The finance committee of the Norwegian parliament has voted to loan funds to Iceland regardless of the ongoing Icesave dispute. It was the representatives of the Christian Democratic Party who pushed for the resolution.
The committee declared that Norway should loan Iceland money regardless of the ongoing Icesave dispute with Iceland on one side and the Netherlands and the United Kingdom on the other, ABC Nyheter reported.
The Norwegian Storting parliament will discuss the committee report tomorrow and it is thought highly likely that parliament will vote to approve the committee’s recommendation. The committee also stated its opinion that Iceland has the right to bring the Icesave dispute to an impartial international court; a move the Netherlands and the UK have opposed.
Representatives of all parties in the committee, except the Christian Democrats, made the qualification that Norwegian funds should be made available to Iceland only when the IMF review is compete and Iceland is seen to stand by its debts according to EU law.
Hans Olav Syversen of the Christian Democrats said it is clear that Norway is ready to lend to Iceland regardless of Icesave but that it is unclear what effect this will have on the IMF programme.
This news effectively means that Norway is exerting political pressure on the IMF to complete its held-up review of its Iceland recovery package – but it does not mean that Norway is about to break ranks with the IMF and loan funds unilaterally.
“Hans Olav Syversen of the Christian Democrats said it is clear that Norway is ready to lend to Iceland regardless of Icesave but that it is unclear what effect this will have on the IMF programme. This news effectively means that Norway is exerting political pressure on the IMF to complete its held-up review of its Iceland recovery package – but it does not mean that Norway is about to break ranks with the IMF and loan funds unilaterally.”
So this means that…yes, but…no.
Whatt??? So what does it mean??
To understand where Christian Democratic Party ( Kristelig Folkeparti ) does fit over there in Norway government :
http://www.icenews.is/index.php/2009/10/01/norway-to-save-iceland-from-icesave-woes/#comment-94759/
A bit of a head scratcher!
As I read it, Norway is willing to loan without a conclusion to Icesave and also independently of the IMF. This might well be a good thing for the Icesave negotiations, at least it provides some incentive for both sides to actually talk, instead of talking about talking!
But I could be completely wrong with that interpretation.
The thought of the Christian Democratic Party of Hans Olav Syversen is a positive leverage while others are hesitant and distant and we do understand the IMF considerastion. If only the other will do the same then negotiation is possible because the account itselt is recognized but if not, then let the impartial International Court decide.
A prolong talking negotiation is default. Useless. Accrued accounts filed up and recovery delayed.
Any other alternatives ?
Well, the Norwegians are free to spend their money whereever they want. They certainly are aware that they may end up like the Icesave investors, but without anyone making good for a loss. No reasonable investor would act that way under these circumstances, so the big spenders in Norwegian parliament deserve praise for their generosity. After all, for a small nation of about 4.7 million people, one billion given to another nation amounts to every single citizen paying 212 bucks for that “good cause”! Yes, that’s generous.
I suspect that something got lost in the translation or else it is a Norwegian thing
Either
“The committee declared that Norway should loan Iceland money regardless of the ongoing Icesave dispute with Iceland”
or
there is a binding qualification inserted into the committee’s declaration
“Representatives of all parties in the committee, except the Christian Democrats, made the qualification that Norwegian funds should be made available to Iceland only when the IMF review is compete and Iceland is seen to stand by its debts according to EU law.”
Norway is sitting on great oil-reserves.
They do not peddle (that much) in cod like Iceland.
In this economic world Oil also equals power.
You wouldn’t want a trade-war with a large oil-producer.
And this is about decency. My hat off to Norway if they go through with this.
The Nordic countries have agreements to work/visit each other.
We have plenty of Icelander in the other northern countries and there are quite a few from the other Nordic countries in Iceland.
I think Iceland is a beautiful country.
Icelanders by large are great people.
Would London England just leave Wales if they where in need?
Would they leave Scotland in need?
The Nordic countries are bound together by blood, values and culture.
Many workers in Sweden go to Norway for high paying work.
By the way. Norway is a great country on its own. And they are in large a great people.
“By the way. Norway is a great country on its own.”
That, BTW, is the definition of a kiss-ass.
“!Yes, that’s generous.”
The Norwegians aren’t making a gift, they are making a loan, at Euribor+ 2.75%. That is a commercial rate, with the 2.75% premium allowing for the risk of default.
They aren’t all that sentimental!
Peter -London
It is kiss-ass of me as a swede to show my appreciation for the Norwegian people? Because I have met quite a few and in every instance it has been a pleasurable experience?
When I think of Norwegians I think of upbeat peeps with a caps on their heads being too jolly for their own good.
(stereotype.. I know)
When I think of UK I think of people getting wasted, puking on the sidebar and beating up people because their team lost in football.
And when I think about us swedes I think about people without a life getting ****ed every weekend until they are puking in the gutter somewhere. (to be fair)
A mere 2.75% premium seems rather small for lending huge moneys to a borrower with such a troubled record. I stand by my opinion that regarding the high risk of default this is more of a generous gift than a serious investment.
Btw, “Euribor+ 2.75%”, how high is this in a real interest rate right now? Less than 5.5%?
Btw, “Euribor+ 2.75%”, how high is this in a real interest rate right now? Less than 5.5%?
Assuming no change in EURIBOR since the UK/NL “best offer” offer (which was the same deal as these Nordic loans), 3.4%. But given historic 3m EURIBOR, the likely range is something like 4.5% – 7%.
Last week the Greek Prime Minister said that Greece was not going to sell any more bonds at 6.5% because that interest rate was “barbaric” and a “recipe for disaster”. The Germans sell bonds for 3%.
The Greek Prime Minister knows about what a fair rate is and isn’t, and how much money should cost to borrow.
Iceland is being offered loans at 5.25-5.75% or something like that. Isn’t that only slightly less barbaric than 6.5%?
The real cost of borrowing money is somewhere around 3%. That’s the rate Iceland should get. The UK is not borrowing the money on the open market. Iceland is getting the money straight from UK, who are printing the money themselves in the back of the Treasury building. Or some bloke named Nigel or Simon is sitting in the UK Financial Recovery Plan room pushing the “quantitative easing” button on his computer.
The UK is not borrowing the money on the open market.
I’ve never understood this position. The UK is plainly borrowing money. If the UK has another £2.5bn in cash, then it can borrow £2.5bn less. If Iceland chooses not to repay that money immediately, then the UK will have to borrow £2.5bn.
“The real cost of borrowing money is somewhere around 3%. That’s the rate Iceland should get. The UK is not borrowing the money on the open market.”
The Euribor rate is for short term loans and it varies depending on how long the loan period is. As Bromley says, the 3 month rate is currently very low, but historically has been much higher. A variable rate might be worse than a fixed interest rate. Rates are generally higher for long term loans, which is what Iceland needs.
Actually I quite agree that a lower interest rate would be better, in recognition of the economic distress caused to the ordinary people of Iceland. Unfortunately, the current rates are what is on offer from Norway (as a loan) and from UK/NL (as part of Icesave). If I only had several billion dollars/euros/pounds, then things would be different… :)
Well.
*If’ you go the route that country A owes country B X amount of money.
A cannot pay B X.
One could argue that B could lend A money to not go default on B.
Then you could look at potential damages.
With that you would try to find out what had happened if A had paid B what it is was owed and what was the result of A not paying B.
Probably there are some losses.
Also there is the inherent credit risk of going default again.
Although A have already been default on its payment to B and that really should not be an issue. (as the damage of going default is already done)
You could argue that A should pay B:
X + (losses) + (potential earnings) + (credit risk)
However. It is purely speculative on that A (Iceland) owes B (UK and NL) X. An issue which has not been settled.
Losses could be a little higher interest rate for loans as the “assets” are a little bit insecure.
Potential earnings (or potential non losses) are things that you could have used the money for to e.g. encourage growth or put in place measures to lessen the impact of the world economic crisis.
“The UK is not borrowing the money on the open market. Iceland is getting the money straight from UK, who are printing the money themselves in the back of the Treasury building. ”
The UK will have to buy back the money printed. Its not free and certainly its not being printed to give away to Iceland. When the borrows its paying around 4.5% at present – historically it pays more like 8%.
Iceland should go on the open market and borrow to see what they ‘should’ be charged, but it has a 5% risk premium to add so 8% plus is likely.
Or Iceland could wait for an EU court ruling and the matter will just dissolve with UK and NL looking stupid.
You *can* talk about hypothetical payment options.
But is it really that interesting until both parties agree to any debt?
Or Iceland could wait for an EU court ruling and the matter will just dissolve with UK and NL looking stupid.
Again with the certainty. Based on what? The fact that you like Icelanders?
Assuming for the moment that the UK/NL wouldn’t deliberately hold up IMF/Nordic loans in the intervening period (which, for the record, I would do), what happens if Iceland loses? They have an immediately repayable debt with no right to attempt to negotiate a good rate. They have to borrow that money from the markets at 8%+.
So, posturing aside, it’s not necessarily in Iceland’s best interest to go to court. Especially as the vast majority of the EU countries have already told Iceland that they believe that a state guarantee is legally required. Sure, that doesn’t equal a ruling, but it is a data point.
And that’s not even considering that if the UK/NL are forced to go to court, they would likely open up the discrimination argument and try for full state backing of the entire balance. That might be likely to fail, but all this uncertainty would do Iceland’s credit rating no good and the situation would easily stretch on to (and beyond) the state debts that fall due in 2011, increasing the cost of renewing those.
To Per-Olof:
Good point. It is definitely premature to be talking about payment options, when the parties have not reached an agreement on the actual debt.
We spent nearly a year reaching an agreement, but unfortunately that effort ultimately failed. And it failed in such a way, that now it has become very unlikely that an agreement can be reached, at least in the near future. Politically, whether people agree with it or not, the outcome of the referendum has been determined and cannot be ignored.
Therefore all this talk about whether the ECOFIN “arbitration” was binding, what kind of interest should be calculated, and etc., is just ignoring the current reality. The genie cannot be put back in the bottle.
Collectively, the people in Iceland seem to have clearly decided to move on. If you follow the discussion over here, you will hardly see Icesave mentioned anymore (except that it is on freeze).
Instead we are starting to spend our time on talking about much more important things like, the fishing quote system, the eruption, family finances, bank loan corrections, ID switching (kennitoluflakk), the investigation report, and even some less important things like whether the government should be able to ban “pole-dancing” :-)
There are upcoming elections in UK and Netherlands, and possibly in Iceland also (very few people here believe that the current government will last very long after this).
After the election results are in, and we all have our new respective governments, we can maybe try to take a look at Icesave issue again. Then we can see if there is any possibility of opening up the negotations for a new agreement (Icesave 3). But, after the previous experience, I will not be holding my breath.
If Iceland do not have the money or are not willing to send the money according to the court order there will be no police knocking on the door of Iceland taking away their property.
However there would be great problems with trust in international trade and trust in any deal Iceland get into.
There would be different outcomes depending on if Iceland cannot pay or will not pay.
Or if Iceland will not pay because it would damage their country to gravely and this is accepted at least partially in the international community.
What would happen next is up to Iceland.
Sell off major assets in the country to foreigners.
Try to be isolationists.
Try to negotiate loans.
Try to get support from Russia.
However Iceland chooses it could affect other national interests in different ways.
Lets say in extreme that Iceland would leave NATO and join the Russian fold. With Russia putting forces on the ground to protect Iceland.
Why would Russia do this? For their own national security and claims on the possible reserves up in the arctic. (Where they have even put a Russian flag on the bottom of the ocean.)
Now I am not certain what agenda Russia would potentially have with Iceland but it is my best estimate that they would gladly expand their zone of interest. This amount of money is nothing to them for the potential gain.
EU would not get access to these potential riches as they do not have any country in the EU with any real claim to the territory except Iceland.
At least that is a big rationale why EU would be interested in Iceland as a member state according to the Swedish foreign minister Carl Bildt.
But in short. If Iceland do not have access to the funds they are in default. How to solve this is a big problem.
Noteworthy is that Iceland is already treated by UK and NL and other countries as if they where more or less in default. So the effects would not be that harmful.
I recently saw a clip from the fishing industry of Iceland. And all deals where done in foreign currency.
I hope that is some answer to my limited knowledge of the repercussions if Iceland would fail in court.
After reviewing what I can about this affair I am very confident that Iceland will not loose in court. At least not with the sums spoken about with UK and NL.
Now I am not certain what agenda Russia would potentially have with Iceland but it is my best estimate that they would gladly expand their zone of interest. This amount of money is nothing to them for the potential gain.
It’s been tried. After a year the amount was reduced from $4-$5bn, thrrough $500m to zero. Because the Russians couldn’t afford it. And they also refused Keflavik when it was offered to them.
