Ice News

International will in IMF support of Iceland

Posted 15/01/2010 - 11:55 by glen07

2010-01-13 13

Dominique Strauss-Kahn, President of the IMF, said this evening that: “If many countries in the international community feel that we should wait with our review of our recovery package for Iceland, then we must do that”.

Strauss-Kahn said this at a Washington press conference today. He said he understands the anger of the people in Iceland because of the huge debts they are left with following the banking collapse. He reiterated that an Icesave deal is not essential for continued IMF assistance; but that Icelanders have to understand the IMF is controlled by the international community and must listen to its will. He added though, that the IMF is no country’s personal debt collection agency.

The IMF itself relies on international co-operation just the same as Iceland now does, Strauss-Kahn told the press conference.

At the beginning of the meeting, Strauss-Kahn took the opportunity to send his condolences to the victims of the Haiti earthquake and said the Fund will shortly be sending USD 100 million to the crisis-struck country with further assistance to follow.

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The attempt to gain unity in Icelandic parliament for Icesave

Posted 12/01/2010 - 12:02 by glen07

2010-01-11 13

Push for Icesave unity in Iceland parliament

By Alex on Jan 12, 2010 in Holland, Iceland, International, MBL, Politics, United Kingdom

ríkisstjórn-íslandsLeaders of Iceland’s government and opposition parties are attempting to reach a united position on the Icesave issue.

Prime Minister Johanna Sigurdardottir yesterday held a meeting with leaders of all parliamentary political parties and later told journalists that renegotiation of the entire Icesave contract with Britain and the Netherlands had not been dismissed at the meeting.

Icelandic ministers have had many conversations with counterparts in the UK and Netherlands, as well as from Iceland’s other ally nations. Sigurdardottir told reporters that the British and Dutch PMs have both expressed to her their deep disappointment with the fact that the Icesave Bill has been sent to a national referendum, reports.

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A review of what rules govern repayment of loans

Posted 12/01/2010 - 11:58 by glen07

2010-01-11 13

Lipietz rejects rejection of his Icesave rejection

By Alex on Jan 12, 2010 in Holland, Iceland, International, MBL, Politics, United Kingdom, european union

alain-lipietzThe French economist and MEP Alain Lipietz, who claimed on Sunday on Icelandic television that European rules do not indicate that Iceland is responsible for the Icesave debt in the Netherlands and UK, has rejected Icelandic government claims that he has misunderstood elements of the law.

He told the Silfur Egils television programme that the Passport Rules do not call for a home country to cover the deposits of its banks in a host country. The Icelandic government countered that he was probably referring to the fact that Iceland is not an EU member; but pointed out that as an EEA member, the country’s responsibilities are exactly the same and do call for repayment.

Lipietz’s words have grabbed headlines in Iceland, as he said that European law on depositors’ guarantee funds shows that the British and Dutch were required to regulate Landsbanki (Icesave) in their jurisdictions. The Icelandic government’s assertion yesterday that he was in fact wrong on this point, and was mistakenly assuming Icesave was a daughter company of Landsbanki and not a branch, was quickly rejected by the French MEP who said he stands by what he said.

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Eu entry won't be affected by Icesave

Posted 10/01/2010 - 20:40 by glen07

2010-01-08 13

Skarphedinsson and Moratinos: Icesave has no impact on EU’s treatment of application

By External on Jan 9, 2010 in Iceland, International, MBL, Politics, european union

eu(Press release from the Icelandic government):

The Foreign Minister of Iceland, Ossur Skarphedinsson, spoke today with Miguel Angel Moratinos, the Foreign Minister of Spain, which holds the Presidency of the European Union.

In their conversation, Mr. Morations stated that the Spanish EU Presidency viewed the Icesave issue and Iceland´s EU application as separate issues, and that the new situation that has arisen in Iceland would not have any impact on EU´s treatment of the application.

This is line with the conversation between the Icelandic Foreign Minister and UK Foreign Minister David Milliband on 7 January, in which Milliband declared that the UK would continue to support Iceland´s EU application. The same view was stated in a conversation between the Icelandic Prime Minister Johanna Sigurdardottir and the UK Prime Minister Gordon Brown on 6 January 2010. This position is also in line with the former Swedish EU Presidency and statements made by representatives of the EU commission.

