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19th Aug 2022

Icelandic PM warns EU over Icesave

  • Reykjavik: Citizens are strongly opposed to the Icesave deal (Photo: Johannes Jansson/norden.org)

The prime minister of Iceland, Johanna Sigurdardottir, has warned the European Commission of the "damage" that could be caused by making links between the ongoing Icesave banking dispute and the economic support being delivered by the International Monetary Fund (IMF).

Meeting with the commission president, Jose Manuel Barroso, and enlargement commissioner Ollie Rehn, in Brussels on Thursday (4 February) she "underlined potential unfortunate and damaging effects of any link made by member states between the Icesave issue and the second review of Iceland's economic programme with the IMF," according to a statement from her office, referring to the row between between the north Atlantic nation and the Netherlands and the UK.

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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 president of the country 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.

"Many Icelanders believed that they were the victims of imperfect EU legislation and that many believed the burden to be unfairly distributed between the three countries involved," Ms Sigurðardóttir told the EU leaders.

The prime minister also noted how important the IMF loans and related loans from the Nordic countries and others are for the rebuilding of Iceland's economy.

"We discussed frankly the Icesave issue and the situation in Iceland," she said. "It is extremely important to explain to key players in the EU the situation in which Icelanders find themselves and to explore all possible avenues for solutions and of course everything was on the table."

Ms Sigurdardottir also underlined that EU accession procedures should not be held up by the current dispute during a discussion with the two commissioners over the state of play with the country's membership application.

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