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President calls for new referendum on repaying Icesave funds


Latest update : 2011-02-20

Iceland's president on Sunday called for a referendum on a new deal with Britain and the Netherlands to repay the 3.9 million euros the two nations paid their citizens to compensate for losses incurred in the 2008 collapse of the Icesave bank.

AFP - Iceland's president on Sunday called a referendum on a new deal reached with Britain and The Netherlands to repay money lost in the collapse of the Icesave bank.

"The citizens of Iceland will get to vote on these new Icesave contracts," President Olafur Grimsson told reporters in Reykjavik.

His announcement came after Iceland's parliament on Wednesday overwhelmingly voted in favour of the new Icesave deal and voted down by a slim majority the idea of putting the issue to a referendum.

Prime Minister Johanna Sigurdardottir, who before the parliamentary vote last week insisted "it's long overdue to take care of Icesave," said she was disappointed by the president's decision.

"This is disappointing. We had anticipated that the president would sign the Icesave bill," she told reporters shortly after Grimsson's announcement.

"This bill got a majority in parliament and it is not common that the president rejects a bill with such a majority," she said, adding: "I don't think there is a big chance that Britain and The Netherlands would be willing to sit down and negotiate again."

Niels Redeker, a spokesman for the Dutch finance ministry, said after Grimsson's announcement that the Netherlands had "taken note of the decision," but stressed "negotiations are over. An agreement is on the table."

"The manner in which Iceland is going to take its decision is an Icelandic matter," he told AFP.

The deal now headed to a referendum calls for the small Nordic country to repay in full the 3.9 billion euros ($5.3 billion) which Britain and the Netherlands spent compensating around 340,000 of their citizens hit by online bank Icesave's collapse in October 2008, at the height of the financial crisis.

This is the second time in just over a year that Grimsson vetoes a repayment deal on Icesave and calls a national vote.

In a March 2010 referendum, 93.2 percent of Icelandic voters rejected the previous deal, although the new deal is considered far more advantageous than the last one.

Nonetheless, a petition circling for a week calling for the bill to be thrown out or put to a national vote had by the time it was handed to Grimsson on Friday gathered 37,500 signatures, representing more than 10 percent of the country's population.

Under the new deal, Iceland would be able to repay the nearly four billion euros very gradually until 2046 at a 3.0 percent interest rate for the 1.3 billion euros it owes The Netherlands and at a 3.3-percent rate for the rest it owes Britain.

Even without counting interest, the repayment deal amounts to about 12,200 euros for each of Iceland's nearly 320,000 inhabitants, but Reykjavik is hoping to cover much of the repayment with assets in Icesave's failed parent company, Landsbanki.

In the previous deal rejected at the referendum, Iceland had to repay The Netherlands and Britain by 2024 at a 5.5 percent interest rate.

"These (Icesave) contracts are different from the last ones that were put to the nation," Grimsson acknowledged Sunday.

Nonetheless, he insisted "it is important that the nation again will get its say," pointing out that "nearly half of parliament wanted... the Icesave bill to go to a national vote."

"The nation had final say on the last Icesave contracts, and the new contracts will go the same way," Grimsson said.

Last time, it took about two months from the time Grimsson called for a referendum until it was held, but it remained unclear how long it would take this time around.

If there had to be a new popular vote, "I want the referendum to be held as soon as possible. Maybe in a month," Sigurdardottir said Sunday.


Date created : 2011-02-20


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