EU would not get access to these potential riches as they do not have any country in the EU with any real claim to the territory except Iceland.
Of course Iceland isn’t in the EU and has no Arctic claim.
Norway and Greenland aren’t in the EU, but they’re the ones with claims that the EU might reasonably expect to influence.
I hope that is some answer to my limited knowledge of the repercussions if Iceland would fail in court.
Presumably if Iceland actually defaulted after an EU court had ruled, it would be kicked out of the EEA.
After reviewing what I can about this affair I am very confident that Iceland will not loose in court.
Again, really?
“Presumably if Iceland actually defaulted after an EU court had ruled, it would be kicked out of the EEA.”
That would hurt. A 25% import tariff on Icelandic goods to the EU would help refund the damage Iceland has caused to the EU.
When was this cooperation with the Russians that failed?
“That would hurt. A 25% import tariff on Icelandic goods to the EU would help refund the damage Iceland has caused to the EU.”
You are very funny.
You *do* realize Iceland is a big importer as well as an exporter?
Iceland could answer with import tariffs to 50% on special good and countries of origin.
EU could answer with increasing the tariffs even further.
Iceland could answer with increasing even further.
And there would be no export of fish to EU and no trade to Iceland from EU.
And everybody gets worse.
There is a reason why you do not want trade-wars.
When was this cooperation with the Russians that failed?
Most of 2009, but the funny part was in 2008.
http://www.barentsobserver.com/russia-invited-to-icelands-airbase.4525408-58932.html
Grimsson got drunk (or stayed sober but became irrational, take your pick), insulted all the Nordics and then offered Keflavik to the Russians. They were bemused.
The loan:
$5bn
http://www.bloomberg.com/apps/news?pid=20601087&sid=aV.chNI42D8o&refer=home
$500m:
http://www.icenews.is/index.php/2009/07/16/russia-approves-64-billion-isk-loan-to-iceland/
Withdrawn:
http://www.icenews.is/index.php/2009/10/15/russia-and-iceland-fail-to-achieve-loan-agreement/
“You *do* realize Iceland is a big importer as well as an exporter?”
Big, as in a small town sort of big. Duty free access to the EU market and employment rights is an privilege and very valuable to a country desperate to earn foreign currency.
Exports – partners:
Netherlands 33.8%, UK 11.7%, Germany 11.5%, US 5.8%, Japan 4.9%, Norway 4.1%
Imports – partners:
Norway 10.9%, Germany 10.4%, Sweden 9%, US 8%, Denmark 7.4%, China 6.8%, Netherlands 5.9%, UK 4.4%, Japan 4% (2008)
So lets see, Iceland sure will lose out of its export markets, UK and NL will gain very substantially by losing (or adding high duties) Iceland as a trade partner.
From EU directive 94/19:
“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”
How do you like them apples?
How do you like them apples?
Are you an idiot?
I know that you’re new to the subject, but do you *really* think that we haven’t seen that? Do you really think that the EU legal experts that issued their opionion to the arbitration process hadn’t seen that?
Have you read it yet? In case you missed it last time, here’s the link again:
http://www.island.is/media/frettir/31.pdf
Anyway, RebelEconomist makes the layman argument well (although as an ex-central banker, it’s a pretty knowledgeable one):
Some commentators have argued that, since the DIGF is supposed to be a private sector funded scheme, the State of Iceland cannot be held responsible for DIGF obligations. On this question, Directive 94/19/EC is ambiguous. It says (in its penultimate “whereas” recital) that “this directive may not result in…..member states…..being made liable in respect of depositors if they have ensured that one or more schemes guaranteeing deposits…..and ensuring the compensation or protection of depositors under the conditions prescribed in this directive have been introduced”. Iceland undoubtedly ensured the introduction of a deposit protection scheme that promised to provide at least as much compensation as prescribed by the directive, but a scheme likely to require ex-post funding of compensation covering one third of the banking system by the remaining two thirds could not realistically be described as “ensuring” that level of compensation. It is true that no government commitment to back up Iceland’s banks’ deposit protection scheme existed when Icesave was rapidly accumulating deposits in 2006-7. But this absence of a formal government back-up is normal – it is understood that governments do not want to absolve banks from contributing enough to make their own deposit protection scheme robust, and, in Europe at least, a deposit protection scheme backed by a relatively wealthy state could be considered to give the banks it covers an unfair competitive advantage in attracting deposits (in the words of Directive 94/19/EC, it is “not appropriate” for deposit protection “to become an instrument of competition”). And Icelandic regulators never attempted to dispel the notion promulgated by influential advisers such as Moody’s that the Icelandic banks would ultimately receive state support.
http://reservedplace.blogspot.com/2010/03/on-thin-ice.html
I suggest that you read the whole thing for a good, if self-admittedly British-centric, appraisal.
Per-Olof Pettersson says:
“How do you like them apples?”
?
As the quote points out; The government is not liable is if ensures the deposits are protected and the depositors refunded as per the directive. The directive says the the depositors protection fund has to be sufficient to protect the depositors up to a level of 20K Euro; Iceland didn’t do that.
per-olof quotes.
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
yep. so iceland is liable. why? let me highlight for him
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**
iceland did NOT ensure such a guarantee scheme existed hence the state does not escape liability. god! cant people read! or do they get bored just before the word IF appears and stop at that point.
I agree with Bromley86, this kind of analysis of the EU Directive is by now rather “old news”, but at the same time not everyone has followed the long detailed discussions and debate, we already had repeatedly here on this issue.
Basically, the EU Directive was very BADLY written, as it has many contradicting terms in it. While there stuff UK/NL can point to (“Not-liable-if-ensured”, etc.), and there is also other stuff in there Iceland can point to (“financed-by-banks”, “should-not-jepordise”, etc.). Until the dispute is put in front of an independent EU court, this will never be fully resolved, one way or another.
This is also a rather pointless debate by now, since the argument is not anymore about whether the guarantee should be covered by Iceland. Since UK/NL will always receive all the recoveries from Landsbanki, and those recoveries are more than enough 6.4B Euros to cover the 4B Euro guarantee. It will just take several years for all the money to come in.
Instead the real issue now, is whether there should be a 4B Euro UK/NL loan authorized by Iceland to cover it in the meantime, and what terms then should be on that loan. The three countries have so far not been able to reach a fair agreement that is politically possible to ratify in Iceland, and THAT is what stands in the way of authorizing the government guarantee.
This is like talking to a brick wall.
Thanks for the “conversation”.
Live long and prosper in your delusions.
The arbitration was not legally binding, and just a opinion,
this issue has already been argued here.
The icesave deal is also dead and buried, it will not be discussed or amended, if a new deal is discussed in the future, it will not be based on the previous deal.
Iceland does have a claim to the Arctic, the EU is partly interested in Iceland because of this, so it would be in Russia’s interest to increase trade with Iceland to make it less dependent on Europe, decreasing even further the remote possibility of EU entry, that way avoiding conflict with the EU over vast oil and gas deposits, and control over shipping lanes, the EU has nothing to do with the Arctic, and no influence or control of it at all.
No state guarantee exists regasding icesave, no loan has been taken,
if there is a dispute, take it to court.
We have survived everything trown at us so far, i dont see the harm in adding a trade barrier, if you dont mind skipping all fish import to Britain, ruin Grimsby and Hull and put some 10.000 Brits in the fish industry out of work its ok by me.
Tanya, stick to the crosswords.
Thanks for the “conversation”.
You’re welcome. If you need any more tips on how to analyse what you read, please feel free to ask.
Axel
Iceland does have a claim to the Arctic
Does it? Because the map that I always link to seems to indicate not:
http://www.dur.ac.uk/resources/ibru/arctic.pdf
Looks like Greenland & Norway entirely block Iceland.
“Are you an idiot?”
Yes. But at least I admit it.
To Per-Olof:
Thanks for the interesting perspective from Sweden. It is nice to see someone willing to look past the same-old rhetoric and headlines, and dig up the real facts. As has been pointed out repeatedly, the issue is not anymore about whether Iceland is willing to pay, but rather how and on what terms, so it is fair to ALL parties involved (it doesn’t count if only UK/NL think its fair).
The UK/NL governments thought they could dictate “punitive” terms, due to their assumed superior negotiation position, and unfortunately our own government agreed with them. But we, the people of Iceland, are made of much sterner stuff than our weak-minded politicians. We refused to be bullied and now, after the overwhelming defeat in the referendum, it is very clear to almost everyone here in Iceland that the old Icesave agreement is dead and is not coming back.
It will take some time for this new reality to sink in with the UK/NL negotiators and also some of the “old-timers” here on Icenews. But that is fine, we are not in a hurry.
After the upcoming elections, we will get new people on both sides, and then “maybe” there will be an opportunity to sit down again and start over from the beginning. But, in order for any new agreement to have any chance of passing, it will have to address the “unfairness” issues, that precluded the old agreement from being ratified in Iceland.
If that does not happen, then so be it. We will then just all have to agree to disagree. As in that case there will be no government guarantee by Iceland, UK/NL will simply have to wait patiently for the Landsbanki bankruptcy recoveries to come in.
If UK/NL are for some reason not happy with that outcome, they always have the option put the matter to an independent EU court. Then, and only then, will we find out who is right and who is wrong on the EU Directive.
Expecting someone to know what somebody else have written or discussed about is a little egocentric.
Considering the arguments being made here I put the bar pretty low on what people where aware of.
Little to no knowledge about the treaties and international law.
So I presented the part of the treaty that is in question.
It is pretty straight forward to me.
(There is also argument about preferential treatment but that is just an excuse so I will not argue that)
By default a country is not liable.
Then it explicitly states that a country in no way may be liable if specific conditions are met.
There is no language in the treaty that says a country is liable.
And there is no writing where they could be.
Contrary there is explicit writing saying a country can never be liable as long as certain conditions are met.
(The interpretation of this would mean considering other directives or rules. This writing has higher priority. To protect member states from *any* claim involving this directive.)
That is like double security.
Again. This does not say a country is liable.
It says a case where it absolutely isn’t.
Not ever.
Please point me to the part where it *says* the country is liable and under what conditions that are relevant to this case?
“, it will have to address the “unfairness” issues, that precluded the old agreement from being ratified in Iceland.”
There is no point UK even attempting to discuss such an issue when Icelanders – an apparently a nation of expert bankers – believe that the concept of paying interest is fundamentally unfair to them.
“Does it? Because the map that I always link to seems to indicate not:
http://www.dur.ac.uk/resources/ibru/arctic.pdf
Looks like Greenland & Norway entirely block Iceland.”
I’m still trying to figure out the wealth of resources Iceland possesses. Oil and gas production is nil. Proven Oil and gas reserves is also a big fat is nil. Potentially, Iceland has some oil/gas but in reality it will be unlikely to ever be economically viable.
Greenland, has potentially the largest oil reserves on the planet. Does Axel image that he’s living in Greenland?
The UK has far more resources than Iceland, plus a strong claim on the Antarctic and many other ocean floors around the world with its dependencies.
It is nice to see someone willing to look past the same-old rhetoric and headlines, and dig up the real facts.
Are you kidding Bjarni? He presented that same-old rhetoric as conclusive proof!
Since some people here claim to have such deep knowledge about the treaties there would be no problem pointing to where Iceland is considered liable, right?
The burden of proof is on the claimant.
There has been a claim of liability.
The claim has been refuted.
What is the proof that back the claim up?
(And saying “they just are” is not proof)
per-olof. i am interested. how do you interpret these letters especally the iceland replys to the british questions?
http://www.island.is/media/frettir/04.pdf
http://www.island.is/media/frettir/05.pdf
http://www.island.is/media/frettir/06.pdf
To Bromley86:
If you really read through his comments, Per-Olof is not claiming to have a conclusive proof himself. As he is points out, “the burden of proof is on the claimant”, which in this case are the UK/NL.
You would do well trying to understand better what he is actually saying and then respond to it objectively, rather than just deriding it and resort to calling him names.
per-olof writes
‘Considering the arguments being made here I put the bar pretty low on what people where aware of.’
and then
‘By default a country is not liable.’
ooopppps p-o take care being derogatory esp when you open youre own mouth and put your foot in it.
in international law a sovereign country is ALWAYS the responsiblle body, except where the coutry has handed an element of its sovereignty to some larger international organisation. and that doesnt act as the case here. a country CANNOT claim to avoid liabiity for anything it sets up within its own borders by its own act of parliment. ACCoUNTABILITY remains at the sovereign level in all such matters.
that explains why every country with multinational depost guarantees has had to meet those guarantees through its tax payers. every country except one – iceland.
“per-olof. i am interested. how do you interpret these letters especally the iceland replys to the british questions?”
I’d be happy to.
There is no change in law or treaties with these letters.
