24th Jan 2021

Iceland debt talks collapse

  • Reykjavik street: The Icelandic people are up in arms about the Icesave deal (Photo: European Commission)

Talks between Iceland and the UK and the Netherlands over the Icesave banking dispute collapsed late on Thursday, making a referendum on a previously agreed deal more likely, a vote the government in Reykjavik is almost certain to lose.

The Icelandic finance ministry announced on Thursday evening that the latest round of talks between the parties had "adjourned without a final resolution."

Read and decide

Join EUobserver today

Become an expert on Europe

Get instant access to all articles — and 20 years of archives. 14-day free trial.

... or subscribe as a group

Representatives of the three parties had been meeting in London for the last two weeks.

"We had hoped to be able to reach a consensual resolution of this issue on improved terms", said Icelandic finance minister Steingrímur Sigfússon, "but this has not as yet been possible."

"Constructive proposals were made by both sides during these talks, but significant differences remain," he added.

Icelandic negotiators are to return to Reykavik to discuss what is to be the government's next move.

After the Icelandic Icesave internet bank collapsed 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 now are demanding Reykjavik pay them back.

The government has agreed to do so, but the terms are considered onerous by a majority of the population. Under the terms of the agreement the loan will be paid back over 15 years with interest, with estimates suggesting every household will have to contribute around €45,000.

The UK-Dutch side had reportedly offered reduced interest rates and a suspension of interest for two years, an position described by the Dutch as their "best offer".

The Icelandic side felt that the interest applied would still be too high to be palatable domestically.

The Icelandic president had refused to sign the government bill that approved a schedule of payments to the two governments, provoking a referendum on the matter due on 6 March, which analysts and pollsters expect the government to lose.

In trying to negotiate better terms for payback of the debt, the government had hoped to avoid the vote, as it is certain to threaten the supply of international financial aid.

The referendum is now likely to proceed and a No vote all but assured.

The development further threatens the likelihood of Iceland acceding to the European Union, as the UK and the Netherlands have hinted that they will block accession talks with the north Atlantic nation if the Icesave issue is not resolved.


Does North Macedonia really exist?

Its language and history give North Macedonia its identity for president Stevo Pendarovski, but, for Bulgaria, neither of them are real, in a dispute holding up EU enlargement.

Spain to recognise Kosovo if it gets Serbia deal

Spain would be prepared to recognise Kosovo if it clinched a deal with Serbia, Madrid has said, in the first positive signal of its kind since EU-brokered talks resumed.

Kosovo to restart EU/US-led Serbia talks

Restarting talks on Serbia relations will be the new Kosovo prime minister's top priority, he said, but will the EU or the US lead the process?

News in Brief

  1. Hungary buys Russia's Sputnik V vaccine
  2. Netherlands imposes curfew to halt new corona variant
  3. Green NGO fails to stop Europe's biggest gas burner
  4. Swedish minister reminds Europe of Russia's war
  5. Spain: Jesuit order apologises for decades of sexual abuse
  6. NGOs urge Borrell to address Egypt rights 'crisis'
  7. EU conflict-area education aid favours boys
  8. EU told to avoid hydrogen in building renovations


How enlargement is running out of steam

While the EU's enlargement progress reports have moved closer to capturing the problems of the region, they are still lagging behind in capturing the decline of democracy and rule of law in most of the region.

Stakeholders' Highlights

  1. UNESDAEU Code of Conduct can showcase PPPs delivering healthier more sustainable society
  2. CESIKlaus Heeger and Romain Wolff re-elected Secretary General and President of independent trade unions in Europe (CESI)
  3. Nordic Council of MinistersWomen benefit in the digitalised labour market
  4. Nordic Council of MinistersReport: The prevalence of men who use internet forums characterised by misogyny
  5. Nordic Council of MinistersJoin the Nordic climate debate on 17 November!
  6. UNESDAMaking healthier diets the easy choice

Latest News

  1. EU leaders keep open borders, despite new corona variant risk
  2. EU and Cuba appeal for Biden to open up
  3. Portugal's EU presidency marks return of corporate sponsors
  4. MEPs chide Portugal and Council in EU prosecutor dispute
  5. EU warns UK to be 'very careful' in diplomatic status row
  6. A digital euro - could it happen?
  7. US returns to climate deal and WHO, as EU 'rejoices'
  8. Big tech: From Trump's best friend to censorship machine?

Join EUobserver

Support quality EU news

Join us