Thursday

29th Sep 2016

Iceland voters reject Icesave deal for a second time

  • Young people sitting next to a mural in the Icelandic capital (Photo: European Commission)

Iceland's bitter row with the Netherlands and the UK over the loss of billions of depositors' money in a collapsed online bank has reached a new stage after Icelandic voters on Saturday rejected for the second time a deal to resolve the issue.

Icelanders voted by 60 percent against a deal that reduced the interest rate demanded by the Hague and London from 5.5 percent down to 3.2 percent.

Dear EUobserver reader

Subscribe now for unrestricted access to EUobserver.

Sign up for 30 days' free trial, no obligation. Full subscription only 15 € / month or 150 € / year.

  1. Unlimited access on desktop and mobile
  2. All premium articles, analysis, commentary and investigations
  3. EUobserver archives

EUobserver is the only independent news media covering EU affairs in Brussels and all 28 member states.

♡ We value your support.

If you already have an account click here to login.

However, a majority of voters felt that even this was unfair, and have flatly refused to use any public cash to pay for the mistakes of the financial sector.

After the Icelandic Icesave internet bank collapsed in the wake of the global economic crisis in 2008, depositers in the UK and the Netherlands were compensated by their governments to the tune of €3.8 billion. The Hague and London then demanded Reykjavik pay them back.

The government had agreed to do so in an earlier deal, but the terms were considered onerous by a majority of the population. Under the terms of the original agreement, the loan would have been paid back over 15 years with high rates of interest. Estimates had suggested every household would have to contribute around €45,000.

The president of the country 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 that saw the earlier deal rejected by 91 percent of Icelanders.

President Olafur Ragnar Grimsson also refused to sign the second agreement, again triggering a referendum.

He hailed the outcome, saying: "The leaders of other states and international institutions will have to respect this expression of the national will."

But ministers from the Netherlands and Britain were in a less celebratory mood, saying they will conclude the dispute via the courts.

"The time for negotiations is over," said the Dutch finance minister, Jan Kees de Jager.

The UK's secretary to the treasury, Danny Alexander, told the BBC: "There is a legal process going on and we will carry on through these processes to try and make sure we do get back the money that the British government paid out in past years."

The European Free Trade Area Surveillance Authority, an organisation with a similar role to that of the European Commission, but for those EFTA countries in the European Economic Area, has already launched legal action against Reykjavik.

"I fear a court case very much," Icelandic Prime Minister Johanna Sigurdardottir said after the result became known.

However, the government, currently in the middle of an application to join the European Union, also reckons it can pay some 90 percent of the money owed from the sale of assets of Icesave's collapsed parent bank, Landsbanki.

New EU rules on financial products in limbo

A feud between MEPs and the EU commission is threatening to derail financial services regulation that would protect consumers from misleading investment products.

Stakeholders' Highlights

  1. Counter BalanceWhy the Investment Plan for Europe Does not Drive the Sustainable Energy Transition
  2. Nordic Council of MinistersThe Nordic Region Seeks to Make Its Voice Heard in the World
  3. Taipei EU OfficeCountries Voice Support for Taiwan's Participation in ICAO
  4. World VisionNew Tool Measuring Government Efforts to Protect Children Released
  5. GoogleDid You Know Europe's Largest Dinosaur Gallery Is in Brussels? Check It Out Now
  6. IPHRHuman Rights in Uzbekistan After Karimov - Joint Statement
  7. CISPECloud Infrastructure Providers Unveil Data Protection Code of Conduct
  8. EFAMessages of Hope From the Basque Country and Galicia
  9. Access NowDigital Rights Heroes and Villains. See Who Protects Your Rights, Who Wants to Take Them Away
  10. EJCAppalled by Recommendation to Remove Hamas From EU Terrorism Watch List
  11. GoogleBringing Education to Refugees in Lebanon With the Clooney Foundation for Justice
  12. Belgrade Security ForumCan Democracy Survive Global Disorder?