The Icelandic Foreign Minister has not received an answer from Britain and Holland to his message on Icesave sent yesterday.
Icelandic government representatives are already in London and ready to attend talks on the issue, RUV reports. However, it was also reported that the Dutch government did not make itself entirely clear in its communication intended as a courteous and constructive rejection of the Dutch and British Icesave counter offer.
Jan Kees de Jager is the new Dutch Finance Minister since he was appointed yesterday as part of The Netherlands’ temporary government. He told media he is not well enough informed about Icesave to make any formal comments yet.
De Jager took over the role of Finance Minister yesterday afternoon after it was decided to hold new elections in June and have a caretaker government in the meantime. Although he was previously Vice Finance Minister, de Jager told reporters he has not yet been personally involved in the Icesave issue.
So no surprise there then!
Come on guys, negotiate. Please.
>Come on guys, negotiate. Please.
Why? the Iceland isn’t negotiating, its demanding more money and offering nothing in return.
UK/NL best option is to let the debt stay ‘outstanding’ and start negotiations after Iceland defaults. If there is no loan agreement, Iceland can’t default on it and Iceland is going to default next year.
@Peter
Quite so. I was referring to the Icelandic side in this case (sorry if I wasn’t clear). Rejecting an offer and then waiting for the other side to resume negotiations are very strange negotiating tactics. Iceland needs a deal more than the UK and NL.
Where is the counter-offer Iceland?
Jan Kees de Jager . . . told media he is not well enough informed about Icesave to make any formal comments yet.
He seems to have got up to speed pretty sharpish:
“We have put an extremely reasonable proposal on the table but even our best proposal was not good enough for Iceland,” said Jan Kees de Jager, Finance Minister of the caretaker Dutch government. “If they think this will be paid by the Dutch taxpayer, they are wrong.”
25.02.10 http://www.nytimes.com/reuters/2010/02/25/business/business-uk-iceland.html
Just as I feared.
“A British government source said the deal offered by the UK government had been generous and that it had tried to support the Icelandic government as much as possible.
“Every time we’ve walked 10 metres towards their position, they’ve walked back 20 metres so it’s been difficult,” the source said.”
It’s just like the comments made by Roy Hattersley when he was negotiating with Iceland over the Cod Fishing…
Jan Kees de Jaeger is may think himself that this Dutch proposal was reasonable, but clearly he has not bothered to listen to what the people on the other side thought about it.
He is also wrong in that the Dutch taxpayers will never have to pay for the 20K minimum guarantee. In the end, the whole guarantee amount will ALWAYS be paid directly from the recoveries of Landsbanki. The opposition to the IceSave agreement has always been regarding how much more Icelandic taxpayers will have to pay through interest and Ragnar Hall issue.
Since UK/NL were not willing to be reasonable, continuing to demand more than the 20K, it is now clear we are going to have our national referendum.
The people of Iceland will finally get to have their own say in the matter. Everybody has been telling us for the past 16 months what we have to do, without listening to our concerns. Now it is our turn to speak.
To Andrew:
The counter-offer is very simple. Just remove 4.2(b) from the settlement agreement, and this whole thing can be finished up very quickly.
It’s just like the comments made by Roy Hattersley when he was negotiating with Iceland over the Cod Fishing…
I’d somehow missed his recent articles on the subject. Very funny.
http://www.timesonline.co.uk/tol/comment/columnists/guest_contributors/article6979915.ece
http://www.guardian.co.uk/commentisfree/2008/oct/11/iceland-foreignpolicy
My previous comment, it seemed, did not get thru.
JK De Jager who is now the minister of finance, before the elections in june, used to lead the dutch tax authority.
In this position he got a reputation for being hard on tax evaders and trying to grab as much money as possible for the dutch state (for instance by pressuring Lux and Switzerland).
It is likely that he will take a hard position towards Iceland.
So there might be some escalation in the whole Icesave affair.