In the conversation with Moratinos, the Mr. Skarphedinsson explained the situation in Iceland following the President´s decision not to sign the Icesave bill, reiterated
Iceland´s vital interests and its determination to honour its international obligations.

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Criticism of inaccuracy of article in The Times

Posted 10/01/2010 - 20:35 by glen07

2010-01-09 13

Iceland’s Icesave debt: how much is too much?

By Alex on Jan 10, 2010 in Finance and Business, Holland, Iceland, MBL, Politics, United Kingdom

icesave1-03923941The only inaccurate thing about The Times’ in-depth Icesave analysis is the headline.

One of Britain’s most respected newspapers, The Times this weekend published a column by Bronwen Maddox explaining the underlying arguments behind the Icesave issue and why Iceland may have a strong case for its reluctance to reimburse the UK and Dutch governments for their Icesave bailouts; although the article is careful not to absolve the Icelandic government and bankers of blame.

The headline, “Iceland says ‘Can’t pay won’t pay’ – and it is right”, is the only major factual inaccuracy, as the country has in fact said neither.

Maddox begins by explaining how ambiguous the European Union passport rules are for cross-border banking. The fact, for example, that UK banks overseas are insured up to GBP 50,000 by the British government is very good; but that Iceland’s banks were only insured by the Depositors’ and Investors Guarantee Fund (owned and operated by the private banks themselves), was no less legal. The fact that the fund contained barely one percent of total deposited funds was also legal, as the EU rules did not foresee a systemic banking crash.

By insisting the Icelandic government reimburse it in full, the UK government is stating that in the event of failure, a privately-run bank deposits insurance scheme becomes the immediate responsibility of that country’s government – but, Maddox points out, the EU rules do not actually say that at all.

The Icelandic government and a majority of its citizens have consistently shown support for paying the Netherlands and the UK back for the embarrassing failure of Icesave; the contention has always arisen from the terms of such a deal.

“The second [point] is that Iceland must pay not the amount set by its own guarantee rules nor even the British £50,000, but the full amount of British savers’ losses, even though the Government chose to pay out more than UK rules obliged,” Maddox says – continuing by saying that the description of this as a ‘loan’ by Britain and Holland is hypocritical because Iceland never asked for or approved the loan, which would amount to GBP 720 billion if the per capita amount is scaled up to the size of the UK population.

Maddox ends by lamenting the fact that the questions the Iceland case raises about EU banking rules have yet to be addressed, and by reaffirming the fact that Iceland’s bankers and previous government were indeed highly reckless and brought the situation upon themselves. But is that reason enough to rob Iceland of foreign aid and investment, potential EU membership, thousands of its citizens and decades of development?

The full article can be read on Times Online, here.

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Eva Joly's view on the Dutch attitude to the Icesave Bill

Posted 10/01/2010 - 20:31 by glen07

2010-01-08 13

Eva Joly to Dutch media: “Netherlands being arrogant”

By Alex on Jan 9, 2010 in General, Holland, Iceland, MBL

jolyEva Joly, the MEP and white collar crime fighter now assisting Iceland’s Special Prosecutor, was interviewed this week in the Dutch NRC Handelsblad. She spoke about her experience investigating fraud at the Elf oil company in France during the 1990s, about the tax evasion of multinational businesses and about her work in Iceland.

Below is the transcript of the interview relating specifically to Iceland. The rest can be read on the NRC website, here.

“The handful of banks that led that island to its doom are all private enterprises. When they collapsed, at the end of 2008, they had ten times more money in their current accounts than the state. The government was left powerless. There are about 330,000 Icelanders and most of them had nothing to do with this. But now the banks’ deficits have become the state’s deficit, affecting everybody. This is theft of public money.”

How is the investigation coming along?

“I cannot say much. The investigation is in progress and might take a couple of years.”

The Icelandic president does not feel that Iceland should repay the Netherlands and the UK back the damages incurred by IceSave’s demise. What is your opinion of the Dutch and British insistence that they do?

