http://www.washingtonpost.com/wp-dyn/content/article/2010/03/07/AR2010030701616.html
Icelanders reject full repayment to British, Dutch caught in bank collapse By Anthony Faiola Washington Post Foreign Service Monday, March 8, 2010; A07 LONDON -- Icelanders this weekend resoundingly rejected a plan to reimburse overseas depositors after the failure of an online Icelandic bank, a rare public referendum on the repayment of a foreign liability that could fuel further concerns over debt problems in Europe. A whopping 93 percent of Icelanders rebuffed a government push to reimburse Britain and the Netherlands $5.3 billion from the October 2008 collapse of an Icelandic Internet bank. The failure led Britain and the Netherlands, the two nations where the bank had foreign depositors, to step in and partially pay back billions of euros lost by their citizens, who were lured in by the bank's high interest rates. The vote on Saturday, with near-final results released Sunday, captured widespread rage in Iceland over years of banking-sector excess that resulted in a financial meltdown at the height of the global financial crisis. Voters reveled in a carnival atmosphere following the vote, shooting fireworks into the air and raising placards saying "Sorry Darling, No Deal" -- a reference to Britain's Alistair Darling, the finance minister. The vote was, analysts said, an extraordinary outlet for weary Icelanders to express their fury over bank bailouts. It was also a vote against government officials, analysts said, whom many Icelanders blame for allowing those years of excess to take place. A full repayment to foreign depositors would have amounted to more than $100 per person per month in Iceland for up to eight years. It would have come at a time when unemployment has shot up in Iceland due to a lingering and deep recession. The result of the vote underscored the risks of global online banking schemes and heightened concerns about some European nations' ability to repay foreign creditors at a time when Greece is in a roiling debt crisis that has raised borrowing rates for a host of European countries with shaky finances. Most analysts say the Icelandic government will still reach a settlement with London and The Hague. Officials in Reykjavik on Sunday said Iceland was making "progress" on a deal that would be less costly to the tiny island nation of 350,000. Britain and the Netherlands have already indicated that they are willing to accept worse terms than full and speedy repayment. Darling conceded on Sunday that it could now take "many, many years" before London would see any reimbursement. But he also seemed to strike a conciliatory note, saying both Britain and the Netherlands are willing to be flexible. "You couldn't just go to a small country like Iceland with a population the size of Wolverhampton and say, 'Look, repay all that money immediately,' " Darling told the BBC. "So we've tried to be reasonable. The fundamental point for us is that we get our money back -- but on the terms and conditions and so on, we're prepared to be flexible." On Sunday, the Icelandic government of Prime Minister Johanna Sigurdardottir sought to downplay the vote, which some critics have said could even jeopardize Iceland's bailout with the International Monetary Fund. A deal with the British and Dutch is also viewed as key to Iceland's fast entry into the European Union -- deemed vital to the nation's longer-term finances. Sigurdardottir insisted that despite the vote, the government would keep negotiating a settlement for the fallout of Landsbanki Bank, which operated in Britain and the Netherlands under the name Icesave. "This result is no surprise," Sigurdardottir told reporters in Reykjavik. "Now we need to get on with the task in front of us, namely to finish the negotiations with the Dutch and the British." -- Robert Naiman Policy Director Just Foreign Policy www.justforeignpolicy.org [email protected] _______________________________________________ pen-l mailing list [email protected] https://lists.csuchico.edu/mailman/listinfo/pen-l