“So there might be some escalation in the whole Icesave affair”
The Icelandic negotiators walked out of the last meeting, what we should do now is to refuse further talks for the next 3 months at least and focus on the referendum, the referndum is a statement to the world that the public is not responsible for the debts of private banks, not by any law or ethics,
if they gamble and loose they should fail like everyone else.
If we would accept this plight, it would make us slaves to bankers,
and it would be a statement that the bankers could take our savings, gamble with it, and as they play Russian roulett they could point the barrel at our heads, leaving virtually no risk for themselves,
they could do as they wish, the taxpayer would always take the bullet.
To add insult to injury they demand and recieve bonuses as well even though they leave schorched eart where ever they go.
“So there might be some escalation in the whole Icesave affair.”
I certainly hope so. I now very obvious that the Iceland doesn’t have any intention of honouring its guarantee.
The last icesave offer from Iceland on Wikileaks.org
http://wikileaks.org/file/icesave2.pdf
To Peter – London/Krakow:
You can try to blame us all you want, from previous experiences here we would expect nothing less from you.
There is only one way to reach an agreement, that will be acceptable to the Icelandic people. That is to remove 4.2(b), so the recoveries from LBI will NOT be shared 50/50 with FSCS/DNB anymore to cover also their unilateral guarantees for deposits above 20K Euros. This is considered extremely unfair here in Iceland, as it forces us to pay MORE than what is required by the EU Directive. To the end, the UK/Dutch negotiators persisted making this demand anyway, even if they knew this would gamble the whole agreement.
When you make a double or nothing bet, in the end you can only blame yourself if the wheel turns against you.
Thanks Axel, the Icelandic team has been unusually leak-proof until now. This is not an offer I would have made if I was the negotiator, but still very interesting to read their justification for the offer.
Here is an even-handed article from FT that covers pretty well the situation and the position of each country.
http://www.ft.com/cms/s/0/74e86d86-22dd-11df-8942-00144feab49a.html
It is nice to see foreign journalists are finally starting to get the basic facts straight.
I think that the dutch offer was a clever tactical move since it could have only 2 results:
-Iceland accepts: UK/NL get their money back…with a profit
-Iceland refuses: UK/NL show to the world that they are ‘the good guys’ while Iceland does
not want to meet its obligations.
It is quite obvious why it was the dutch side (and not the UK) that came up with the offer,
playing the role of the ‘more reasonable partner’
And again Iceland has negotiated poorly. I agree that an acceptable offer should have resolved the
Ragnar Hall issue.
But by allowing the negotiations to fail very fast, without making the icelandic position
and the RH issue clear to the world the icelandic delegation has wasted a very
important opportunity.
UK/NL can now justify future consequences by the icelandic unwillingnes.
It is not fair but that is the way it will work out, I think.
The fact that Iceland is seeking support from the USA clearly shows that icelandic
authorities are pretty desperate.
It is quite naive to believe that the USA would step up in support of Iceland.
Why would they get into a row with 2 important allies who have given strong military
support to the US war on terror in the past years?
“There is only one way to reach an agreement, that will be acceptable to the Icelandic people.”
You and I include the general Icelandic population in this, see to fundamentally misunderstand the concept of a guarantee.
Guarantee’s cannot be negotiated. Iceland has to pay, you cannot dictate terms to the only lender willing to lend to you. Doing so means that you are refusing to honour the guarantee.
If you can’t see this, fine, but don’t expect anyone else to understand your argument.
BTW, the negotiators are not discussing Raganar Hall or other such crap because they must understand that there is no legal basis for it. The only focus is in the interest rate – which is fair enough.
It is quite obvious why it was the dutch side (and not the UK) that came up with the offer, playing the role of the ‘more reasonable partner’
I saw this (unsupported) report on IR, so who knows which one the “bad cop” is:
Earlier reports had indicated that British Finance Minister Alistair Darling was willing to have a full seven years of no interest payment, but the Dutch rejected that suggestion.
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16567&ew_0_a_id=358464
But I agree with your point about the media war. Definitely puts Iceland more on the back foot. For example, I’ve always seen Ward at the FT as pretty pro-Iceland, but that article that Bjarni links to is pretty-much neutral.