It is correspondence between people in the government(s).
It appears the Icelandic party is making claims that are not supported by law and mandate.
It also appears the UK party is aware of the poorly functioning banking system in Iceland.
Simply put. The government of Iceland was lying to you. And the UK gov probably knew about it.
First part I already acknowledged as I have seen proof of this before.
Poorly done by the official(s). But not binding on the state of Iceland.
I do not know what legal measures are needed in UK for a treaty to be passed. I doubt a minister can just make up treaties as he or she wishes.
Which highlights the difference between legal obligations and moral obligations.
I have seen no evidence of legal obligation.
The moral issue is quite different and there is a lot to talk about there.
Please show me proof of legal obligation of the state of Iceland to make the private crashed banks debts to sovereign debts.
Or just concede the claim.
Bromley, one of our islands, Grimsey is on the Arctic circle,
http://www.airiceland.is/AirIceland/Actionpackeddaytours/BeyondtheArctic/
Kolbeinsey island is much further North, but uninhabited.
this Artic matter is something that will be argued and fought over for the next years, i guess we will suck up all the Hatton Rockall oil first and then we look at the Arctic.
Video from the arbitration.
http://www.youtube.com/watch?v=JshcuLgIalM&feature=fvsr
“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**
iceland did NOT ensure such a guarantee scheme existed hence the state does not escape liability. god! cant people read! or do they get bored just before the word IF appears and stop at that point.”
———————————————————
Old stuff I know, already debated to the gills, I know.
But surely the Iceland state had already ensured that there was a deposit guarantee scheme set up according to the terms of contract? Is this disputed?
Anyway, there is no deposit guarantee fund that will adequately cover the deposits in a bank crash. The question moved onto, was the State responsible for the deposits when the properly set up guarantee scheme was quickly exhausted?
Now the whole Icesave debt issue has moved on from that place way back in the distant past.
Do people not read the news?
tanya
That didn’t make any sense on many levels.
Would you please explain what you mean by your post in a more structured format?
I would agree it was not prudent of me to belittle other people here.
Although in defense the same was done by other participants. (which is a poor excuse as two wrongs does not make right)
There where a lot of emotional arguments and very little facts and I acted accordingly in defending Iceland.
I will also agree that I am not always right on every subject or right on all facts.
However. The main point have not been met.
What is the lawful basis on corporate debt going sovereign in regards to the crashed banks with HQ in Iceland?
“It appears the Icelandic party is making claims that are not supported by law and mandate.”
Iceland elected him and gave him a mandate. If you don’t like how they acts on your behalf, vote them out of office. If this minister broke Icelandic law, prosecute him.
However he represented the Icelandic state and made it quiet clear that Iceland would honour the EU directive and take up the debt.
You can change government, draw up laws, anything you like internally in Iceland. But you cannot change the fact that the Icelandic state is responsible and has a liability externally.
“Poorly done by the official(s). But not binding on the state of Iceland.”
You can’t disassociate the state from its representative. Has this letter been formally rescinded, the government removed of its power to commit to applying international laws? I don’t think so.
And you cannot do it retrospectively.
It does not matter how he/she represents himself if he/she is not without a legal mandate to do it.
“Iceland elected him and gave him a mandate.”
He was given *a* mandate. True.
But I have yet to see any evidence he was given mandate to make new treaties with other governments.
He simply lied and said more than he had mandate for.
This impacts the moral part but not the lawful part of the disagreement.
I think you are looking at the government of UK (which I am not that familiar with). It seems your ministers have much more authority to act on behalf of the country than most other countries.
*If* Iceland would have given that mandate to the individual I believe it would be bound by how that official acted. However I can see no evidence that that was the case. And it would reasonably not be the case in any country.
I agree you cannot take back a treaty retroactively.
However I disagree with your claim that a treaty was made.
“You can’t disassociate the state from its representative”
Yes you can. And it happens all the time.
That is why treaties have to be ratified to be valid.
For your reference:
http://en.wikipedia.org/wiki/Ratification
“The ratification of international treaties is accomplished by filing instruments of ratification as provided for in the treaty. In most democracies the legislature authorizes the government to ratify treaties through standard legislative procedures (i.e., passing a bill). (In the UK, treaty ratification is a Royal Prerogative, exercised by Her Majesty’s Government; however, by convention called the Ponsonby Rule, treaties are placed before parliament for 21 days before ratification.)”
The treaty or legislation does not apply until it has been ratified.”
I notice there is still no evidence of the claim that Iceland is obligated to make private debt into sovereign debt.
Expecting someone to know what somebody else have written or discussed about is a little egocentric.
Fair point, but likewise presenting something that obvious with a “how do you like them apples” comment was hardly the pinnacle of fair debating.
Bear in mind that, up to that point, I’d found most of your comments to be very superficial, i.e. Sweden was “sucking up” (no reasoning given), you were “very confident” that the UK/NL would lose in court (no reasoning given), Russia would be interested (no research done).
I have seen no evidence of legal obligation.
Ultimately though, you are correct. There is no definite proof of legal obligation, in that there’s nothing that anyone can point to that says “Iceland is liable”. All we have are the legal opinions, which are easy to trash in that everyone works for someone. From memory, we have one legal opinion for liability (Van der Tweel), one against (Mishcon). Plus the EU-member opinions and the arbitration opinions.
Or just concede the claim.
At the end of the day, you’ll understand if I’d rather it goes to court :) . On that, if nothing else, there has been a convergence of the two sides.
Bromley, one of our islands, Grimsey is on the Arctic circle . . . Kolbeinsey island is much further North, but uninhabited. this Artic matter is something that will be argued and fought over for the next years
Okay, you can be a part of the Arctic Council. But seriously, how does any of this push past Greenland and Norway to the good stuff?
And I’m not sure how arguing that an otherwise pointless (and in Iceland’s case apparently diminishing) island helps the case against the UK’s Rockall claim. Finally, Jan Mayen is a real island :) .
“Fair point, but likewise presenting something that obvious with a “how do you like them apples” comment was hardly the pinnacle of fair debating.”
You are correct. My apologies.
“At the end of the day, you’ll understand if I’d rather it goes to court :)”
At least we agree on that. :)
‘Poorly done by the official(s). But not binding on the state of Iceland.’
the letter says
‘if needed the icelandic government will support the depositors and investors guarantee fund in raising the necessary funds so that the fund would be able to meet the minimum compensation limits in the event of the failure of landsbanki and its uk branch.
** on behalf of the minister **’
it has a nice letterhead as well – or is that joninas own personal stationary she is using. and isnt that a bit odd. she claims to write on behalf of the minister. a minister with the nesessary executive powers. appointed by the president, the head of state, with those powers to exercise on behalf of the state of iceland (article 2 of the consitution). or are you saying the minister knew nothing about this letter. jonina just sent it as a personal note. she just randomly decided to represent the ‘icelandic government’ on her own and didn’t tell anyone. thought she might make some mischielf and write a lie. your saying she wasnt instructed to write it. she just wrote a personal letter to a senior civil servant of the uk government with an unambiguous commitment to pay back the depositors:- on her own personla letters which just happen to look like the letters sent by the ministry of business affairs?
you are keen on international law. how do you think an international court will interpret that letter. just brush it off like you say. just a lie. poorly done. nothing of any significance. never mind the icelandic constituion. that doesnt matter. that letter wouldnt lead the uk government to believe that the icelandic government would pay the depositors there money. no i guess not. its to ambiguous!!!!
Tell you what, Tanya.
Let the court decide.
I believe I made my case above regarding ratification.
tanya
the letter says
As with all of the official statements about Icesave by both of the Icelandic governments, those letters appear to say something but actually commit them to nothing.
“Assist”, “support . . . in raising funds”, “may provide”,”everything a responsible government would do”, etc.
To tanya:
There is no question that this letter
http://www.island.is/media/frettir/06.pdf
was an official communication of the Icelandic government, and Jonina S. Larusdottir, as Director in the Commerce Ministry, was acting on behalf of the Commerce Minister. Although this letter is rather short, the exact wording of it was apparently much debated by multiple people in the Geir Haarde´s government, before it was sent out.
Now the question is, what exactly does this letter actually promise, and does it have any legal consequences for Iceland.
First, we need to look at the exact wording, with highlighting and brackets provided by me:
“IF NEEDED the ICELANDIC GOVERNMENT will SUPPORT the depositors and investors guarantee fund [TIF] in RAISING the NECESSARY FUNDS so that the fund would be able to meet the MINIMUM COMPENSATION LIMITS [20878 Euros] in the EVENT of the FAILURE of Landsbanki and its UK branch.”
When you read through this letter, it is very clear that the Icelandic government is NOT promising to provide the guarantee by itself, but rather only that it will “support” the TIF “raising” the “necessary funds”.
The Geir Haarde’s government was not able to do this before it fell in February 2009. The next government led by Johanna Sigurdardottir took this task on, and negotiated a loan agreement with UK/NL governments that was signed in June 2009.
Unfortunately, due to many additional provisions in this agreement, that required Icelandic government to guarantee much more than the 20K minimum, it faced fierce opposition in Iceland, and therefore could not be ratified. An amended agreement was subsequently voted down in the national referendum March 2010, which moved us back to square one.
Legally, Icelandic governments are NOT allowed to sign treaties or international agreements, unless they can be passed as laws in Althingi, and ratified according to the Icelandic constitution. Therefore, this letter has no legal consequence in Iceland. And, due to its “careful” wording, it is likely that it does not have any legal consequence outside Iceland either.
On a side note, Jonina is one of the list of 12 individuals that were sent letters by the special parliament investigation committee (Rannsóknarnefnd Alþingis), but it is not known yet whether it was related to this letter.
Declaration: Never posted here before. British. A lawyer. Working in finance. No interest personal or professional in Iceland or Icesave.
Some misunderstanding here about how international law works.
Very little international law is statute law. By statute I mean things written down: UN conventions, EU directives, bilateral treaties etc. Most of it remains unwritten. It is based on conventions of behaviour – how would you like others to treat you. It is based on the nature of independent sovereign states which exist in a community with given norms. It does not assume that states are selfish individualistic institutions (as per pre WW2).
So to dispose of one issue. The defence that the liability is not written explicitly anywhere is no defence. Such a legalistic line wouldn’t work.
You see, any international court would consider a number of questions. First: what did the people who wrote this direcrive have in mind? what was it they were really after? what would they envisage happening in this case? I would hazard a guess that the court would decide that the framers intended depositors of a bank to have their deposits returned up to the 20,000 limit.
The next question would be: so who is liable? This would eventually boil down to the question of which country was ultimately responsible (and hence accountable). This question would revolve around the nature of the failed bank and its relationship to any given sovereign state. Who licenced the bank? Who regulated it? Who acted as its lender of last resort? All three of those answers in Icesave’s case would be organisations based in Iceland, and organisations that are agents of the state. I can’t see how any other country could be held responsible for Landsbanki other than Iceland.
Iceland would be ill advised to go to any international court of law. They would probably lose the case and worse, get the discrimination issue brought up. They could end up with a far worse bill than agreed so far! (And the Dutch are getting pretty ****** off with these Icelandic evasions – if you go to court with them they will throw the book at you.)
But that is only an opinion and you can find lawyers who would argue the contrary case.
P-O says arbitration is not binding until confirmed in a court. That is pure rubbish. Binding arbitration is what it says on the can. Moreover, 99% of international financial disputes are settled through binding arbitration. Why? Here are the text book answers:
(i) the disputants can agree on the judges, the process, the set up and parameters of the case, you don’t get that luxury in a court of law – you have to take the set up you are given,
(ii) without prejudice to your case you can negotiate in arbitration (try doing that in a court!),
(iii) legal judgements are blunt instruments, they often cannot capture the subtleties of a case,
(iv) no appeals. The judgment is clear and final. You also get a quick answer.
(v) arbitration avoids problems with applicability in relation to national boundaries. This works many ways. For example those in dispute may well end up in dispute about which court will hear the case. Iceland? The UK? Anyone could argue bias. Then there is the issue of settlement. A UK court might make a decision which might not be applicable in Iceland – and vice versa. This is why P-Os position is untenable on this point. Sure you can take the arbitration to a court, but that court could only make a decision relevant to its own area of jurisdiction. And that is why binding arbitration cases don’t go to court. (In any case, any competent judge would tell any diputant to get lost if they came appealing against an arbitration judgement.)
In my ever so ‘umble opinion Iceland missed a trick when it didn’t agree to binding arbitration early on. They could have used plenty of moral arguments in that forum which are not applicable in a court.
It may well still go to arbitration, but the time lost to Iceland has been very very damaging not only to the country’s economy but also its international reputation. Not to put too fine a point on it: the international community doesn’t trust Iceland. And that is the biggest loss to the country.
