Guest Post: Iceland shows its mettle – People before banks!

You probably remember 2008, when the running joke was

Question: What’s the difference between Ireland and Iceland?

Answer: An ‘r’ and three months.

Iceland now is in full recovery, while Ireland’s crisis lingers on.

Last week the people of Iceland, for a second time, refused by means of referendum to pay for the debts of the failed private bank Landsbanki Íslands and its on-line branch, Icesave, which operated in Britain and the Netherlands. Almost 60 per cent voted No to an agreement that reduced the interest rate demanded from 5.5 per cent to 3.2 per cent.

But the deal would have seen Icelandic taxpayers shouldering responsibility for the debt, estimated at €11,875 for each of Iceland’s 320,000 inhabitants.

The result of the referendum was decisive, with a turn-out of 75 percent. After the Icesave internet bank collapsed in the wake of the global economic crisis in 2008, depositors in Britain and the Netherlands were compensated by their governments, to the tune of €3.8 billion. These governments then demanded that Iceland pay them back.

The president of the country, Ólafur Ragnar Grímsson, had refused to sign the government bill that approved a schedule of payments to the two governments, provoking a referendum on the matter in March 2010, which resulted in the earlier agreement being rejected by 91 per cent of Icelanders. The president also refused to sign the second agreement, again triggering a referendum.

By contrast, Enda Kenny arrogantly said that we had our referendum on the bail-out through the general election.

The Icelandic people have always wanted the Icesave dispute to be dealt with in the courts; and now, after two unsuccessful attempts to find a fair solution through political negotiations, it will probably end up in court.

Many legal experts have claimed that Iceland would win using the legal route, which is probably one of the reasons why the British and Dutch governments have repeatedly dismissed the idea of taking the matter to the courts. But no matter how such court cases should go, it is highly doubtful that the result would serve their interests, or that of the EU.

If Iceland wins, the two governments would not win a penny from Icelandic taxpayers. They would, however, still be paid from the foreign assets of the failed Landsbanki when they are sold in the coming years.

On the other hand, in the unlikely event of an Icelandic legal defeat, it would mean that not only Iceland but every country in the European Economic Area, which includes all the EU member-states, would be responsible for all deposits in their private banks, both domestically and in foreign branches within the EEA, and would have a clear obligation to step in with their taxpayers’ money if necessary.

That’s just another right mess the EU could get us into!

People’s Movement · 25 Shanowen Crescent · Dublin 9 ·
087 2308330 ·  post  @ people . ie

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