I’m still baffled why no one official has talked about the Ragnar Hall issue. After all, we’re seeing the exact offer terms nearly in real time now, so why no mention of the detailed points discussed? Anyone know if there been mention recently of the Ragnar Hall issue by someone like Birgitta/PP leader/etc. in the Icelandic media?
To Peter-London/Krakow:
Now we are getting somewhere! Clearly there is a fundamental difference of an opinion on what exactly this particular guarantee is.
Here is my take:
1. According to existing laws 98/1999 the deposit insurance fund (TIF) is responsible for guaranteeing deposits of Icelandic banks and their branches abroad. These laws specifically state that TIF is a private foundation and it is to be funded solely by a 1% levy on the banks.
2. When all the major banks in Iceland crashed in 2008, it became immediately clear that TIF would never be able to pay out the 4.0B euros necessary to cover the 20K deposit guarantee for the Icesave accounts.
3. The former government of Geir Haarde tried to make the case that there was no legal obligation of Iceland to provide a government guarantee for Icesave.
4. This was disputed by other countries in EU, and after putting a lot of pressure on Iceland, a set of guidelines were agreed to (so-called Brussel guidelines), which stated in that in turn for providing government guarantee, the negotations “shall take into account the unprecedented difficult situation of Iceland and therefore the necessity of finding arrangements that allow Iceland to restore its financial system and its economy.”
http://eng.forsaetisraduneyti.is/news-and-articles/nr/3229
5. A new government was formed in Iceland in February 2009, after the pots-and-pans revolution, and shortly afterward started negotiations with UK/Dutch governments on terms of how this government guarantee would be provided.
6. The agreement signed on June 5th, 2009, provided there would be a “loan” from UK/Netherlands that would be paid back during the 8 year period between 2016 and 2024. This agreement stated that this guarantee would only come into effect, if laws were passed in Iceland, effectively transferring the guarantee from TIF over to the government.
7. Due to fierce opposition in Iceland on the specific terms of this Icesave agreement, the Icelandic government was not able muster the majority to pass the laws unchanged. This was resolved during the summer 2009 in Althingi by adding the so called “amendments” to the agreements, which were finally passed as laws in August 2009.
8. These August law amendments were not acceptable to the UK/Dutch governments, which lead to new amended Icesave agreements negotiated that were finally passed in Althingi by a slim margin in December 2009 after very torturous debate.
8. Again due to fierce opposition in Iceland, the President was petitioned by 60 thousand Icelanders (quarter of the voting population), to refuse signing the laws, and send them instead to a national referendum, where we are today.
The December laws will now almost certainly be voted down in the referendum, which means we are back to the August 2009 laws. As those laws with the amendments are not acceptable to UK/Netherlands, the original agreements since June 2009 are then terminated and we are back to square one. It is important to note though, that UK/Netherland governments never gave their formal response to the August 2009 laws, so if they so wish to do so, they still have an opportunity to accept them.
Now we come back to your original point, on what exactly has the Iceland government officially guaranteed, if there is no debt agreement reached between the three countries. Without new laws passed in Iceland, it is not possible, according to the constitution, for the government to guarantee ANYTHING. Therefore legally only the original TIF guarantee remains in effect.
If we go back to the original Brussel guidelines from November 2009, which stated that in turn for a government guarantee, there has to be an agreement negotiated, that “shall take into account the unprecedented difficult situation of Iceland”. This is the crux of the problem, as people here in Iceland do not believe that the Icesave agreements ever adhered to these stated guidelines.
The basic point is this. If you want the Icelandic government to accept this guarantee you are going to have to negotiate the terms of it, so it becomes acceptable to the Icelandic people (the ultimate decision maker in this case). If you fail to do so, there is simply NO government guarantee and therefore by definition NO government debt possibly associated with it.
So in a way, you could way we are indeed dictating the terms of the guarantee, even if we are not supposed to. :-)
To Niels:
This may have been a clever tactical move, but after we learned the actual terms of this “cannot-be-refused” offer, it was never any doubt it would indeed be refused.
