The third and final Icesave debate in Iceland’s Althingi parliament was adjourned late last night with 20 MPs still waiting to speak. Party leaders agreed with the President of Althingi that MPs will vote on the issue at some point today. It could take a long time, however; as one member of each party has the right to speak for 15 minutes and then MPs will begin the process of voting on each article of the bill individually.
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Alexander E. said:
“They can take as many positions as they like. I have much less problems with that than with paying for something I didn’t “buy”.”
You did ‘buy’ the Icesave depositors protection, or to be precise your government did on your behalf. When a Icelandic minister tours with the Icesave salesmen and says “You can deposit your money with Icesave because the Icelandic state will guarantee your money”, he has saddled Iceland with the debt.
If you don’t like it, have nothing to do with the Icelandic Government and leave Iceland, its the states debt, not yours.
To Alexander E.:
>>>>”no other loans will be available to Iceland.”
But you said this is not bad thing, right?
Correct, if Iceland has to suffer sovereign default anyway, it is possible to make the argument, that the earlier it happens, it will more “fair” for everyone involved.
This would actually be close to Iceland going “cold turkey” (no more loans, take the consequences now), we discussed few months ago.
>>>>My opinion – this must be decided by people vote. With some conditions.
If pro-IceSave supporters win – they’ll pay this bill.
If anti-IceSave supporters win – they’ll pay for for troubles caused by UK/Dutch hard positions.
Nice idea, and actually would be somewhat fair, since this way everyone would have to bear their responsibility for their own actions. But unfortunately, in reality, this would of course never work. Whatever Althingi decides, we will all pay the consequences, one way or another.
Based on the facts that are now known, Iceland faces almost certain sovereign default, it is just a question of when. Who ever at that time, which still holds a loan with Iceland, is likely to loose most of it.
They can take as many positions as they like. I have much less problems with that than with paying for something I didn’t “buy”.
But you said this is not bad thing, right?
My opinion – this must be decided by people vote. With some conditions.
If pro-IceSave supporters win – they’ll pay this bill.
If anti-IceSave supporters win – they’ll pay for for troubles caused by UK/Dutch hard positions.
This is simple – you make decision and you pay for it.
For Parliament and President this is easy – they won’t pay in both scenarios. So all their “debates” are basically about their seats and next elections only.
And no need to mention fifty-fifty “majority” in Parliament over the issue. Just one sick person might turn Iceland’s future upside down? That’s really crazy (but some people still call it “democracy”).
It looks like we are down to the wire once more on Althingi deciding whether to accept the IceSave guarantee. It would be a completely futile effort to try to predict how the vote is going to fall (or if in fact it will actually happen tomorrow or for some reason postponed once more).
Basically, 28 of the oppostion MP’s and 2 of the government party MP’s have declared they are definitely voting against it, and about 31 of the government party MP’s are definitely voting for it. This leaves the final outcome up to 2 MP’s, one independent (formerly Borgarahreyfing) and one government MP (Left-Green).
It is also of course possible that there will be some surprises resulting in one or more of the MP’s to change their vote or not vote. Clear majority of the votes is needed for the law to pass (tie means the law does not pass).
If the law will be passed by Althingi, it will have one more hurdle to pass, that is whether the President will sign it into law. When he signed the earlier laws, he wrote an opinion where he stated that it was important that the amendments where included with the laws, so not open up a chasm between the parliament and the population. It is therefore also completely up in the air, what he will do.
If the President does not sign the laws, they will automatically go to a national referendum, which will probably end up being quite complicated, since the laws for it are actually not very clear.
If the laws will not be passed by Althingi, the government will probably fall. I say probably, since in this matter, it has been shown time and again, that nothing is really certain. This will probably mean, new election and new government, which will take at least few months. In the meantime, complete politcal confusion will be likely.
As been mentioned multiple times, whether this law will be passed, will probably have major concequences what will happen to Iceland for the next few years:
If the IceSave guarantee will be passed into law, the recovery process will gain full speed. Iceland will get the rest of the Nordic/IMF loans and the EU application will move forward. The trouble will rise on the other hand within few years when the loan payments start hitting in full force. The current estimate is that total government debt is about 130% of GDP (about half foreign currency) and total Icelandic debt load is well above 300%.
The loan payments by government will be about 40% of tax revenues 2010 and about 57% of tax revenues 2011, then settling back down to 20-30% of tax revenues after that.
It goes without saying that the only way Iceland can make these kind of payments will be by taking further loans. This is the real reason for taking the Nordic/IMF loans, not the currency reserves, as was originally stated.
Whether the government can clear up these loans in time before the IceSave payments start, as the current plan is, is rather questionable, to say the least. Iceland therefore faces the very likely prospect of full sovereign default, by the time the IceSave payments kick in the latest.
If the IceSave guarantee will not pass, the main question is how will the UK/Netherlands government handle it. It is very likely if there is a new Icelandic government, that the current IceSave “deal” will not be on the table, by Iceland, and it is also likely that UK/Netherlands will take more hardline position.
Unless “cooler heads” will prevail, a new IceSave agreement will therefore be very difficult to reach. This means almost certain sovereign default by 2011 the latest, since no other loans will be available to Iceland.
The thinking by some of the hardliners here in Iceland, is that if we are going to have a default anyway, it might be better to just do rightaway, rather than let the loans collect interest for few years first.
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