Dutch government collapses

den-haag-littleThe Dutch government has fallen over differences within the ruling coalition on the contentious issue of the ongoing war in Afghanistan.

It is not yet clear what (if any) effect this surprising news will have on Iceland’s negotiations with Dutch and British authorities in order to find a new Icesave repayment deal. However, a new offer expected today has already been received by Iceland, despite the political crisis in the Netherlands.

The Dutch government convened yesterday for a marathon 16-hour meeting which ended with the second largest coalition party (the Labour Party) withdrawing from the government because it wants to bring Dutch troops home from Afghanistan, while Prime Minister Jan Peter Balkenende’s Christian Democrats want to answer a NATO call to keep them there beyond 2010.

Finance Minister Wouter Bos is the leader of the Labour Party. He said yesterday that Iceland’s new proposals had been received coolly by the British and Dutch in London this week, but that the will remained to carry on with discussions. Unconfirmed reports last night predicted that Iceland would today be offered a new deal with much lower interest payable than the current offer of 5.5 percent. Other unconfirmed reports claim that a new variable interest rate will be offered in order to lower the impact of repaying the Icesave loan.

The Icesave issue is currently having an effect on all of Europe, as the European Commission debates a proposal to unite all EU/EEA countries into one single depositors’ insurance fund and remove the responsibility from individual member states to support depositors in any future bank failures.

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