Since Iceland has now refused the offer as expected, the question becomes how much good it will really do for Dutch government. This depends on what their goal was.
If the goal of the Dutch was to look good to the home crowd and the rest of the world this may very well have been accomplished. I agree, the Icelandic government and the negotiators has been very naive about this whole affair from the beginning. They have never shown any ability to publish their side of the story internationally, which has been solely left to ordinary people and groups such as InDefence.
If on the other hand, the Dutch government goal is to reach an agreement on Icesave, that actually can be ratified in Iceland, this certainly did not help. By raising the expectations that finally a reasonable offer was on the way, and then not delivering, they created a lot of disappointment in Iceland and even resentment. In the end, it is NOT the home-crowd that needs to be convinced here, but the Icelandic people. Without their acceptance, there can be no agreement.
BTW, there are news here in Iceland that members of the InDefence group will be visiting the Dutch parliamentary finance committee on March 9th, right after the referendum to discuss the aftermath. It will be very interesting to see what happens there, since I get the feeling most people in Netherlands simply have no idea why the people in Iceland are so much against the current Icesave agreements. This gives them the opportunity hear it directly from the horses mouth.
To Bromley86:
As far as I know there has been no mention about the Ragnar Hall issue in the media here in the context of the latest round with UK/Netherlands. In fact there has been hardly any reports on what the negotiations involved, except for the leaking of the original Dutch offer and the WikiLeaks document with the Icelandic counter-offer.
So it is possible that the Ragnar Hall issue was indeed discussed with UK/Netherlands. My guess is that it must have been discussed, but this is of course impossible to verify.
The Icelandic Icesave negotiation team in the Wikileaks offer does in fact address the Ragnar Hall/priority issue, in very simple language, as “Key point #1″:
“Iceland will ensure that the full amount expended by the United Kingdom and the Netherlands to pay Icesave depositors in each of those countries (up to the EUR 20,887 minimum provided for in accordance with the EU Deposit Guarantee Scheme) is recovered by the Governments of those two countries.”
What Buchheit is saying is, “you will get your money for the under 20k deposits, but no guarantee of anything more.”
The Icelandic politicians don’t discuss the priority issue much, probably because they are too stupid to understand it. All they can say is “vid borgum ekki” – we won’t pay.
In the UK system, the UK Deposit Insurance Fund has first priority to recover money if any bank fails, so the UK must acknowledge the right of the Icelandic TIF to recover money to pay off depositors from the bankrupt estate of an Icelandic bank –the only question being whether the TIF and the UK/NL have equal priority or the TIF has “super-priority”.
The UK is talking out of both sides of their mouth on the priority issue. At one moment they argue that Icesave/Landsbanki is a purely Icelandic bank, at the next moment they argue that UK rules regarding paying back over 20 deposits apply and Icelandic laws against splitting claims are not valid.
The only way UK/NL can operate within normal bankruptcy rules and Icelandic law — clearly the governing law here — is to assign ALL depositor claims to the Icelandic TIF, who would then promise to give any leftover UK asset money back to the UK/NL deposit funds.
“6. The agreement signed on June 5th, 2009, provided there would be a “loan” from UK/Netherlands that would be paid back during the 8 year period between 2016 and 2024. This agreement stated that this guarantee would only come into effect, if laws were passed in Iceland, effectively transferring the guarantee from TIF over to the government.”
Actually thats not correct, the LOAN would only come into action if Iceland’s parliament approved it. The guarantee was a given, there is no requirement for Iceland to pass a law before it could become liable – the EEA decided on that.
“So it is possible that the Ragnar Hall issue was indeed discussed with UK/Netherlands. My guess is that it must have been discussed, but this is of course impossible to verify.”
Nothing indicates it was discussed, I can’t see it coming up as the interest rate is far more significant.