Bjarni – with all due respect your explanation to Tanya is the worst sort of sophistry. It would be pulled to pieces by any competent lawyer. Any judge would be amazed that such an argument would be deployed.
In a court the question would be asked: What would any normal person expect to happen who received such a letter? What would they understand the letter to mean?
Once again the legalistic device of focussing on individual words would not suffice. This isn’t a clever debating game but a question of a communication being received in the middle of a discussion on liability. It would need to be seen in a wider context of question and answer, and with the overall issue at stake: who is going to pay the depositors their money back and who is responsible for ensuring that is the case? The only possible reading of the letter is that the Icelandic government accepts responsibility. For if that is not the case why would they write such a letter in the first place?
Let me give you one example of how the argument could be pulled apart. Is the TIF part of the government or not? The argument used to avoid liability is that the TIF was set up to satisfy the Directive. And Icelanders argue that it is thus NOT part of the state, and hence its debts CANNOT be socialised. Yet here you are saying that any debt taken on by TIF has to become part of the national debt and therefore has to go through the government. You cannot have it both ways. If your explanation of the letter is correct then the Icelandic state has undertaken to support the TIF – as a non-governmental body – in raising the necessary funds. In such a case it is not necessary for the debt to be attributed to the state. It becomes what is called an off-balance sheet item. The state can arrange for the provision of funds to TIF. It can guarantee repayments and it can act as security, but at no time is the debt attributable to the state itself. (The situation is similar to the set up of Central Banks when acting as potential lender of last resort. The CB doesn’t have the debts of the banks it is supervising but it acts to ensure an orderly debt market and can step in when failures occur.) So, if your reading is correct, why did the debt suddenly mutate into a sovereign debt? If the separation between TIF and the government exists – as you argue the letter shows – then the debt belongs to TIF not the government. So what was all that voting and referendum about?
I would suggest that your reading of the letter is thus faulty. The Icelandic government has acted all along as if that letter committed it to the socialisation of the money needed to bail out the faulty TIF. Indeed, I would say that my reading of the government’s position is that they have been reasonably straightforward. They have never argued as you have about what the intent of such communications were. I suspect they know that they would be roasted alive in any court if they tried to argue that that letter did not commit the Icelandic state to taking on the necessary debt. Any internal politics or legal niceties would not wash in a court of law – the question would be asked: why was the minsiter acting beyond his powers in such a case (its called “ultra vires”)? And did the minister make it clear to his counterparties on the steps needed to socialise the debt? (In general in any international negotiations the negotiators make it clear what their remit is, what powers they hold, how they can deploy those powers, and the limits or constraints on their actions.)
I looked at the Icelandic Consitution and Tanya is right that Ministers are given executive powers so there can be no doubt about the nature or intent of the letter.
When you read through this letter, it is very clear that the Icelandic government is NOT promising to provide the guarantee by itself, but rather only that it will “support” the TIF “raising” the “necessary funds”.
Take that Fisy! :)
As always, thanks Bjarni. Even now I’m still finding out new things, like “the exact wording of it was apparently much debated by multiple people in the Geir Haarde´s government”.
Unfortunately, due to many additional provisions in this agreement, that required Icelandic government to guarantee much more than the 20K minimum
Bjarni knows this, but just for anyone else. The Icelandic government has never been required to guarantee more than the 20,887 euros. However, there was a issue regarding the priority of payments from Landsbanki to the various creditors (effectively the Icelandic government on the one hand and the UK/NL governments on the other) which would have meant that the Icelandic government paid more interest and recovered less of the principal from Landsbanki. AKA the “Ragnar Hall issue”.
The agreement contained a way for Iceland to solve this in their favour (i.e. effectively super-priority for the TIF). However there was some question as to whether English courts would recognise this change, if it was made.
The thing that I find curious is that the Icelandic government hasn’t started the ball rolling on getting the Icelandic courts to rule on this change. Perhaps courts can’t rule on a hypothetical situation? Be that as it may, the December agreement was law for 3 months before the referendum overturned it.
The only possible reading of the letter is that the Icelandic government accepts responsibility.
Dammit! Just as I think an issue if finally settled, someone comes along and muddies the water.
Fisy is going to be impossible to live with, because that was his position. So thanks for nothing Carl!
(No seriously, thanks. Always good to get an explanation from someone who actually knows what they’re talking about :) .)
Not sure how that fits with the Icelandic government repeatedly declaring that they believe that there is no legal requirement to honour the guarantee. This predates the collapse, so in that case (and assuming Carl is correct) there was a legal requirement from before October 2008.
At least that might shed some light on reason for the tone of the “The Icelandic government believe it or not, have told me yesterday they have no intention of honouring their obligations here” statement.
To Carl regarding arbitration.
You claim arbitration is as binding as court ruling.
It might be true in your country.
I do not know.
I know that it isn’t true for the whole world.
Take US e.g.
The courts have final say and you can go to court with an arbitration.
And the judge will just refer to the arbitration and the only way to get away with it is to challenge the validity of the arbitration.
The point is that the courts will uphold the arbitration (if done properly and not challenged.)
This is based on the (unofficial) legal opinions of lawyers and paralegals from US.
Now I am sure you as well as I am aware of the very different legal systems in US and that one practitioner in a state cannot go to another state as a lawyer since the rules of procedure differ so much (law too).
But this seem to be true in most if not all states as well in the federal circuits.
In the end. Domestically it is a question if local authorities are accepting arbitration, not as much as a contract, but as a court ruling that is in effect.
UK law. I have very little knowledge.
US laws I know quite a bit. Swedish law a bit.
International law. A bit.
Claiming to be a lawyer gives quite some weight and humility on the arguments.
Question is if all other lawyers would agree with you.
There is a lot I agree with you on.
International law is more a matter on reputation rather than following the letter of the law.
However. When there is a treaty I do not believe EU court would just put the treaty away and rule what would be “fair”. (Ok. You didn’t say that.)
I *do* believe they would go on the letter of the law.
Now. If there was no treaty about it. I would consider your argument sound. But then again there would be no basis for EU court to be involved. As the EU court resolutions are part of the treaties with regards to the treaties for the EEA.
It is hard to argue specifics when the other party is claiming to be an expert on the area. You would need another person with similar ethos.
I am not sure *what* legal system EU court has. I would assume a mix of different ones. The German legal system is more to the letter of the law while other systems are more focused on intent and who is right morally.
At least it seem that you accept there is a difference between the letter of the law and the moral implications in international law.
I still say go to EU court and get it over and done with.
As Private Pile said in Full Metal Jacket. “I *am* in a world of sh*t!”
UK/NL has already put Iceland in a position of the one breaking international law by claiming very loudly that they are doing just that.
Big countries can yell harder than a country of 300k people.
This is unfair.
They deserve a chance to get their voice heard in EU court before they are sentenced.
Carl says: “In my ever so ‘umble opinion Iceland missed a trick when it didn’t agree to binding arbitration early on. They could have used plenty of moral arguments in that forum which are not applicable in a court.”
The “arbitration early on” that you refer to was not independent and had the appearance of little more than a kangaroo court.
It would also appear that the UK and Dutch are not keen on an Independent arbitration of the Icesave dispute rather depending on a unified front to obstruct loans to Iceland. It is an interesting development should Norway break the embargo.
“So what was all that voting and referendum about?”
It was a rejection of the parliament bill of december outlining the terms of repayment of the Icesave debt. it was not a denial of the Icesave debt.
Carl
“In my ever so ‘umble opinion Iceland missed a trick when it didn’t agree to binding arbitration early on. They could have used plenty of moral arguments in that forum which are not applicable in a court.”
Well, the point we have been discussing is that there was arbitration. Iceland agreed to ‘legally binding and final’ arbitration; they chose they representative and the process started. However, when they realised the meaning of ‘legally binding and final’ they decided they didn’t like it and withdrew – or tried to because the arbitration went ahead and decided against Iceland primarily based on the basis of discrimination.
So my question to you is – do you think Iceland can back out of arbitration when they realised they didn’t like the result?
“Big countries can yell harder than a country of 300k people.”
You understand the Mafia in Italy is far below 300k people yet nobody would suggest the Italian state did not use every power against it would?
“You understand the Mafia in Italy is far below 300k people yet nobody would suggest the Italian state did not use every power against it would?”
I do not understand your point here.
What has the Italian mafia to do with a state with 300k or so men, women and children?
To Carl,
Since you are a lawyer, it might interesting for us to hear your interpretation of the following opinion:
http://www.island.is/media/frettir/31.pdf
“This opinino is limited to addressing this specific question. It is given in the personal capacity of the nominees and does not commit their respective appointing authorities”
According to some people here on Icenews (Peter – London), this “arbitration opinion” should be considered “binding” on Iceland, although it clearly states otherwise.
You mentioned in your comment, that you have in fact read the Icelandic constitution. It would be interesting to hear your opinion then of article 40. which states that all “loans” that obligate the government have to be specifically authorised by law, and article 41. which states that no payment by the government can be made without it being expressly authorized in the yearly budget passed by Althingi.
The letter we were referring to, by the Commerce Ministry, therefore cannot be treated as a guarantee by the Icelandic government, until there are actual laws passed in Iceland that authorizes such a guarantee, according to the constitution.
Finally, you also discussed the TIF and whether it is part of the government. The establishment and operation of TIF are governed by laws 98/1999:
http://www.tryggingarsjodur.is/modules/files/file_group_26/log/log-98-1999-ens.pdf
According to article 2. “The Fund is a private foundation”. Article 6. specifies that all contributions to the Fund shall be made by the banks. Article 10. states that “if the total assets of the Fund prove insufficient, the Board of Directors may, if it sees compelling reasons to do so, take out a loan in order to compensate losses suffered by claimants.”
As you are probably aware of, nothing in laws 98/1999 authorizes the Icelandic government to take over the deposit guarantee from TIF, hense the requirement to pass separate Icesave laws to that effect. This is the reason the Icelandic government went through months of negotiations and amendments of the Icesave agreement, in order to somehow be able to pass these laws.
But, since in the end, the government in Icelandic was NOT been able to get these laws passed, there is NO government guarantee in effect. The mentioned letter cannot be used to try to change this essential fact, as that would be against the constitution.
To Carl:
Regarding your question what the referendum was about, is that was allow the government to guarantee the payment back of the loan by taken by TIF. The “debt” does in fact officially belong to TIF, BUT everyone “knows” that TIF will never be able to pay back this loan by itself.
UK/NL want Iceland to pass the necessary laws which would authorize the government guarantee for it. This can be easily verified, since it is actually specified in the Icesave agreements themselves.
The Icelandic government ultimately failed in this effort and could not not get these new laws passed. Hence, no government guarantee is in effect.
“I do not understand your point here.
What has the Italian mafia to do with a state with 300k or so men, women and children?”
Iceland is the control of a Mafia like organisation. It was officially classified as an organised criminal entity by the UK government – this has never been disputed by anyone in Iceland.
“According to some people here on Icenews (Peter – London), this “arbitration opinion” should be considered “binding” on Iceland, although it clearly states otherwise.”
As I have already said that IS NOT the arbitration DECISION – its is a legal opinion, probably given to the arbitration committee. The decision of the committee was reported in Icelandic news sites and the who reason Iceland withdrew was becuase the decided that ‘legally binding and final’ didn’t suit them.
To Carl:
To give a complete picturee, I should mention also that there were in fact laws 96/2009 passed in August 2009, which authorized the government guarantee:
http://www.iceland.org/media/info/010909_Act_on_state_guarantee.pdf
But those laws contain several specific “amendments” to the Icesave agreements, that were negotitated in order to get the necessary majority to pass them in Althingi during the summer of 2009.
The government guarantee authorized by this law, will only come into effect if the UK/NL accept those amendments. You could therefore say that Iceland has indeed authorized the government guarantee, with the amendments, but so far UK/NL governments have not been willing to accept it.
To Peter – London:
As has been pointed to you multiple times (I think Fishy’s count was well over 20), if you want to persist in claiming the “arbitration” decision was “legally binding and final”, it must be some other document than the one that contains the “personal opinion” that “does not commit their respective appointing authorities”.
If you you want anyone to believe you, you are going to HAVE TO give us the actual reference to that decision where is says it is legally binding, so we can verify it ourselves. Sorry, but we cannot anymore just take your word for it.
The decision of the committee was reported in Icelandic news sites
Okay, but Iceland withdrew from the process before that occurred. You can’t hold up that one Newsfrettir article (poorly translated at that) as ultimate proof.
http://newsfrettir.com/politics/general/1025-arni-was-on-the-defence-
(Well, obviously, you can!)
Why has no one managed to find anything on this “binding” decision? Why have the UK/NL not initiated EFTA proceedings if they have a binding decision?
