1st Apr 2023

Iceland turns to Russia to avoid bankruptcy

  • Iceland's traditional "friends" decided not to help (Photo: Johannes Jansson/

The Icelandic government, fighting hard to prevent a collapse of its financial system, took control of the country's second biggest bank, Landsbanki, on Tuesday (7 October) and has had to run to Russia for cash to support its currency.

The country's central bank has also pegged the krona to the euro.

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

Reykvjavik said it had had no choice but to turn to Russia to secure a €4 billion loan lasting for up to four years - something necessary to strengthen its foreign exchange reserves and support the krona.

"We have not received the kind of support that we were requesting from our friends. So in a situation like that one has to look for new friends," Prime Minister Geir Haarde was cited as saying by the Financial Times on Tuesday.

"In a situation like this, it's turning out that it's every man for himself, every country for itself, everybody's taking care of their best interest and that's what we are doing," he added, stopping short of revealing which countries refused to assist in the rescue operation.

Moscow has confirmed it is assessing Iceland's application and views the request "positively."

"Iceland is well known as a country with tough budgetary discipline and a high rating of reliability," Russian finance minister Alexei Kudrin said, the Financial Times reports.

The volatility of the country's currency, the krona, was so extreme that Iceland's central bank had to peg the currency to the euro at a rate of 131 krona per euro.

A spokesperson for the International Monetary Fund said that a staff team from the IMF was in Reykjavik.

Iceland has been pummelled by the ongoing financial crisis, with the prime minister earlier saying his country risks facing "national bankruptcy".

"What we are doing here is saving the domestic banking system and making sure that it can function properly," he was cited as saying by the BBC, referring to the rescue plan of Landsbanki.

The institution owns British internet bank Icesave, home to some 350,000 savers in the UK and Netherlands. Its UK operation announced yesterday it had stopped customers from withdrawing or depositing money.

In separate moves, the country's central bank injected a loan of €500 million to the largest bank Kaupthing "to facilitate operations." The government has also stepped in to nationalise the third-largest bank, Glitnir, to avert its bankruptcy.

Police violence in rural French water demos sparks protests

Protests are planned in 90 villages across France on Thursday to protest against escalating police violence that have left 200 people injured, including two people who are still in a coma, after a violent clash in Sainte-Soline over 'water privatisation'.

EU approves 2035 phaseout of polluting cars and vans

The agreement will ban the sale of carbon-emitting cars after 2035. The EU Commission will present a proposal for e-fuels after pressure from German negotiators via a delegated act, which can still be rejected by the EU Parliament.

'Final warning' to act on climate change, warns IPCC

The United Nations's report — synthesising years of climate, biodiversity, and nature research — paints a picture of the effects of global warming on the natural world, concluding there is "no time for inaction and delays."

EU launches critical raw materials act

The EU presented its strategy to ensure access to critical raw materials needed for clean technologies. No country should supply more than 65 percent of any key material. Currently, China dominates almost all rare earth metal markets.


Dear EU, the science is clear: burning wood for energy is bad

The EU and the bioenergy industry claim trees cut for energy will regrow, eventually removing extra CO2 from the atmosphere. But regrowth is not certain, and takes time, decades or longer. In the meantime, burning wood makes climate change worse.


EU's new critical raw materials act could be a recipe for conflict

Solar panels, wind-turbines, electric vehicle batteries and other green technologies require minerals including aluminium, cobalt and lithium — which are mined in some of the most conflict-riven nations on earth, such as the Democratic Republic of Congo, Guinea, and Kazakhstan.

Latest News

  1. EU to press South Korea on arming Ukraine
  2. Aid agencies clam up in Congo sex-for-work scandal
  3. Ukraine — what's been destroyed so far, and who pays?
  4. EU sending anti-coup mission to Moldova in May
  5. Firms will have to reveal and close gender pay-gap
  6. Why do 83% of Albanians want to leave Albania?
  7. Police violence in rural French water demos sparks protests
  8. Work insecurity: the high cost of ultra-fast grocery deliveries

Stakeholders' Highlights

  1. EFBWWEFBWW calls for the EC to stop exploitation in subcontracting chains
  2. InformaConnecting Expert Industry-Leaders, Top Suppliers, and Inquiring Buyers all in one space - visit Battery Show Europe.
  3. EFBWWEFBWW and FIEC do not agree to any exemptions to mandatory prior notifications in construction
  4. Nordic Council of MinistersNordic and Baltic ways to prevent gender-based violence
  5. Nordic Council of MinistersCSW67: Economic gender equality now! Nordic ways to close the pension gap
  6. Nordic Council of MinistersCSW67: Pushing back the push-back - Nordic solutions to online gender-based violence

Join EUobserver

Support quality EU news

Join us