To Peter – London/Krakow:
You are going to have to provide some actual references to back up the following statement, if you want us to take it seriously:
“The guarantee was a given, there is no requirement for Iceland to pass a law before it could become liable – the EEA decided on that.”
Please provide real quotes from this EEA “decision” that you are referring to, that supports your conclusion on Iceland’s liability and supersedes even the Icelandic constitution.
“The fact that Iceland is seeking support from the USA clearly shows that icelandic
authorities are pretty desperate.”
The government may fall with the Icesave laws next week, thas why they worry, that would be the end of EU dreams, of course it would be civil to listen courtiously to the demands of the EU before we say no. There are other optinons, other forms of government.
“It is quite naive to believe that the USA would step up in support of Iceland.
Why would they get into a row with 2 important allies who have given strong military
support to the US war on terror in the past years?”
I agree, Iceland does not support USA war busyness.
Good to see the Dutch parliament stick to the promise they had made to call back the soldiers from Afghanistan and Iraq.
http://www.b92.net/eng/news/world-article.php?mm=1&dd=12&yyyy=2010
@Bjarni,
You said:
“If on the other hand, the Dutch government goal is to reach an agreement on Icesave, that actually can be ratified in Iceland, this certainly did not help. By raising the expectations that finally a reasonable offer was on the way, and then not delivering, they created a lot of disappointment in Iceland and even resentment. In the end, it is NOT the home-crowd that needs to be convinced here, but the Icelandic people. Without their acceptance, there can be no agreement.
”
I will give a response which does not reflect my personal opinion since I believe that the RH issue is unfair to Iceland and needs to be resolved. Moreover I think that an acceptable agremeent should take into consideration that Iceland should be able to avoid default.
BUT UK/NL so far only have been dealing with icelandic negotiators/politicians who are both scared and incompetent.
So they do not care at all about the opinion of the icelandic people, after all, what does this opinion matter when you can force its representatives into accepting anything you want?
And let us be realistic: any form of repayment is very unpopular with the icelandic public so any agreement, even one with fair conditions, would not easily be accepted.
Fact of the matter is also that the icelandic position is very weak.
No deal means no international (IMF) aid.(it is pretty clear that Iceland is very much on its own in this issue)
No international aid means Iceland will be stuck with the the present situation: a dead krona and currency restrictions.
As long as this is the case the currency restrictions will remain in place and with the krona and these restrictions there will not be an economic recovery.
After the referendum votes down the present deal and UK/NL/IS will have new goberments a whole new constellation will arise but it is quite probable that there will be a more hard line approach from all sides.
And even if the new icelandic goberment will be more hard line on all issues, it will have to deal with the very weak icelandic position.
It is really a good idea that people from inDefence will come to NL since there is sympathy for the icelandic position here but most people do not know any details.
Icelanders are being regarded as provincial fools who messed up their economy and refuse to face the consequences.
InDefence should make it clear that there is a RH issue and the Iceland is forced, under the present conditions, to pay far more than the 20k.
Probably ordinary icelanders can do what their professional representatives failed to do.
The current icelandic efforts to get EU membership have nothing to do with membership as such but with being able to get the euro: that is the essential thing.
@Axel,
on a lighter note, there are already plans to divide Iceland between UK and NL!
http://thedutchiceland.com/index.php?page=the-uk-iceland
“What Buchheit is saying is, “you will get your money for the under 20k deposits, but no guarantee of anything more.”
Lee Buchheit offered his service to Geir Haarde shortly after the crash but unfortunetly Geir was too stupid to accept.
I am already sharpening my pencil for the NO vote on Saturday like most Icelanders, no one i have spoken to believes a accord on this dispute is possible,
I hope this referendum will inspire other nations to fight back and refuse to pay debts of private companies, if that means to default, or become pariah states so be it, the alternative is not a option.
” When someone cannot repay his debts that person becomes bankrupt and all his assets belong to the creditors!
It’s just the same with countries!
THE DUTCH OWN ICELAND!
and so does the UK”
Personal debt will never become the responsibiality of the nation.
This argument is moronic at best but displays a dagerous way of thinking.