“The Netherlands and the UK are being arrogant. They are asking for 2.7 and 1.3 billion euros respectively at 5.5 percent interest. But Iceland’s public debt amounts to 300 percent of GDP. They will never be able to pay back the whole amount.”

Still, Dutch money has vanished.

“Yes, but the Dutch need to understand that it is both unrealistic and unreasonable to demand everything be repaid with so much interest, and to make this a condition for Iceland’s entry into the EU. What IceSave did was wrong, but the Dutch and the British are also partly to blame. All business was conducted through IceSave’s branch offices. The Dutch and British financial regulators said: these branches are not covered by our jurisdiction because they are the Icelandic supervisor’s responsibility. But everybody knew there was no way a handful of people in Reykjavik would be able to supervise properly what was happening in Amsterdam and London. According to a European directive, EU countries should regulate multinationals from outside the EU operating on their territory just as strictly as home-grown enterprises.”

Meaning the Dutch supervisor was negligent?

“To a certain extent, yes. The Dutch were supposed to ensure that the regulators in Reykjavik were doing a proper job, which they weren’t. The Netherlands has tried to cover its tracks citing IceSave’s legal status. Scandalous, really.”

How will this all end?

“If you do not meet Iceland halfway, only fishermen will remain on the island and you still won’t have your money back. The brain drain has begun: 8,000 highly educated people have already left the island and more will follow. It is not in our interest to impoverish Iceland. It has natural resources we might need in the future and it has a strategic location. We should not bully them, but negotiate, in a more grown up and proper fashion than we are currently doing.“

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Support for Iceland rejecting the Icesave Bill from Lithuania and Latvia

Posted 09/01/2010 - 03:39 by glen07

2010-01-07 13

Lithuania follows Latvian lead by expressing support for Iceland

By Olafur Olafsson on Jan 8, 2010 in Iceland, MBL, Politics

Vygaudas UsackasLithuanian Minister for Foreign Affairs, Vygaudas Usackas, has followed his Latvian counterpart’s lead. Both have now spoken out and defended Iceland on its decision to have a referendum in regards to the Icelandic bank “Icesave” bankruptcy and its debts to Great Britain and the Netherlands.

The British and the Dutch governments have both reacted strongly to the President of Iceland’s decision to call for a referendum due to issues of compensation, and warned that this could have an impact on whether or not they will support Iceland’s ambitions to join the European Union (EU).

On Thursday, during a telephone discussion regarding this issue with the Icelandic Minister for Foreign Affairs, Ossur Skarphedinsson, Usasckas called “the threats of international isolation unacceptable by some politicians and commentators”.

“I have expressed the view that we understand the Icelandic president has the constitutional right,” said Usackas.

“In my opinion, currently appearing threats of international isolation for Iceland by some politicians and commentators are not acceptable,” added the Minister.

In Usackas’ opinion, the European Commission should get involved with the dispute over Iceland and the EUR 3.8 billion compensation pay out for Great Britain and the Netherlands.

“In my opinion, it is negotiable that the European Commission should get involved in this political dialogue and economic-financial dispute between the two EU countries and Iceland, especially bearing in mind that Iceland is a candidate country for the EU, which is just now waiting for an opinion to start negotiations with the EU, ” Usackas concluded.

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Looking at what fellow Scandanavian countries are going to do to support Iceland

Posted 09/01/2010 - 03:37 by glen07

2010-01-07 13

Joint Nordic statement on Iceland loans next week

By Alex on Jan 8, 2010 in Denmark, Finland, Iceland, MBL, Norway, Politics, Sweden

nordicDenmark, Finland, Norway and Sweden will release a joint statement next week about the future of their economic aid programmes with Iceland, following President Olafur Ragnar Grimsson’s decision to send the so-called Icesave Bill to a public vote.

Further Nordic loans to Iceland have never been dependent on a resolution of Iceland’s Icesave spat with the Netherlands and the UK on paper; but in reality, leaders in each country have said that they are.

