK supports Iceland in not accepting this deal, same with Holland why doesnt the media report on that? Why are they just scareing the cr.. out of people with all this “catastrophic” news?
This was in the FT today:
Check out this link:
http://www.ft.com/cms/s/0/dd0831a4-fafa-11de-94d8-00144feab49a.html
This in the Guardian:
http://www.guardian.co.uk/business/poll/2010/jan/06/should-iceland-repay-icesave-debt
so dont belive tha everytinh is in chaos and that the sky will fall on us if we dont accept this deal, Yes to pay NO to this deal.
Could it be that they are trying to scare averybody to vote Yes on the 20th of Feb. They wouldnt be puutin it to referendum if they didnt know they can change the mind of 70% of people that oposses through fear.
To Peter – London:
>>>>So why are you demanding that Dutch and British taxpayers be made to pay for the faults in the Icelandic banking/regulatory/political system?
You know full well that Iceland is NOT demanding anything of the Dutch and British taxpayers. The only thing we are asking is that any deal that will be negotiated, is fair and equitable for everyone involved. The new agreement is not, at least in the opinion of large number of Icelanders.
To EmmaB:
>>>>Perhaps it is time for some fundamental truths to be pointed out to the Icelandic people.
Wow! And I thought I maybe i was writing too long posts :-)
Actually, your post is quite accurate, unbiased, and welcome change from some of the nonsense written by some people, that don’t even bother to look up the facts before forming their opinions.
I only have few comments to clarify or expand on some of your points:
>>>>2. Both jurisdictions appear to have a different version of their discussions and events, however, the outcome indicates that whatever conversations took place, all meaningful negotiations failed.
There is still not much official detailed descriptions available on exactly why the negotiations failed. There are two books I have read that provide at least some new details on those discussions, “Frozen Assets” by Armann Thorvaldsson, and “Umsátrið” (the siege) by Styrmir Gunnarsson.
>>>>9. … has merely served to provide Iceland’s Government and people with the extremely useful and much utilised diversionary tool of raucous furore and indignation at the concomitant inference of ‘Terrorism’ to thereby distract its populace and media from the fundamental issues …
We didn’t need any distraction, we felt this heavyhanded action immediately through people on travel not being able to use their credit cards, students thrown out of their places or otherwise harrased, not being able to send payments to or from Iceland (even UK companies not being able to pay Icelandic ones), and etc. etc. The InDefence group of recent fame (the referendum petition), was started directly as response to this UK government action, and well over 80000 people signed their petition or sent in “postcards”.
>>>>Railing against perceived allegations of terrorism, while allowing Icelanders to vent their understandable rage and humiliation, it would be more accurately directed at the failure of their Government, banks and as a direct result, their economy and monetary system.
Rest assured, if you read news articles, commentaries, and blogs here in Iceland, they are definitely getting their full share of the anger and rage by the population. Most of the guilty parties have already lost their positions, are being investigated, and many have already left the country as a result.
>>>>10. …the Icelandic Government audaciously claimed that the UK Government had caused the Icelandic banks’ collapse by its actions and continues to divert attention from the real issues.
Well, the UK government certainly didn’t help. The bank’s collapse had many different causes and cannot be blamed on any single party. The main issues we have with the UK government are the above mentioned freezing order that was bluntly used, and how KSF was dealt with by taking over the Kaupthing Edge accounts and handing them over to ING, which caused the immediate collapse of the parent bank and all its subsidiaries. They say they were worried about transfers of money from KSF to Iceland, but the details have never been provided.
>>>>3. … many Icelanders apparently unquestioningly and bizarrely took out a high number of loans in foreign currencies … those same creditors have found themselves unable to repay their loans and in parlous financial situations. Their anger is understandable, but misdirected if focused anywhere outside Iceland.
I have not seen anyone trying to blame the foreign currency loans on anyone else outside Iceland. It was crazy that people were taking loans in different currency than their income, but most of them probably did not have good understanding of the risk they were taking. Many of these people are now blaming their banks for pushing those loans, but ultimately the responsibility lies with both them and the banks, and both are paying very heavy price for this.