“Iceland is the control of a Mafia like organisation. It was officially classified as an organised criminal entity by the UK government – this has never been disputed by anyone in Iceland.”
Ok. Now I understand your point.
Regretfully…
Bjarni, you know damn well that the only references to it being legally binding arbitration is the news article, one of which has vanished as far as I can see; its original in Icelandic may or may not be available :)
one of which has vanished as far as I can see; original in Icelandic may or may not be available
For the English-translated one, see above. The original, which translates slightly differently when using Google (i.e. the tenses are different):
http://mbl.is/mm/frettir/innlent/2009/07/01/arni_atti_i_vok_ad_verjast/
To Peter – London:
News articles cannot make arbitration “legally binding”, so they do not count.
“News articles cannot make arbitration “legally binding”, so they do not count.”
Good job we are not in court and merely chewing the fat between ourselves.
Because in the real world there is no doubting Icelands liability.
To Peter – London:
In the end you are going to get your 4B Euros. You will just have to wait 5-10 years for it, while Landsbanki recovers its assets. Which is exactly the way it supposed to be, as that is the only liability that has been proven so far.
“Because in the real world there is no doubting Icelands liability.”
Obviously people in the real world do not share your claim.
Good to see some good discussions into this thread.
Bjarni said :
>As has been pointed to you multiple times (I think Fishy’s count was well over 20)
Yes sadly this is 24th time I have read of Peter saying. Next I will have to keep track of time he has thought to claim and imply I am Independence Party voter as well just because he thinks that is effective ad homiem attack ( it’s not ).
It is boring for every body when he does it.
In from another thread, those that have not read into the EU ” kangeroo court ” arbitration Icelandic government did with draw from November 2008 before the process convened read specifics here :
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87719 EFTA Surveillance Authority did distance them selves from opinion and process
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87236 Analysis of what EU appointees opinion did say
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87419 withdrawal letter from Icelandic financial minister
Really it is very genrous to call this EU led ” process ” arbitration. This whole case of IceSave as state guarantee needs to be seem in front of actual impartial third party for it to get the legitimcacy it needs legally and in eyes of Icelandic people.
EU commission has avoid that like the plague until now. Now it is time for that them stop the nonsense on this and support UK and NL suing Icelandic court about this guarantee if they believe in strong case to get they loan upheld.
Bjarni takes good analysis :
>Now the question is, what exactly does this letter actually promise, and does it have any legal consequences for Iceland. ..
And here is link were you can find link ;) to conversation between me and Brumley about this letters in context of Darling just plain bad faithing :
http://www.icenews.is/index.php/2010/01/07/bbc-newsnight-interview-with-the-icelandic-president/#comment-109657
Carl above is I believe getting correct understanding of intends of the letters. But as Bjarni point out there can be no state guarantee without our parliament approving it ( Icelandic parliament ).
If Darling had bothered to liase with UK Foreign Office who have people that do know Iceland and its laws it might perhaps have helped situation would it not ?
Layman can not be expected to know if Icelandic laws on guarantees but the Chancellor had better have been better briefed on this.
But as we know that during Brown years UK does not have Foreign Office any more. It just has HM Treausry, So Darling could just go ahead and do what ever he liked.
( After that events of knocking Iceland over head of course after that did the Geir Haarde / Ingibjörg Sólrún government get more hard legalistic.
Is that hardly surprising ? )
EFTA Surveillance Authority did distance them selves from opinion and process
Incorrect.
Tim Middleton, Director in the Council’s Legal Services
Mr. Patrick Hetsch, Director, European Commission Legal Service
Katja Würtz, legal counsel for the ECB
Per Andreas Bjørgan, EFTA Survellance Authority
http://www.eftasurv.int/about-the-authority/staff-directory/persona/53/fyrirtaeki/1
He’s not just a flunky either – check out the organisation chart there.
The EFTA person didn’t contribute an opinion. But we don’t know the reason for that. Perhaps it’s related to them being nominated by Iceland?
Analysis of what EU appointees opinion did say
That analysis is absolute twaddle. Just because the UK covers the guarantee doesn’t get Iceland off the hook. You’d have to show that in doing so the UK somehow disrupted Iceland’s plans to pay the guarantee. And Gunnar isn’t just a joe like you or I. He should know better.
If Darling had bothered to liase with UK Foreign Office who have people that do know Iceland and its laws it might perhaps have helped situation would it not ?
Actually, I thought Carl was saying that those letters on the face of it themselves represent a guarantee. Therefore it was the duty of the Icelandic government, both in the letters and in the D-M phone conversation, to explain that they’d need to pass it through parliament.
Either way though, assuming Carl is correct that the letters represent a guarantee, the actions of the UK government could in no way be used to invalidate that guarantee. As you’re fond of saying, “to court!”. If the freezing of Landsbanki’s assets was improper, then sue the UK government. But that’s a separate issue from honouring the deposit guarantee and the Icelandic government already has opinions that it’d be a tough one to win:
http://www.island.is/media/frettir/Landsbanki-Freezing-Order-2008.pdf
http://www.island.is/media/frettir/39.pdf
This should all be clear if you think about it for a moment. Do you honestly think that if the UK hadn’t frozen Landsbanki but had closed down KSF (the freezing order not being the reason that KSF was in trouble), that the situation in Iceland would be any different regarding the Icesave guarantee? Would it not still be an onerous burden, too much debt, public guarantee for private debt, etc?
That EU meeting can not be “binding arbitration” for the reasons that Arni M. specified in the “withdrawal letter: the rules for the “arbitration” were not clearly specified and agreed upon by both parties prior to the beginning of the arbitration.
However, this does nothing to affect the “responsibility” of Iceland for TIF/Icesave.
The arguments for both sides are well-summarised in the Mischon memo. Mischon concludes that it is more likely than not that the EU’s argument would prevail, and as far as I can tell, all reasonable and objective lawyers from outside Iceland who have looked at the evidence and the arguments have come to that conclusion too.
The Icelandic argument that somehow TIF may be responsible – but the Icelandic state is not – is almost laughable. Judges look at legislative intent. They will not fall for this silly argument — created only after the fact — that TIF is a separate entity unrelated to the Icelandic government.
Judges also look at the parties’ behavior to determine whether an agreement existed, and if so, what the obligations of the various parties were. Iceland has acted all along, until the crash, as if a governmental guarantee existed. And the UK/NL “relied” on the appearance of governmental guarantee, and yes, “reliance” is an important concept in contract law that judges take into account.
Bjarni takes another detour into bizarre logic by arguing that the Icelandic government, by law, either didn’t or can’t or won’t approve any loans or expenditures for reimbursing Icesave depositors. He cites article 40 “which states that all “loans” that obligate the government have to be specifically authorised by law, and article 41. which states that no payment by the government can be made without it being expressly authorized in the yearly budget passed by Althingi.” And this too: “The letter we were referring to, by the Commerce Ministry, therefore cannot be treated as a guarantee by the Icelandic government, until there are actual laws passed in Iceland that authorizes such a guarantee, according to the constitution.”
The contract / obligation is a result of EU directives, so therefore the governing law is EU law, unless the two/three parties agree otherwise. Iceland cannot decide unilaterally not to follow EU law — and the EU interpretation of EU law — by throwing up some roadblock in Icelandic law.
And I didn’t even mention the absurdity of the argument. Let’s say the Icelandic embassy in London borrows 4 million pounds from a British bank to buy a new building. Under Bjarni’s logic Iceland might refuse to acknowledge the existence of that loan because the Icelandic Althingi did not approve the loan beforehand, or the loan was not in its yearly budget.
And by the way, I don’t know why Icelanders keep on insisting that Iceland deserves 7-10 years to “wind up” Landsbanki. The normal maximium period for a winding up in bankruptcy is two years. The Landsbanki bk is complex and might need 2-3 years, but not 5 or 7 or 10 years.
To Vilhjalm Antonsen:
If you actually read the laws 98/1999, that I already provided reference to, you will see it is indeed correct that TIF was a private foundation financed by fees leveled on the banks. This was therefore NOT something created after the fact, as these laws were passed over 10 years ago in 1999 when TIF was originally established. Judges in Iceland are obligated to follow Icelandic laws as they are written, not what someone else thinks they should be.
Regarding articles 40. and 41. of our constitution, this requirement to get laws passed from Althingi before any expenditure or loan is authorized, is well-known and well established in Iceland. The constitution trumps all other laws, and no government in Iceland can decide to ignore it, for whatever reason.
If you do believe our constitution is in contradiction with EU laws, then you or anyone else is welcome to bring a lawsuit, where you can try to prove your claim. Until then our constitution stands as it written and as always has to be obeyed by the Icelandic government.
If you read through the original Icesave agreements
http://www.island.is/media/frettir/01.pdf
you will find the following clause (emphases and brackets added by me):
“3.1 Conditions precedent
This Agreement will come into force if and when:
…
(b) the Icelandic parliament (Alþingi) has AUTHORIZED the guarantee given by Iceland under this agreement and has adopted any other legislative act or authorization NECESSARY to ensure that the obligations of the Guarantee Fund [TIF] and Iceland under this Agreement and the Settlement Agreement are legal, valid, binding, and enforceable, and Iceland has delivered to the Lender a copy of any such act or authorization when enacted or adopted”
You can rest assured, if there had been ANY another way possible to authorize the guarantee, the Icelandic government would have used it already.
BTW, this same requirement goes of course for the Embassy of Iceland in London. As a representative of the Icelandic government, it would NEVER be allowed to borrow any money from any bank, without it being expressly authorized beforehand by Althingi.
To Vilhjalm Antonsen:
The 7-10 years estimate for the Landsbanki asset recovery, is NOT picked out of thin year. The winding-up board publishes regular reports, and provides estimates for the recoveries. Here is the most recent report:
http://lbi.is/Uploads/document/LBI_2nd_creditors_meeting_presentation_24022010.pdf
As you can see on page 21, the current estimate is that about half the assets will be recovered between 2009 and 2013, while the second half will be recovered between 2014 and 2018. So 7-10 years is a very reasonable estimate.
@Bjarni
This message was intended to foreign countries/depitors:
http://www.tryggingarsjodur.is/Frett/7806/
and repeated the day after
http://www.tryggingarsjodur.is/News/7821/
Don´t you think think this messages was given to calm down customers of Icelandic banks in these countries? In my view it is quite normal – political and legal – that it is a elected goverment that handle crisis.
To Oystein-Norway:
The Geir Haarde’s government will not get any awards for their handling of the crisis, nor a passing grade in the “honesty” department. Nearly everything they said or did during this time, to both people in Iceland and elsewhere, ultimately ended up being wrong or mistaken. This was the reason they were booted from office few months later during the “pots-and-pans” revolution.
These statements published by TIF are basically verbatim repetition of the Commerce ministry letter to the HM Treasury, so all the previous comments regarding it also apply here.
The constitution of Iceland still governs any loan, obligation, or guarantee the Icelandic government wants to offer. The purpose of constitution like in any other country, is to protect the rights of the people. It cannot simply be turned off or ignored, when it becomes inconvenient for someone.
bjarni
ok so when the iceland gov takes more debt it needs an act of parliament. thats the constitution you say. so i ask ….
1) where is the law to take on the faroes debt
2) where is the law to take on the poland debt
3) where is the law to take on the imf debt
4) where is the law to take on the banks reorganisation debt – 1.5 billion euro i think.
it must be easy for you to tell us. you know when these debts happened and iceland laws are quoted as year/number.
etc etc etc
can you show us the constitutional law working, thanx!
“The constitution of Iceland still governs any loan, obligation, or guarantee the Icelandic government wants to offer.”
The Icelandic constitution has no bearing on Iceland’s external liabilities; if a represntative of Iceland makes an agreement with a foreign power and at no point over many years is that disputed in Iceland then that agreement will stand. The Icelandic government makes almost weekly loans without any any approval from the Althingi, even today.
Here is a link listing weekly borrowing by the Icelandic government without ANY governance by the Icelandic constitution.
http://www.bonds.is/news.aspx?catID=1618
Evidently the Icelandic government thinks you are bull****ting.
Well said Bjarni!
Stand strong!
Do not be cowed by the foreign bullies!
As long as we stick to the same story we’ll all stay out of prison.
And even assuming the worst, as I see it: you’ll have 3 months to try out the famous Pritikin diet that has for so long perplexed so many Icelanders.
Afram!
Gummi
Peter – London/Krakow says:
“Here is a link listing weekly borrowing by the Icelandic government without ANY governance by the Icelandic constitution.
http://www.bonds.is/news.aspx?catID=1618
Evidently the Icelandic government thinks you are bull****ting.”
