Saturday

7th Dec 2019

Opinion

Iceland is fully committed to honouring its obligations

The Government of Iceland remains fully committed to honouring Iceland's obligations in the Icesave dispute with Britain and the Netherlands under international commitments regarding the collapsed Icelandic bank Landsbanki hf.

My government has pledged this; the Icelandic Althingi (Parliament) has agreed, and the country's major political parties are also in agreement on this basic tenet.

Read and decide

Join EUobserver today

Support quality EU news

Get instant access to all articles — and 20 years of archives. 30-day free trial.

... or join as a group

The President of Iceland, Mr. Olafur Ragnar Grimsson, decided to invoke the right, accorded to him by the Constitution, to refer Althingi's decision and the underlying agreement between the government and the governments of Britain and the Netherlands to the nation in a referendum.

The referendum will be held in late February or early March. In my conversations with the Prime Ministers of the UK, the Netherlands, Norway, Sweden, Finland and Denmark, all of them expressed full understanding of the situation.

Opinion surveys in Iceland, following the President's decision, indicate that there is strong and widespread internal dissatisfaction concerning the agreements reached with the UK and the Netherlands, which call for Icelandic taxpayers to pay minimum deposit guarantees to the British and Dutch authorities.

A large majority would have preferred more reasonable terms of payment. There are numerous reasons for the public resentment.

The international banking operations of Icelandic banks, was completely disproportionate to the 300,000 inhabitants, when it collapsed almost overnight in October 2008, resulting in losses equivalent to seven times the nation's GDP.

While the creditors of the banks lost the largest sums, the financial losses suffered by the nation amounted to twice the amount of Iceland's GDP.

In Iceland, as in most countries, the financial recession has placed additional pressures on public finances, resulting in substantially higher taxes and costs for services even without the added costs of the failed banks.

The public is understandably upset that privatised banks were allowed to carry out international, high-risk financial operations without regulators in Iceland, the UK and the Netherlands protecting the public against such serious risks.

European legislation on deposit guarantees, as has been pointed out, is flawed in not envisaging the possibility of a systemic banking collapse. Finally, the nation is dissatisfied with the draconian measures implemented by the British government, which exacerbated a distressed situation.

Despite all of these legitimate concerns, Icelanders realise the importance of fulfilling the state's international commitments. My government is determined to continue its economic reconstruction, as laid out in its' economic programme with the International Monetary Fund (IMF) and friendly European nations.

Substantial progress has been made in the past months, including the re-establishment of the Icelandic commercial banks in co-operation with creditors. The banks are now fully financed in order to serve the needs of the domestic market.

Preparations continue for Iceland's EU accession negotiations, which we hope will commence later this year. The Icesave dispute should not jeopardise our long-term co-operation with the IMF or the EU accession process.

Positive international co-operation is crucial for a small island nation in the North Atlantic. Free trade and openness to its neighbours have always proved to be to Iceland's best advantage. Fortunately Icelandic politicians are in close contact with political leaders and other decision makers in numerous European countries.

My government has been made aware of the widespread understanding of our situation. Hopefully this will contribute to the favourable resolution of the Icesave dispute, while serving as an instructive reminder to all of us of the necessity of ensuring the health and solidity of the international financial system in the years ahead.

Jóhanna Sigurdardóttir is Prime Minister of Iceland

Disclaimer

The views expressed in this opinion piece are the author's, not those of EUobserver.

Does EU have role in stopping backsliding in Georgia?

The EU's eastern neighbourhood is in flux. The collapse of the pro-reform government in Moldova and the stagnation of anti-corruption reforms in Ukraine was recently followed yet by another political crisis in Georgia.

Column

Keep an eye on the Swiss!

So many things are happening in Europe that many of us will have missed the small political earthquake that took place in Switzerland recently.

Nato at 70: not 'brain dead', but needs shot in arm

There is a significant risk that Nato will be weaker and more divided after the London meeting than it was before. What was supposed to be a low-key celebration of the 70th anniversary takes place against multiple crises.

Nato and EU: cooperate, not compete, on space security

Ahead of its summit in London this week, Nato foreign ministers confirmed the intention to make space an "operational domain" – alongside air, land, sea, and cyber. The move will bring space within the scope of the alliance's collective-defence commitment.

News in Brief

  1. Greece denies access to fair asylum process, report says
  2. Report: Self-regulation of social media 'not working'
  3. Turkey: Greek expulsion of Libyan envoy 'outrageous'
  4. Merkel coalition may survive, says new SPD co-leader
  5. Von der Leyen Ethiopia visit a 'political statement'
  6. Over 5,500 scientists ask EU to protect freshwater life
  7. Iran defies EU and UN on ballistic missiles
  8. Committee of the Regions: bigger budget for Green Deal

EU investment bank 'wide open to abuse by fraudsters'

Fundamental reforms are needed if the EIB is to become more accountable, democratic and transparent. Establishing a firm grasp on corruption to ensure that public money no longer feeds corrupt systems is a vital first step.

European beekeeping in crisis

Europe's bee population is dying. The number of pollinator species threatened by extinction is increasing each year, and human activity is the main cause.

Stakeholders' Highlights

  1. Nordic Council of Ministers40 years of experience have proven its point: Sustainable financing actually works
  2. Nordic Council of MinistersNordic and Baltic ministers paving the way for 5G in the region
  3. Nordic Council of MinistersEarmarked paternity leave – an effective way to change norms
  4. Nordic Council of MinistersNordic Climate Action Weeks in December
  5. UNESDAUNESDA welcomes Nicholas Hodac as new Director General
  6. Nordic Council of MinistersBrussels welcomes Nordic culture

Latest News

  1. Russia makes big promises to Arctic peoples on expansion
  2. UK election plus EU summit in focus This WEEK
  3. Migrants paying to get detained in Libyan centres
  4. Searching for solidarity in EU asylum policy
  5. Will Michel lead on lobbying transparency at Council?
  6. Blood from stone: What did British PR firm do for Malta?
  7. EU Commission defends Eurobarometer methodology
  8. Timmermans warns on cost of inaction on climate

Stakeholders' Highlights

  1. UNESDAUNESDA appoints Nicholas Hodac as Director General
  2. UNESDASoft drinks industry co-signs Circular Plastics Alliance Declaration
  3. FEANIEngineers Europe Advisory Group: Building the engineers of the future
  4. Nordic Council of MinistersNew programme studies infectious diseases and antibiotic resistance
  5. UNESDAUNESDA reduces added sugars 11.9% between 2015-2017
  6. International Partnership for Human RightsEU-Uzbekistan Human Rights Dialogue: EU to raise key fundamental rights issues

Join EUobserver

Support quality EU news

Join us