Icesave deal still controversial in Iceland and still not green lighted

icesave2009-011Hoskuldur Thor Thorhallsson, an MP for Iceland’s Progressive Party, believes the figures recently released on likely economic migration away from Iceland are too high.

“I hope it will not be as bad as it was in the Faroe Islands during their crisis; but I think these figures have been very carefully predicted. This could be a very serious problem,” he said (apparently contradicting the first paragraph, ed.).

The statistics bureau of the University of Iceland warned recently that large scale migration could result in a noticeably higher debt burden for those left behind. Sociology professor Stefan Olafsson said in yesterday’s Frettabladid that as many as 10,000 citizens could leave the country in addition to thousands of foreign nationals as a result of the economic crisis. That would, he said, be a leech on the country, but not a knockdown blow.

Hoskuldur Thor Thorhallsson believes however, that the figure could be even higher if the country’s parliament passes the Icesave bill in its present wording and accepts billions in further debt responsibility (apparently now contradicting both the first and second paragraphs above, ed.)

“We [in the Progressive Party] are immensely dissatisfied with the idea of approving the Icesave deal as it stands today. The heavier the debt load, the harder it will be to revive the employment market. And if the state doesn’t have the resources to go out and make things happen, everything will just stop,” he said.

There is a strong incentive for people to look abroad these days. “It is clear that if we have no work for well-educated young people, they will look abroad – both to find work and to pay off debt.”

Minister for Social Affairs, Arni Pall Arnason, said that the government is on guard against large scale emigration because of the economy and said that various things have already been done to help those finding it hardest to pay their debts.

“We increased interest relief by 70 percent this year, for example, and that helps the most indebted the most. We are also dealing with household debt differently than before. In the last kreppa (economic crisis), people went bankrupt and had to leave the country as a result. Now we are working on ways to help people deal with having less money without going bankrupt, for example by ensuring that the banks deal with defaults sympathetically and with new payment plan options.”

Arnason believes that Thorhallsson’s position on the Icesave bill is just scaremongering.

Meanwhile there is also a lot of resistance toward the Icesave deal among the Icelandic public, according to a new Capacent-Gallup poll conducted for

The question was: Do you support or oppose the idea that the government should approve the bill on accepting state responsibility for the Icesave losses? (Question reworded extensively in translation.)

Four percent of respondents were very much in favour of passing the bill, around 16 percent were mostly in favour, around 20 percent were mostly against and some 48 percent were very much against. The remaining 12 percent did not answer. reports that the poll was conducted 16-27 July and included 1,273 people. Of that number, 717 people agreed to take part in the survey, making the response around 56 percent.

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