Icelandic Finance Minister, Steingrimur J. Sigfusson has spoken to his counterparts from all four countries over the last two days, making personal trips to Oslo and Copenhagen as well as phone calls to Stockholm and Helsinki.

The Minister’s effort already appears to be bearing fruit, with Bloomberg reporting an emerging consensus that the Nordic countries will live up to their commitments amid growing confidence that Iceland will live up to its.

“Norway stands by its commitments to Iceland,” Norwegian Foreign Minister Jonas Gahr Store said in Oslo today. “It is Norway’s stance that the Nordic region should push for a continuation of the program within the International Monetary Fund.”

“What is essential is that Iceland’s government stands by its commitments, and we believe that they will,” he added. “Then we should make it clear to the other IMF partners that it would be extremely damaging for Iceland if we start to shake this foundation.”

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The need for a referendum and when to decide the fate of the Icesave bill

Posted 09/01/2010 - 03:35 by glen07

2010-01-07 13

Taken from Ice News, dated 8th January 2010

Government bill for a national referendum on Icesave legislation

By Olafur Olafsson on Jan 8, 2010 in Finance and Business, Iceland, Icelandic PM´s office, MBL, Politics

Iceland's coat of arms(Press release from Icelandic Prime Minister’s office)

The Icelandic Parliament, Althingi, convened today to debate a Government bill regarding the preparation for a national referendum on the so-called Icesave legislation. This comes in the wake of the President of Iceland´s decision on 5 January not to sign into law a bill which provides for a state guarantee of loan repayments to the British and Dutch governments. According to Article 26 of the Constitution, a national referendum must take place should the President not sign a bill into law.

Prime Minister Johanna Sigurdardottir emphasized to Parliament the importance of respecting the Constitution, adding that all political parties agree that national referendum should take place as soon as possible.

“The draft law is simple and without restrictions. I am confident that the majority of eligible voters will make up their minds and participate in the referendum. I have full trust in the Icelandic voters and know that they will make the right decision. The government will prepare a vote and inform voters carefully, and by that bring the Icesave issue to a close. This is necessary to continue the ongoing economic recovery in Iceland”, she stated during the parliamentary debate.

The draft law before Parliament states that a national referendum should take place no later than Saturday 6 March 2010. The government suggests that the vote should take place on 20 or 27 February, or 6 March, 2010.

Despite the President´s decision not to sign the bill it nevertheless enters into law and remains in force unless rejected in a national referendum.

The Icelandic Government has clearly stated its intention to honor its international obligations and remains fully committed to implementing the bilateral loan agreements with the UK and the Netherlands and thus the state guarantee provided for by the law. Iceland has been in close contact with the Governments of the UK and the Netherlands, other partner countries and the EU and the IMF, to inform counterparties about the latest developments and explain the process triggered by the decision announced by the President on Tuesday.

Reykjavik 8 January 20

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What the President of Iceland's veto to Icesave bill really means.

Posted 06/01/2010 - 12:11 by glen07

2010-01-05 13

Icesave: Misunderstanding in the foreign media

“Icelanders are not going to pay their debts generated at the time of the fall of the banks in 2008.” This is a common misunderstanding of the facts being played in the foreign media after the president of Iceland decided to send Icesave to a public vote.

News of the president’s ‘veto’ on the Icesave Bill travelled quickly over the globe, and it seems that many journalists are under the wrong impression that Iceland does not intend to pay the Icesave bill. Sky News was the first to come out with this misunderstanding that Icelanders did not want to pay the British and Dutch.

Beside Dutch and British media, German media have been quite active and there this misunderstanding lingers, as many German news channels continue to state that Icelanders have rejected paying back the Icesave debts. Among the strongest headlines seen in German news media was in the Financial Times Deutschland, where the headline stated that the President of Iceland has called new a crisis down upon Iceland.

The Guardian is closest to the Icelandic government’s stated truth, saying that an argument has been ignited between the President and the heads of the Icelandic Government. By his action the president had put Iceland in further uncertainty, but the Prime Minister has promised that the debt will still be paid.

Most media agreed that this action will have unforeseen long-term implications, both politically and economically.

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