Does that type of activity not come under the Act of Parliament on The National Debt Management Agency no. 43/1990 and the Act on State Guarantees no. 121/1997. Article 1 of the Act no. 43/1990
http://www.lanasysla.is/EN/category.aspx?catID=48
http://www.lanasysla.is/EN/category.aspx?catID=202
To tanya:
Yes, you are correct, this is very easy to find. These kind of loan authorizations are typically covered in the yearly budget (fjárlög) or the extra budget (fjáraukalög) that are passed each year by the parliament.
The government maintains a special web site http://hamar.stjr.is/ (fjarlog.is) where you can browse through and/or search for specific budget items. But it is also possible to just browse through the original law text (which I prefer).
http://www.althingi.is/altext/136/s/pdf/0481.pdf (page 7)
http://www.althingi.is/altext/138/s/pdf/0010.pdf (page 5)
http://www.althingi.is/altext/138/s/pdf/0594.pdf (page 7)
In there you will find all the authorizations for the Finance Minister, to take loans on behalf of specific governmental agencies and institutions, as well as instructions how he can distribute those loans.
Loans to increase the foreign currency reserve for the Central Bank are included there also, but only the total amount is specified each year, leaving the actual negotiated details to the Finance Minister.
BTW, any financial transaction that the government wants to perform, has to be authorized, for example if the government wants to sell any real estate (for which you can find the full list in article 6.)
Although I am not familiar with it for other countries, I am pretty sure, that the budgetary authorization process is probably very similar, at least in most western democratic countries. That is, the government is required to create a large detailed budget each year, authorizing loans, taxes, programs, and other expenditures, which then has to be passed through their respective parliament before it can be applied.
To Peter – London:
Knowless has already given you a detailed response, including specific links that explain the legal justification for the bonds issued by the Icelandic government, so I have nothing more to add.
I just wish you would for once do a little bit research, before as always just start making things up. All the information is right there, for anyone that can type search words in Google.
“Does that type of activity not come under the Act of Parliament on The National Debt Management ”
Indeed, the Icelandic government can borrow for its needs without direct oversight from the electorate.
http://silfuregils.eyjan.is/wp-content/uploads/2010/03/Euromoney-Magazine_failed-state-of-iceland.pdf
Gunnar Andersen, doesn’t mince his words.
To Peter – London/Krakow:
Are you going to start now repeating this untrue statement 20+ times like you did with the arbitration?
“Indeed, the Icelandic government can borrow for its needs without direct oversight from the electorate.”
Me and Knowless have already shown you how all borrowing by the Icelandic government has to be explicitly authorized by Althingi by passing it into laws beforehand. If the government would not be able to muster the majority necessary to pass the relevant laws, no borrowing would be allowed according to the constitution, period!
Which is exactly what happened with the Icesave agreements.
Peter – London/Krakow says:
“Gunnar Andersen, doesn’t mince his words.”
???
Moving the goalposts ::)
Yes we know Gunnar does not mince his words and in part due to the credibility of his words he has been appointed director general of the FME in Iceland.
Even you could pick up a hint or two there if you bothered, instead of constantly throwing your credibility into the shredder.
bjarni
yes yes those documents are to be found in all countories. every has to have a budget which has a vote.
but these debts i show are not there. or i cannot see them.
you are so full of exact wisdom i wonder if you can help us alll & show us the laws that were passed to ok these debts.
Bjarni aided and abetted by Fisy – have for some-while, proposed the prospect of UK/NL taking what’s on offer – or walk away and get nothing.
http://www.icenews.is/index.php/2010/03/07/1-5-voted-yes-in-icesave-referendum/#comment-125734
http://www.icenews.is/index.php/2009/10/12/icesave-time-running-out-for-icelandic-government/#comment-96187
Within this thread Bjarni says –
“It will take some time for this new reality to sink in with the UK/NL negotiators and also some of the “old-timers” here on Icenews. But that is fine, we are not in a hurry.
After the upcoming elections, we will get new people on both sides, and then “maybe” there will be an opportunity to sit down again and start over from the beginning. But, in order for any new agreement to have any chance of passing, it will have to address the “unfairness” issues, that precluded the old agreement from being ratified in Iceland.
If that does not happen, then so be it. We will then just all have to agree to disagree. As in that case there will be no government guarantee by Iceland, UK/NL will simply have to wait patiently for the Landsbanki bankruptcy recoveries to come in.
Collectively, the people in Iceland seem to have clearly decided to move on. If you follow the discussion over here, you will hardly see Icesave mentioned anymore (except that it is on freeze).
Instead we are starting to spend our time on talking about much more important things like, the fishing quote system, the eruption, family finances, bank loan corrections, ID switching (kennitoluflakk), the investigation report, and even some less important things like whether the government should be able to ban “pole-dancing” :-)
we can maybe try to take a look at Icesave issue again. Then we can see if there is any possibility of opening up the negotations for a new agreement (Icesave 3). But, after the previous experience, I will not be holding my breath.”
As much as you malign Peter – he talks about the ‘real world’
http://www.icenews.is/index.php/2010/03/22/norway-pushing-to-break-imf-iceland-deadlock-over-icesave/#comment-133545
Iceland may dance around the intricacies of its internal laws – and in the absence of agreement -decide to ‘move on’ – if only things were so simple!
An interview with IMF Managing Director Dominique Strauss-Kahn reveals interesting comment-
“We need a majority; if there’s no majority, there will be no review,” Strauss-Kahn said in an interview on a flight to Bucharest from Warsaw today. “If there is a majority, we can go forward. Myself, I think it would be useful to go forward now. But I cannot anticipate if there would be a majority.”
“I have always said Icesave is not a condition for the IMF, but we need to have a majority in the board,” said Strauss-Kahn. “If the Icesave question is solved, I’m sure there will be a majority. If the Icesave question is not totally solved, I don’t know if there’ll be a majority on the board.”
The article also states –
“The representatives of the U.K. and the Netherlands “haven’t made any statements” of support for Iceland’s review now, said Magnusson. “We have had discussions with their representatives in the IMF board and the governments in the countries, so they are fully aware of the situation.”
Would one expect ‘statements of support’from UK/NL?!
http://www.businessweek.com/news/2010-03-30/iceland-s-imf-loan-payment-may-lack-support-strauss-kahn-says.html
My understanding is that IMF voting requires a ‘super-majority’ vote (85%) to proceed with support to Iceland. USA alone has sufficient voting rights to block voting – having over 17% of voting allocation.
In order to block IMF assistance to Iceland UK 4.94% and NL 2.38% voting rights would have to seek allies. Assuming USA did not support – sufficient votes may be obtained with support from our European partners.
Iceland would do well to remember that the those with significant voting rights within IMF being asked to provide support ‘bit the bullet’ and supported their own failed banks, and therefore may not be supportive of the Icelandic position.
“???
Moving the goalposts ::)”
An interesting report, off topic for this discussion but this isn’t a forum that allows creation of new topics
If the Icesave question is not totally solved, I don’t know if there’ll be a majority on the board.
Sigrun Davidsdottir, who’s always worth a read, has a new piece out that briefly mentions this. She, rightly or wrongly, emphasises the “totally” part:
http://uti.is/2010/03/still-waiting-for-the-icesave-agreement/
Assuming USA did not support – sufficient votes may be obtained with support from our European partners.
I think it’s the Exec board that votes and it’s organised into groups:
http://www.imf.org/external/np/sec/memdir/eds.htm
UK aren’t a part of a group, 4.85%
NL have the representative for their group(a funny one, composition-wise), 4.77%
Germany & France have another 10.72% between themselves. Another 13.67 in groups represented by Italy, Belgium & Spain.
As I believe all of those have gone on record as saying that deposit insurance requires state backing, it’ll be an uphill struggle.
There’s also the Nordics who Denmark represent at 3.43%.
So the EU can easily block it, if they choose to. Only Germany need join the UK/NL, and they were apparently pretty pissed at Iceland over the whole deposit guarantee business when it looked like they were in the frame for a Kaupthing branch.
To tanya:
It is specified right there in the article 5 for the 2010 budget, on the page 7 I referred to (similar language is also there in the previous budgets).
There, the Finance Minister, on behalf of the government treasury, gets authorization to borrow up to 460B ISK (about 3B Euros), and disburse it according to the specifications listed in item 2. For example, the Central Bank is authorized to receive up to 220B ISK.
The actual numbers are then typically fine-tuned and adjusted further in the extra budget laws passed later in the year, when more detailed information about the requirements becomes available.
You all know but it might be good to remember that and IMF loan is not a gift but a loan that is expected to be paid back.
Not sure about the interest on the loans but we all know placing yourself in debt makes it more difficult to recover.
If you could get investment capital to support the main produced good in the country an IMF loan might not be needed.
It will not be easy going even with an IMF-loan.
And the small payment of the loan will probably the only bit in quite a while.
So. What can Iceland and it’s people do to continue producing good and trade?
What is the IMF-loans for, really?
To keep afloat in order to pay interest on loans?
In a little documentary on the fishing industry in Iceland it seemed all invoices where in foreign currency. Wouldn’t that bypass the problem with exchange rate of the ISK?
(Just some questions that come to mind. I am not at all an expert at this (as you probably see)).
To be fair.
In international law you cannot point to domestic laws to prevent treaties from being in effect.
However. The treaties must have been ratified.
And that is the issue with the letters.
UK knew the rules of ratification and the constitution was public for everybody to see.
Nobody in their right mind would treat these letters as treaties.
It would simply be incompetence if an agent of UK interpreted these letters as an international treaty. The UK state knew the rules of ratification in Iceland. It is not a closed country.
So. You will have to go back to the EEA-treaties and look at the interpretation of them. AFAIK there is a mix of different ways to handle disputes with international treaties.
It should be easy to see what obligations everybody have.
However. The treaty is far from easy to read and plain language in the interesting parts isn’t there.
Then you will have to go into the intent of the treaties.
AFAIK the party state was not allowed to back the banks. This based on that less financial countries would not have the same backing as more stable countries and thus have a competitive advantage over other member states.
I am not sure about this. It is take from just a little material.
But I believe it to be true.
All countries where to have systems that where on equal footing as to get the same possibilities to compete in the market.
State backed guarantees would give a country a competitive advantage and was forbidden.
Instead you where forced to have a private system for dealing with crashed banks.
Is there any truth to this interpretation?
To Terry:
As I am not directly involved in any of this, the main purpose in posting the Icenews comments has been to give people in other countries the perspective from Iceland, and also try help correct the many misunderstandings and untruths that are floating around regarding Icesave.
This international dispute is actually quite complex and manifests itself on many different levels: legal, political, financial, moral, and ethical to name a few. There are no absolute truths here, and as we have learned for the past 18 months the situation can change regularly.
No one really knows how this will be resolved in the end, or if in fact it ever will be resolved. The only thing that I (and everybody else) can do, is to try to analyze the current situation at each time and based on this, provide my “best” estimate on how things will likely play out.
It is now very clear, that letting the Icesave agreements go all the way to a referendum, was a MAJOR political mistake, that most likely will not be possible to undo. We now have a completely different political situation here in Iceland, than existed before the referendum. Anyone that thinks the result of the referendum, where over 93% voted against the Icesave agreements, can just be somehow overlooked or ignored, is just deceiving themselves.
But, to entertain your comment, instead of concentrating on why the government guarantee is not possible, lets try to analyze what options might still be available to establish the guarantee by the Icelandic government (which I think we all agree is the goal of the UK/NL/IS governments). For each option I could think of, here is my analysis:
a) The Icelandic government might decide to try negotiating a new Icesave agreement with UK/NL governments (basically Icesave 3). The UK/NL goverments would provide some of the incentives they offered in February (variable or interest free periods) allowing the government to pass the laws through Althingi again. The chances are almost certain that the opposition parties would again oppose the new agreement, leading to another referendum. Unless half the voting population changes their mind, most likely outcome would therefore be a defeat for the second time.
b) The Icelandic government might also try negotiating again, this time with the participation of the opposition parties. The main hurdle here is whether UK/NL negotiators are willing to even discuss the additional demands of the opposition. Still, if an agreement is somehow reached, with good enough terms to receive the blessing of the opposition parties, it would then actually stand a decent chance of passing through Althingi, and it might not even need to go to referendum. But, in order for this to have any chance of succeeding, the UK/NL negotiators would likely have to give up a lot of their demands.
c) If the Icesave agreements cannot be passed as laws in Iceland, the question remains whether it is possible to somehow “force” the Icelandic government provide the guarantee anyway. There are basically three kinds of pressure tactics that I can think of:
1) Legal: This basically means going to some EU or International court and obtain a judgment there that has enforceability in Iceland. UK/NL would have to prove that the Icelandic government is in fact required according to the EU directive to provide a government guarantee for TIF. If UK/NL succeed, then the dispute still remains what the interest payments should be, and whether deposit guarantee amounts above 20K should have equal priority to the guarantee amounts below 20K.
