In an emotional address to parliament today, Icelandic Prime Minister Geir H. Haarde summed up the tempestuous waves of misfortune that over the last weeks have shaken the nation’s financial foundations and threathened its sovereignty.
“It is at such times that the Icelandic nation will show what stuff it is made of – its fortitude and prudence in the face of these disasters inspires admiration everywhere. We may for a time be bloodied, but we are unbowed.”
Haarde went on to say that now that the worst of the storm was over, that the time to regain control over the raging economic situation and normalise the economy had arrived. Landsbanki and Glitnir have already begun operating in a changed form.
“…loan lines of up to 400 million euros were activated yesterday from the central banks of Denmark and Norway. We will strengthen the currency reserves considerably in addition to this and discussions are now in progress in Moscow on a possible currency loan,” said Geir. “Furthermore mentioning discussions with the IMF on the possible involvement of the Fund in the financial reconstruction work that lies ahead. All possibilities are being assessed without prejudice.”
The Prime Minister then reminded how the seriousness of Iceland’s situation has its roots in the financial upheavals across the world that have left no country unaffected and have brought larger economic entities to their knees.
“…dozens of banks around the world have had to throw in the towel and look to the state for assistance in their home countries. The problem which faced the Icelandic Government when this chain of events was unleashed was more serious than the problem facing other governments, because of how large the Icelandic banking system was in proportion to the economy. It was, therefore, clear that it was neither sensible nor feasible for the Icelandic state to shoulder the burdens of the entire banking system.”
In face of these facts Haarde stated that, “The Government decided to take another course with the long term interests of the Icelandic nation uppermost. The actions of the Icelandic authorities are among the most radical actions taken by a government in a banking crisis.”
Haarde then took this opportunity to thank the members of Althingi from all parties for working to ensure that the so-called emergency legislation was passed as quickly as it was.
He continued that the most important task was to retrieve as much value as possible from the operations of the banks in order to limit the damage caused by their collapse. “All of us, the administration, members of parliament, and others in leading positions must stand together in this task. In this work we will need to make use of the efforts of all those with experience and expertise in banking. We should not allow speculation about the causes of the fire to hinder the work of extinguishing it,” Haarde said.
Haarde then hit the topic of relations with UK. “…the way we were treated by the British Government last week had nothing to do with salvaging British interests and was absolutely unacceptable.”
“The British Government’s unprecedented actions against Kaupthing in the United Kingdom have led us to review our legal position vis-à-vis the British authorities. To that end, the Government of Iceland has appointed a British law firm, which is now working to prepare a case, and the Icelandic Government has also taken various measures to ensure that the British public is made aware of our point of view.”
“Despite the dispute that has arisen in relations between Iceland and the United Kingdom, both countries have emphasized resolving the issues connected to Landsbanki’s IceSave accounts. The same applies to IceSave accounts in the Netherlands.”
“No agreement has yet been concluded with the United Kingdom, but I am hopeful that an outcome will be achieved soon.”
“In the emergency legislation passed by the Althing last week, depositors’ claims were given priority during the receivership process. There are good prospects that Landsbanki’s assets in the Netherlands and Britain will go a long way toward covering the claims that savers in these countries have on the respective banks – which will in turn reduce the claim that falls on the Icelandic state. The Government has taken measures to ensure the value of the banks’ assets and in that way limit losses as far as possible.”
Haarde ended his speech by asking the nation to come together, learn from its mistakes and not to turn to anxiety.
“There are always opportunities in a difficult position. We have been forced onto the defensive in recent days, but with determined effort, we will slowly but surely regain the offensive.”
“The Icelandic nation has been confronted with great and difficult challenges in the past, and adversity has always fortified us and brought out the best in this nation. There are difficult times ahead, and they will put our solidarity to greater tests than ever before. But no one need be in any doubt that the people of Iceland will draw on their inherent strength and make their voice heard in the world once again.”
“In these difficult times it is essential to prevent fear and anxiety, which understandably effect people, from developing into confusion and panic.”