Monday

16th May 2022

Bank reparations linked to Iceland's EU membership bid

The Netherlands is stepping up pressure on Iceland to hammer out a draft deal on compensation to Dutch savers for money lost in Icelandic banks, linking the agreement to the island's EU membership bid.

"It is absolutely necessary that the agreement is approved," Dutch foreign minister Maxime Verhagen stated on Tuesday (21 July) after a meeting with his Iceland's counterpart Ossur Skarphedinsson, AFP reported.

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

"A solution to the problem of Icesave would encourage rapid consideration of Iceland's bid to join the EU," said Mr Verhagen, adding "It would show that Iceland takes European directives seriously."

More than 120,000 Dutch clients and 200,000 British clients had their Icesave accounts frozen during the nationalisation of Landsbanki, the parent group of the online banking unit, one of the three key Icelandic banks that went bust due to the global credit crunch and almost brought the country's financial system to a complete collapse in October.

The Social-Democratic government of Johanna Sigurdardottir in June agreed to pay back €1.3 billion to the Netherlands and €2.6 billion to the UK after both countries compensated their nationals.

But the draft deal still needs to be adopted by the Icelandic parliament, in a vote expected in the coming weeks, with several deputies in the 63-member Althingi privately suggesting that they are against the terms under which Reykjavik should pay back the money.

"To this day, I have not been shown any information confirming that Iceland is legally responsible for these debts," Ogmundur Jonasson, a member of the Left Greens told Bloomberg in late June. "The depositors are entitled to all the assets of the failed banks, but they are not entitled to the assets of private citizens in Iceland," he added.

Under the scenario approved by Ms Sigurdardottir's cabinet, the island in the North Atlantic with population of 320,000 would pay back the agreed sum between 2016 and 2024, in exchange for €3.8 billion in loans from the Netherlands and Britain, with a 5.5 percent interest rate.

But the parliamentary vote on the conditions under which Reykjavik will honour its obligations to the foreign savers comes after the green light was granted last week by Icelandic lawmakers to kick start of the country's EU entry procedure.

And although both Sweden as the current EU presidency and the European Commission, the 27-strong bloc's executive, were quick to praise the decision, Iceland will have to overcome all necessary hurdles to become a member.

"Iceland's membership application would be treated like any other, even though its transposition of the acquis communautaire is very advanced," Swedish foreign minister Carl Bildt told the European Parliament's foreign affairs committee on Tuesday (21 July).

Mr Bildt was referring to the EU's book of key legislation that needs to be adopted before accession countries can join the club. However, the bloc's rules on fisheries could prove controversial for the island, as the sector accounts for almost 40 percent of its exports.

Sovereignty over sensitive issues of national interest has also been one of the main arguments of opponents to EU membership that had dominated the debate in Iceland before the financial crisis broke out last autumn.

And the Icelandic public remains evenly divided: a Gallup poll in May showed that 39 percent of Icelanders favour joining the EU while 38.6 percent were against, according to Bloomberg.

It is expected that Reykjavik will formally submit its EU membership application to a foreign ministers' meeting in Brussels on 27 July. Under an unofficial plan, Iceland could start membership negotiations next February and hold a public referendum in late 2011 or early 2012.

Revealed: Big Oil shaped EU's gas-cutting strategy

Internal documents found EU Commission president Ursula von der Leyen and energy commissioner Kadri Simson coordinated their Russian gas cutting strategy with oil CEOs to determine which measures were "feasible".

Lagarde signals summer interest rate hike

European Central Bank president Christine Lagarde signalled an interest rate increase possibly as early as July, but some experts warn for a repeat of the 2011-2012 debt crisis.

Lagarde signals summer interest rate hike

European Central Bank president Christine Lagarde signalled an interest rate increase possibly as early as July, but some experts warn for a repeat of the 2011-2012 debt crisis.

News in Brief

  1. German ruling party in regional election blow
  2. EU expanding arms-for-Ukraine programme
  3. Reports: EU drafts plans for Russia energy payments
  4. Pro-Russian hackers targeted Eurovision
  5. EU to donate extra €400m for Africa vaccines rollout
  6. Spain plans five-days 'menstrual leave' and to ease abortion rules
  7. MEPs reject proposal for stricter 2030 target on cars and vans
  8. Study: EU spent €341m on AI border technology

Stakeholders' Highlights

  1. Nordic Council of MinistersClear to proceed - green shipping corridors in the Nordic Region
  2. Nordic Council of MinistersNordic ministers agree on international climate commitments
  3. UNESDA - SOFT DRINKS EUROPEEfficient waste collection schemes, closed-loop recycling and access to recycled content are crucial to transition to a circular economy in Europe
  4. UiPathNo digital future for the EU without Intelligent Automation? Online briefing Link
  5. Nordic Council of MinistersHuge support for Ukraine
  6. EFBWW – EFBH – FETBBWorkers want EC to limit subcontracting chains in construction

Latest News

  1. Sweden to join Finland in applying for Nato
  2. Russia sanctions and energy dominate Next WEEK
  3. Will 'Putin's Nato' follow Warsaw Pact into obscurity?
  4. EU reaches deal on flagship cybersecurity law
  5. EU to help Ukraine export grain — amid food shortages fears
  6. Revealed: Big Oil shaped EU's gas-cutting strategy
  7. EU: Ukrainians hesitating to register for protection
  8. UK says 'no choice but to act' over post-Brexit trade rules

Join EUobserver

Support quality EU news

Join us