2) Political: This kind of pressure is already being applied, in the form of threatening to raise obstacles to EU membership and blocking the IMF reviews. While this works quite well on the Icelandic government (which wants both), it does not seem to have much impact on the Icelandic people. In fact, more people in Iceland now oppose both EU and IMF, than support it.
3) Financial: It is quite obvious that many countries are not willing to provide any loans to Iceland until the Icesave matter has been resolved. There are some signs that Norway might be willing to consider offering loans anyway, but nothing is decided yet. But, if you follow the discussion closely here in Iceland, many people do not believe it is a good idea to take on this large amount of debt. Even the Commerce Minister was announcing the other day, that the only loans Iceland really needs for the next few years, is the 1.5B Euros to refinance the large bond payments at end of 2011/2012. Therefore, it is becoming increasingly likely that Iceland will simply decline most of the loans from Nordic/IMF, and go “cold turkey”. If this succeeds without Iceland defaulting, there is no question we would be much better off long-term. Hence as pressure tactic, threatening to hold back the Nordic/IMF loans is not very likely to work (unless we fail and suffer sovereign default, we will probably not be able to pay anything).
d) If the government guarantee can neither be negotiated or forced upon Iceland, the only option left for UK/NL is to somehow try to seize the foreign assets to cover it (Peter – London’s favorite option :-)). The main question here is how much those assets are really worth, and whether this is possible legally according to International laws. Most of the foreign assets of Iceland, are in fact the assets of the three bankrupt banks, which means they are all going to the bankruptcy claimants anyway. It is therefore likely, that even if they succeeded legally, the seizures would not go very far to cover the guarantee.
As you can see from the above analysis, that although there are still many possible outcomes in the Icesave dispute, the likelihood of successful conclusion is unfortunately not very high anymore.
Everyone that has been following my comments here on Icenews, knows I was very supportive of reaching an Icesave agreement, so long as it was fair and equitable for ALL parties involved. But, the effort failed and we ended up with no agreement.
We now have a new and completely different political situation in Iceland. We simply cannot ignore it or try to naively deceive ourselves into thinking that somehow everything will still just all work out. Things have already just gone too far the wrong way to turn it back. That is the reality we have to face now, for better or worse, for everyone.
Not sure about the interest on the loans
IMF: 6.24% variable (no idea what the usual IMF base range is)
Nordic: 3.4% variable (should settle between 4.5% – 7%)
Faroes: 5.25% fixed
http://www.icenews.is/index.php/2009/09/28/british-and-dutch-stance-on-icesave-hardening/#comment-94860
we all know placing yourself in debt makes it more difficult to recover
And cold turkey can kill you. As with eberything, it’s down to the implementation.
What is the IMF-loans for, really?
Stated reason (never did find a proper breakdown though):
1. Recapitalisation of banks
2. Support krona
3. Fund defecit
In a little documentary on the fishing industry in Iceland it seemed all invoices where in foreign currency. Wouldn’t that bypass the problem with exchange rate of the ISK?
There are a bunch of cases hitting the courts about just this :) .
Bjarni
Excellent post. Only one point that I disagreed with:
Legal . . . If UK/NL succeed, then the dispute still remains what the interest payments should be, and whether deposit guarantee amounts above 20K should have equal priority to the guarantee amounts below 20K.
For interest, surely whatever the market charges? There’s no requirement for the UK/NL to offer any loan themselves under EU law – that was just part of the framework that was set up for solving the dispute out of court.
And I’d hope that the EU court (or an Icelandic court, if that’s the right place) would have ruled on the priority business by then or at the same time. Optimistic?
@ Per-Olof,
about your question whether it has to be a private institution that guarantees the deposits. No, I don’t think that is the correct explanation. A quick search on google yielded me this result for most of the European countries:
http://www.nytimes.com/2008/10/06/business/worldbusiness/06iht-6saversbox.16718540.html
So quite a few states have a government guarantee system in place and as far as I understand, most people also expect the government to guarantee it like that. The US has a Federal deposit insurance corporation, which is fully backed by the US government as stated on their website:”FDIC deposit insurance is backed by the full faith and credit of the United States government. Since the FDIC was established in 1933, no depositor has ever lost a single penny of FDIC-insured funds.”
If Iceland never intended that its guarantee scheme was government backed, then it has been deceitful to the point of being criminally fraudulent in my opinion. And it would have caused a much earlier implosion of the Icelandic banks. It is not as if the guarantee scheme is an afterthought. It was a vital requirement for Icelandic banks to be allowed to operate in the European Union.
And furthermore, the Icelandic government has both explicitly and implicitly agreed they had an obligation. They confirmed it numerous times to the UK and NL governments, and more importantly, they paid for their own inhabitants. There are no provisions in the EEA treaties that say that a country can restrict its guarantee scheme to only people of its own country, that is blatant discriminiation! By helping its own citizens, I believe it implicitly acknowledged its full liability to pay for the deposits of the failed banks.
bjarni
that doesnt add up. not unless the icelandic minister has a timemachine. the debts i talk of were in 2009. you are giveing me the budget for 2010. and remember a budget is forecast of things to come. not what has happened in the past. the debts were taken before that budget.
and guess wot!! the debts dont appear in 2009.
I meant to say, on the priority/Ragnar Hall issue, is RebelEconomist wrong to say this?
“Thereafter the deposit protection scheme has a claim which generally ranks on a par with the claims of any other depositors, meaning that it should receive a share of the liquidator’s distribution to depositors in proportion to the value of its aggregate claim (“pari passu”).”
http://reservedplace.blogspot.com/2010/03/on-thin-ice.html
I forget whether the TIF under existing Icelandic law ranks pari passu with the depositors. I’d assume not, otherwise the whole Ragnar Hall issue wouldn’t exist.
Per-Olof
Then you will have to go into the intent of the treaties. AFAIK the party state was not allowed to back the banks.
Have a look at page 9 of the opinions from, apparently, Schjodt. Seems to be saying that the directive may not be the most important factor and that the EEA agreement itself is.
http://www.island.is/media/frettir/14.pdf
Also see RebelEconomist’s take on it:
“It is true that no government commitment to back up Iceland’s banks’ deposit protection scheme existed when Icesave was rapidly accumulating deposits in 2006-7. But this absence of a formal government back-up is normal – it is understood that governments do not want to absolve banks from contributing enough to make their own deposit protection scheme robust, and, in Europe at least, a deposit protection scheme backed by a relatively wealthy state could be considered to give the banks it covers an unfair competitive advantage in attracting deposits (in the words of Directive 94/19/EC, it is “not appropriate” for deposit protection “to become an instrument of competition”). And Icelandic regulators never attempted to dispel the notion promulgated by influential advisers such as Moody’s that the Icelandic banks would ultimately receive state support. To do otherwise would have disadvantaged Icelandic banks in the European market.”
http://reservedplace.blogspot.com/2010/03/on-thin-ice.html
Terry says:
March 31, 2010 at 5:06 pm
“Bjarni aided and abetted by Fisy – have for some-while, proposed the prospect of UK/NL taking what’s on offer – or walk away and get nothing.”
That is one aspect.
Bjarni has gone into minute detail explaining the situation as it stands in its complicated glory, all the aspects of it.
In other replies he has also explained what he thinks is the best way to resolve it.
BREAKING NEWS! Icesave Dispute Resolved
Iceland Review beat me to it! See the fantastical news article here:
http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=360231
Excellent news, I’m sure you’ll all agree. Welcome brothers!
Wow. You people generate a lot of heat.
Some comments.
Knowless and Fisy
If you want to be relentlessly negative then that’s fine but to label an arbitration process as a ‘kangaroo court’ is to misunderstand the process.
Bjarni
Your detailed postings show a good deal of contradiction (Is TIF independent of the government or not? And whichever answer you give you will find that certain statements you make contradict your assertion.) Tanya’s clumsy formulations and questioning is leading you up the garden path. I think she may well be trained as a lawyer – certainly her line of attack with its gentle probing questions shows an acute mind at work. Her questions are far sharper than your long answers. So I can see where she is going to trip you up. You quote the constitution and the legal requirement with respect to government loans. But if you look carefully at the various government websites, tot up the numbers in round fingers you will find that far more loans have been taken than accounted for in the government finance figures. Whither the rest? well, certainly the Icelandic Central Bank is taking loans on its own account which do not appear in the legally mandated loans (and they are big ones as well, for example the IMF loan seems to have been routed through the Central Bank and thus has avoided polictical scrutiny). So my guess is that Tanya will floor you with a sucker punch in a day or two with that one. The upshot will be: Why is the Icelandic state making such a fuss over the Icesave deal when it has taken on loans (not mandated through law) via its own agencies. The Icelandic defence looks highly selective to me. Loans from IMF? Put them under the counter. Loans from the UK and Holland? Put up every legal barrier you can find!
Per-Olof
Much of what you say is correct. Certainly in the US arbitration must be confirmed in a court BUT those courts rarely overturn an arbitration result. Usual grounds for doing so are: (i) suspected criminal illegality by one of the parties, (ii) third party issues – especially non-representation at the arbitration, or (iii) the panel overstepping its dicretionary powers. In all other cases they pass through as final and binding.
As for the arbitartion process way back in 2008, that was clearly not an arbitration process. It stopped before it got going. There is no decision. It is an opinion at best (and probably the correct opinion).
I note that in your last post you return to the legalistic argument – if it aint written then it gonna happen. You seem to think that only formal treaties are the case in international law – and by saying those letters are not international treaties that they have no legal force. That reading is quite at odds with international law – which I would remind you is not about things written down but mainly about equal states would expect to be treated. It is a matter of behaviour, of norms. Those letters are pretty damning. Weasel words based around : “It only says ‘support’” won’t wash.
Because consider the behaviour and norms of all other states which have had to bail out their banks. Those states have taken on the debts (much to everyone’s unhappiness) because there is only one place where those payments can come from – the state that licenced and regulated the banks. The fact that EVERY country with such guarantees has acted in this way shows that that is the accepted international norm. Iceland has failed to act in an acceptable manner. That is the key reason Iceland would lose in any international tribunal.
Which brings me to my final observation. I’ve only looked at this in the last week or so, but it is absolutely clear that the behaviour of the Icelandic state (reflected in many of the pro-Iceland comments here) is simply unacceptable. The whole approach has been devious, double-dealing and evasive. It really does Iceland no good whatsoever to persist in that manner. Your reputation is in pieces, you do not look trustworthy in the least – and reputation and trust are what allows nation states to deal with each other as equals.
So there we go. I’ll sign off, having stirred the pot. I can’t afford to spend my time reading all this stuff. You should see my hourly rates – they would make you cry!
To tanya:
For the 2009 budget, the corresponding amount was 500B ISK as described in item 4 on page 7:
http://www.althingi.is/altext/136/s/pdf/0481.pdf
This kind of back and forth, is turning into an exercise in futility. If you actually read through the documents I provided references for, you will see that the government in fact received all the authorizations it needed. Trying to convince the people in Iceland that we do not have to adhere to our constitution, will no work. There is no magic button that allows us to ignore it or turn it off.
@Bromley,
LOL , looks like an april fool to me :-)
Part of the deal which affects air travel ;)
“Icelandair, which is owned by the Icelandic government, will cease operation but people who have bought flights after May 15 can convert the tickets to BA and KLM for a small fee.”
Knowless said
“In other replies he has also explained what he thinks is the best way to resolve it.”
Yes, I follow Bjarni’s posts, and I accept there are difficulties Ragnar Hall etc.
My main concern was the catalogue of seemingly Laissez faire comment within Bjarni’s post such as –
“It will take some time for this new reality to sink in with the UK/NL negotiators and also some of the “old-timers” here on Icenews. But that is fine, we are not in a hurry.”
‘Not in a hurry’ doesn’t seem to fit with the context of this link.
http://in.reuters.com/article/bankingfinancial-SP/idINLDE62U24S20100331
Excellent Bjarni!
Don’t stop!
Bury them in verbiage!
Before long we’ll have them thinking:
Left is right,
black is white,
a debt is a suggestion,
a depositor is an investor,
larceny is a virtue,
the robber is the victim,
and the robbed are all bullies.
It’s just a matter of definition.
Afram!
Gummi
Bjarni did write :
” >d) If the government guarantee can neither be negotiated or forced upon Iceland, the only option left for UK/NL is to somehow try to seize the foreign assets to cover it (Peter – London’s favorite option :-)). The main question here is how much those assets are really worth, and whether this is possible legally according to International laws. Most of the foreign assets of Iceland, are in fact the assets of the three bankrupt banks, which means they are all going to the bankruptcy claimants anyway. It is therefore likely, that even if they succeeded legally, the seizures would not go very far to cover the guarantee. ”
Don’t forget ‘ team UK ‘ poster here .. ( come on now you are trying to put me and Bjarni together in to some ‘ team Iceland ‘ when his stuff is much better writing than mine ) ..