>>>>8. Such a shortfall would surely justify an independent audit, comprised of international politically unafilliated experts, …
Completely agree. In fact, I think all major money transfers between all the different branches and subsidiaries leading up to the crash, should be made public, except maybe for names of innocent parties to protect their privacy. That way we would know exactly what happened, without having all kinds of rumours and accusations going around. For example, we still do not know if Kaupthing was transferring money to KSF (as they claim), or if it was the other way around (as UK is claiming).
>>>>9. …the British Government has sought to accuse Iceland of a breach of its obligations under Article 4 of the EEA Agreement which prohibits “any discrimination on grounds of nationality”, reflecting Article 7 of the Treaty of Rome.
Also 11. and 12.
There was a recent preliminary judgement by the EFTA Surveillance Authority (ESA), where they looked at some of the actions taken by the Icelandic government during the crash.
http://www.forsaetisraduneyti.is/media/frettir/Bradabirgdanidurstada_ESA.pdf
I have already discussed their opinion here:
http://www.icenews.is/index.php/2009/12/30/the-icelandic-parliament-althingi-says-yes-to-icesave/#comment-108342
One thing they mentioned was that for some reason none of their current claimants were depositors, and therefore they could not give their opinion yet on the “discrimination issue” specifically in regards to depositors. This is an important issue to resolve, so maybe some of the depositors will file a claim with ESA, so they can rule on the issue in the near future.
>>>>BUT, it should be remembered that at the end of the day, full accountability lies with Iceland – its Government of the day and the Icelandic people who elected them, thereby allowing their own bankers to run the Iceland economy into the ground, to destroy the Krónur’s exchange rate and to destroy the reputation of an honest, diligent and internationally respected nation.
Well said!
Welcome to the Anglo-Saxon press cheat. In Spain we suffered this all the time and since years ago…
>Almost 90% of UK supports Iceland in not accepting this deal
Not so. Almost 90% of people who read and voted in that Guardian poll supports Iceland not accepting. Very different.
hmm ,but will the economy really rise ?
Iceland don’t let them to do like they do with our country. Im from Slovenia and here is total chaos we as a citizen we must pay every mistake truth tax witch our govermant, bankers and managers of bigest company in country…dont let it to do like EU do to us… its much more in back ground of EU, USA and UK politic…
u can chack this video to…for more info…
Respect for your goverment that its not that corrupt is our and almost all goverments all over the world.
But i dont know why do you sight Lizbon contract??
Big respect from Slovenia
and take care and fight for your freedom and independents!!!
Silverj
This is the video witch i forgot in first post
chack it:
http://video.google.com/videoplay?docid=3543161691381895251&ei=luhFS-eOOprE2wKenaGFDg&q=wake+up+call#
EmmaB, I think most of your post is very accurate and interesting, but one thing I would take issue with is that a 5% loan is “patently unreasonable by today’s standards”. If I recall correctly, even the beloved Faroe Islands are charging similar or more. If it is such an unreasonable rate, why doesn’t Iceland get a loan elsewhere and just pay back the UK/Holland that way? It would seem to me that the current Icesave deal is already better than anything else Iceland could get. (Also realize that, understandably, Iceland doesn’t exactly look too reliable or trustworthy right now, so there will be a certain amount of risk factored into the interest rate.)
Actually, the coverage of the current situation by the FTD is far closer to the facts than by other media in Germany, which are just rehashing half-truths and canned news. Don’t let yourself get distracted by the headline.
Apparently, this email is going around at the moment with the following new offer:
“People of Britain:
Surrender and we will take our freezing weather back.
Best regards, Iceland.”
:-)
“just implement a 90% property tax on everybody owning more than 10 million Euros and you’ll have no problems to pay the debt.”
that is just naive, they have already left the country and pay taxes in UK og Luxemburg if they pay taxes that is.