Icelanders resoundingly reject Icesave bill - La Treizième Étoile: A blog on EU politics
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Icelanders resoundingly reject Icesave bill

Sunday, 7 March 2010
Voters in Iceland have resoundingly rejected a law to compensate the United Kingdom and the Netherlands for savings lost in the collapse of the country’s largest bank, Landsbanki, in the midst of the financial crisis in 2008.

An Icelander reads a referendum pamphlet in Reykjavik (Source: AP)Although only provisional results, 93% who voted in the referendum, the first held since 1944 when Iceland voted for its independence from Denmark, rejected the deal whereas less than 2% supported it.

When the bank collapsed, the British and Dutch paid out some £3.4 billion in compensation to those 400,000 savers who had lost money in the events, but they now want it back.

A referendum was called when Icelandic President Ólafur Ragnar Grímsson refused to sign the deal into law and yet while polls consistently showed that Icelandic people believed the debts should be repaid, they bitterly resented being stuck with a bill for the mistakes of a handful of bankers under the watch of foreign governments.

One voter explained to journalists why he voted no as a means to express his opinion that his neighbours should not cover the debts. “I feel that citizens should not pay for the financial mistakes of companies,” he said. Another described the result as a “token of the people's unhappiness with a flawed system.

With a timid population of only 320,000 people on the island, each household has become effectively liable to pay Britain and the Netherlands something in the region of £8,500

Speaking to the BBC this morning Chancellor Alistair Darling told the Politics Show that the UK would get its money back, but not for many years.

"It's not a matter of whether the sum should be paid. There is no question we will get the money back but what I am prepared to do is to talk to Iceland about the terms and conditions of the repayment," he said.

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.’

Icelandic Foreign Minister Össur Skarphéðinsson said talks with the UK and the Netherlands would continue after the referendum, adding that the result was good for his government's position.

"It certainly doesn't weaken our hand," he said. Although with EU candidacy in the pipeline, finding a quick solution would prevent two of its members throwing a few less spanners in the accession process…

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