.. that already the UK government has entirely in its hands ISK 200 billion (USD 1.6 billion, EUR 1.1 billion) deposited in a the Bank of England account since the assets of Landsbanki in the UK were frozen in October of 2008 under abominable UK Anti-terrorism, Crime and Security Act 2001 freezing order.
In June 2009, the freezing order was lifted, yet the deposits cannot be relocated because, according to British regulations, money owned by bankrupt estates in the UK cannot be transferred out of the country or even be used to pay Lansbanki creditors ..
” When asked why the down payments of Landsbanki’s loans are being deposited to an interest-free account at the Bank of England, a spokesperson for the resolution committee stated that they had only trusted the Bank of England to store the loan down payments and that the bank had not offered any interest rates. ”
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=28304&ew_0_a_id=357653
I Fisy said :
>>EFTA Surveillance Authority did distance them selves from opinion and process
Brumley said :
>Incorrect.
Yes I know that Per Andreas Bjørgan, EFTA Survellance Authority signed it.
But you note they did make it clear they did not have any involvment with prepareing the opinion. Clearly because they were disatisfied with proceedure for same reason that Icelandic govnerment at time was — and pulled out.
You do notice that EU burcrats so desperate to give they opinion of Iceland government being liable for the guartantee that they went ahead any way.
Even though Iceland had pulled out.
That’s why they made it clear even though signed the letter, that :
“The European Free Trade Association did not participate in the preparation of this opinion. ”
Why not ?
Because whole process was a ” kangeroo court ” of lowest order.
http://www.icenews.is/index.php/2010/03/22/norway-pushing-to-break-imf-iceland-deadlock-over-icesave/#comment-133638
As I did state long time ago,
” Desperatation of EU burecracy not to have this in front of any impartial court is only equalled by the gloss over langauge and sliding slippery conclusions of this opinion. ”
http://www.icenews.is/index.php/2009/07/29/more-members-of-parliament-against-the-icesave-deal/#comment-87719
Well, now the excuse of EU burecrat that whole EU banking system at risk if rest of world doesnt think that govenrments back they banks seem to be over.
( Although of course Spanish banks are going soon to have to admit to 40% + write downs of they bad loans in construction and home loans .. )
So… end of part 1.
So Part 2..
Question is if Iceland govenrment does pay this minimum deposit insurance guarantee should it be force to pay any interest that UK and Holland does ask for ?
Answer to that should be decided by court where all aspects of case can be bought together. Best court would be in courty that is in EEA, so EU or EFTA country.
Best place would be Iceland because that is where banks are based, etc. and it would be fast put up to EFTA Court for appeal after decision of Icelandic courts.
I still do not understand why UK and Holland did not take amended deals as passed by Althing — it amazes me that they would not address Ragnar Hall issue at all etc. even with our spine less jellyfish currently in government seats.
RebelEconomist analysis is interesting but just points to fact that this whole mess needs to be seen in court because the Icelandic law is clear on matter even let us say, that the ” EU ” law takes different view.
So…
For gods sakes UK and Holland get on with it and sue TIF here in Icelandic court. Then all these issues will be worked out.
I am one of the people in Iceland that thinks the moral responsility to pay this minimum gurantees for IceSave is there.
But UK and Holland has just made things so difficult for people like me by the way they have gone about this ” negotations “.
Now I cannot convince any one that it is right thing to do without there having been a court case with appeals that shows all issues have been chewed over in full impartial process with knoweldaable EFTA and EU judges and experts presenting facts case laws and properly constructed legal arguments.
For gods sakes ! This is the right thing.
And I cant convince any one I talk to here in Iceland of any thing else any more. The referdum made it very clear that Icelandic people have had enough of doing it the way that Left Green and Social Democrat spine less idiots have been doing it for last over year.
If you think any thing different you are just ignoring reality of situation created by UK and Holland.
To hell with the EU and to hell with the IMF. We’ll find a way to survive without these big loans but the damn idiots in current government have to go first.
Then..
To court !
Fisy
or even be used to pay Lansbanki creditors
Is this correct? I’d be surprised if the funds weren’t available to the administrators if they wanted to make an interim distribution. More likely, I suspect, is that the administrators cannot make a distribution until they know the creditors and their priority.
But you note they did make it clear they did not have any involvment with prepareing the opinion. Clearly because they were disatisfied with proceedure for same reason that Icelandic govnerment at time was — and pulled out.
Is it clear, or is it unsupported supposition? When you say “make it clear they did not have any involvment with prepareing the opinion”, are you referring to the “It is given in the personal capacity . . . does not commit” part? Because there may well be other reasons for then to issue an informal opinion.
All that we can say is that if EFTA Surv. was dissatisfied, one of them certainly managed to contain it well.
You do notice that EU burcrats so desperate to give they opinion of Iceland government being liable for the guartantee that they went ahead any way.
Even though Iceland had pulled out.
Or, alternatively, they were all there, had all put the work in and all agreed that Iceland was liable. Surely you can’t object to them clarifying the EU position?
Question is if Iceland govenrment does pay this minimum deposit insurance guarantee should it be force to pay any interest that UK and Holland does ask for ?
The answer is, obviously, absolutely not. For the first 3 months (or 9 if Iceland bothered to apply for extensions). After that, assuming that it is required to pay the money, it is required to pay it immediately and needs to secure the funds on the market.
What was interest was Greek debt commanding? 5.9%? I assume that Iceland is in a less enviable position than Greece, but I may be wrong.
I still do not understand why UK and Holland did not take amended deals as passed by Althing — it amazes me that they would not address Ragnar Hall issue at all etc. even with our spine less jellyfish currently in government seats.
Well, I’m not surprised. I, an absolute layman, said that the time-limit on the guarantee would be unacceptable (if only because it might give people who owe more an idea).
Also, they did address the Ragnar Hall issue by including the clause that allowed priority to be amended. Are you not just as amazed that Iceland hasn’t started the ball rolling on that one and got an Icelandic court to rule and an EFTA court to review?
For gods sakes UK and Holland get on with it and sue TIF here in Icelandic court. Then all these issues will be worked out.
One of the rare moments when most of us here can agree :) . Does anyone have a sensible explanation (i.e. no conspiracy theories about punishing Iceland for winning the Cod Wars) for why the UK/NL don’t go down the court route now?
The imminent danger to the European banking system seems to have passed, and the EU can always introduce a new directive that affirms that state support is required to head off problems with Spain etc.
Carl says:
“If you want to be relentlessly negative then that’s fine but to label an arbitration process as a ‘kangaroo court’ is to misunderstand the process.”
I think you are the one who misunderstood, I labelled that particular arbitration process a kangaroo court. It appears that the UK/NL are the ones who are reluctant to accept an arbitration process. Imho I would be very positive to an arbitration process :)
“Tanya’s clumsy formulations and questioning is leading you up the garden path. I think she may well be trained as a lawyer – certainly her line of attack with its gentle probing questions shows an acute mind at work.”
It may have escaped your attention that Tanya is still claiming (for over a year now?) that the Iceland state is responsible because it did not ensure that the deposit insurance fund was properly set up. Not even the respected legal opinion that were drawn together to consider the extent of Iceland states liability are claiming that one.
The Iceland states liability re the deposit scheme is accepted de facto, the complications in it becoming de jure are the terms. Bjarni has explained the legal process and has explained the agreement in minute detail and why the terms of the settlement are not finding agreement.
The process of a parliament passing an act into law is a standard parliamentary practice. There are many reasons why this process has become stuck in Iceland.
The main reason you imagine, that Iceland wants to worm out of deposit guarantee, is nonsense
“Bromley86 says:
April 1, 2010 at 12:13 pm
BREAKING NEWS! Icesave Dispute Resolved
Iceland Review beat me to it! See the fantastical news article here:
http://icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=360231
Excellent news, I’m sure you’ll all agree. Welcome brothers!”
hmm, April 1st, eh?
. . . Iceland state is responsible because it did not ensure that the deposit insurance fund was properly set up. Not even the respected legal opinion that were drawn together to consider the extent of Iceland states liability are claiming that one.
Really? Most of them do, IIRC, even if they subsequently argue in favour of no state guarantee. Certainly that ECOFIN one does (they use “make sure” rather than “ensure”).
The main reason you imagine, that Iceland wants to worm out of deposit guarantee, is nonsense
This statement falls foul of the current (and, indeed, initial) Icelandic negotiating position. i.e. no state guarantee until after the dissolution of Landsbanki.
Are there still people here who do not realise that the Iceland Parliament has twice passed the Parliamentary Act on Icesave. That both those Acts accepted responsibility for the minimum deposit insurance of Eur20k determined by EEA regulators. The first Act became law but was rejected By UK/NL. The second Act was not signed by the President, went to referendum and was rejected by the people.
It is striking that there are people here, even lawyers/economists who boast of high salaries, come on here and are so uniformed about the State, the Constitution, Parliament and the Law.
Is it bewildering to them that we do not live in a dictatorship of the neo-liberal economists? They may even not know how a States constitutes its parliamenent to run a country.
All loans and expenditure are mandated by parliament, either with a regular pre-determined specified mandate, an emergency mandate or a new law to deal with a new issue. This is standard practice in existing so democratic parliamentary systems of governance.
When the UK Gov met to convene to deal with their banking collapse, parliament had to give a mandate to the government to act, either in the form of a pre-existing emergency mandate or a new law passed in parliament.
Regarding international law and its broad meaning according to Carl.
International law does only cover a few areas.
Such as international borders, sea routes, piracy, genocide, how to act in war.
There is *nothing* in international law itself that governs how banks are to be regulated.
There *is* however international law covering *how* treaties about anything are to be constructed, how to interpret them and what is required for them to be in effect.
So in using international law principles on a specific treaty is not a valid argument to the extent the contents of that treaty is concerned. There is international law governing how it is to be interpreted but you cannot apply general international law principles on the interpretation itself on how countries are to act towards each other. As far as the treaty do not cover international law issues such as borders, warfare and such.
Are there still people here who do not realise that the Iceland Parliament has twice passed the Parliamentary Act on Icesave. That both those Acts accepted responsibility for the minimum deposit insurance of Eur20k determined by EEA regulators.
Ah, great. Then you’ll be able to point to the resolution? No?
It is a fact that the Icelandic government does not accept legal requirement for the guarantee (see the explanatory docs for the recent referendum).
And at least one, if not the only, reason the why first law was rejected was precisely because it did not offer a state guarantee. As you note, the second was never (or, at least, not for long anyway) law.
@ p-o
“There is *nothing* in international law itself that governs how banks are to be regulated.”
really???
all the follows have rules on banks.
EU Directives
EEA rules on banks
IMF
G20
Basel Commitee on banking supervision (see basel 2: BIG RULES)
International organisation of securities commissions
international association of insurance supervisors
international accounting standards
World bank (for poor countries)
UN
Baltic exchange in london for trade/ship matters with banks
NAFTA (i think – not sure but must be something!!!)
etc etc etc
many international clearance & settlement rules (bilateral)
plus many many general rules on organisational governance
@tanya
International law in general with the rules as Carl suggested outside of treaties.
You are just pointing on treaties with regulations.
Please reread my comment or come with some valid points or arguments.
You missed the entire point of my post.
Hi I’m New
Just wanted to check if html tags work before I start posting
Bromley wrote “Ah, great. Then you’ll be able to point to the resolution? No?
It is a fact that the Icelandic government does not accept legal requirement for the guarantee (see the explanatory docs for the recent referendum).
And at least one, if not the only, reason the why first law was rejected was precisely because it did not offer a state guarantee. As you note, the second was never (or, at least, not for long anyway) law.”
Bromley you are still beating that old disingenuous drum.
Read what I wrote.
I wrote
“the Iceland Parliament has twice passed the Parliamentary Act on Icesave. That both those Acts accepted responsibility for the minimum deposit insurance of Eur20k determined by EEA regulators.”
I did not claim that the Iceland parliament accepted that they were obliged to do so. I wrote that the law passed in Parliament in Sept 2009 accepted responsibility for the Icesave deposit scheme -
without acknowledging that they were required to do so.
http://www.iceland.org/media/info/010909_Act_on_state_guarantee.pdf
To any rational person, that law passed in Sept 2009 is either good to go or almost good to go.
Most of it was acceptable to the UK/NL and we have already debated to death the few bits that the UK/NL did not accept.
Do the UK/NL require that Iceland accept that they are obligated to accept responsibility or are they satisfied that Iceland just accept the responsibility?