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Latest update: 10/04/2011
- financial crisis - Iceland - Netherlands - UK
Iceland voters reject plan to repay bank debt
Voters in Iceland issued a resounding “no” in a referendum on whether to approve a renegotiated deal to compensate Britain and the Netherlands over the 2008 collapse of Icesave Bank, leaving the issue to be settled in court.
By News Wires (text)
REUTERS - Iceland faces more economic uncertainty and a drawn-out European court case after its voters rejected for a second time a plan to repay $5 billion to Britain and the Netherlands from a bank crash.
The British and Dutch governments voiced disappointment with the result of Saturday's referendum, in which almost 60 percent of voters opposed the repayment deal.
"We must do all we can to prevent political and economic chaos as a result of this outcome," Prime Minister Johanna Sigurdardottir told state television.
The issue will now be settled by the court of the EFTA Surveillance Authority (ESA), the European trade body overseeing Iceland's cooperation with the European Union.
"My estimate is that the process will take a year, a year and a half at least, Finance Minister Steingrimur Sigfusson told a news conference.
The debt was incurred when Britain and the Netherlands compensated their nationals who lost savings in online "Icesave" accounts owned by Landsbanki, one of three overextended Icelandic banks that collapsed in late 2008, triggering an economic meltdown in the country of 320,000 people.
Economists have said failure to resolve the issue means Iceland faces delays ending currency controls, boosting investment and returning to financial markets for funding.
But the centre-left coalition government said it would not resign despite the defeat.
"The government will emphasize maintaining economic and financial stability in Iceland and continuing along the path of reconstruction which it began following the economic collapse of 2008," it said in a statement.
It said a fresh round of talks on further funding from the International Monetary Fund, which led a bailout for the island, would be delayed several weeks, but that it had enough foreign exchange reserves to cover debts maturing this year and next.
Court case ahead
The proposed deal at issue in Saturday's vote set a clear timetable for repaying the Dutch and the British, including interest. But voters rejected the idea that taxpayers should foot the bill for what they see as bankers' irresponsibility.
"I know this will probably hurt us internationally, but it is worth taking a stance," Thorgerdun Asgeirsdottir, a 28-year-old barista, said after casting a "no" vote.
Dutch Finance Minister Jan Kees de Jager said: "This is not good for Iceland, nor for the Netherlands. The time for negotiations is over. Iceland remains obliged to repay. The issue is now for the courts to decide."
Economists have said the court route could be much costlier.
The government still hopes most of the debt will eventually be paid back from the estate of the bankrupt Landsbanki. Ratings agencies were following the vote closely. Moody's had said it might lower Iceland's rating in case of a 'no'.
Standard & Poor's analyst Eileen Zhang said a 'no' vote "might possibly result in a lengthy legal process and further uncertainties regarding the ultimate fiscal cost".
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(99) Reactions
iceland
its scarry having people vote that dont understand a dam thing especially a barista(coffee server)come on now interview from the bottom of the barrel, most of these people from their 20's to 30;s live mostly off the system even if they work low level jobs...
Repay Debt
Just vote to get outta the EU and save your country!
It is interesting that the
It is interesting that the vote against paying the bank debt was only 59%/41%. The original vote against, if I remember correctly, was 90%/10%. I agree that in all likelihood, as things stand at the moment, the "international community", i.e. the corporatist-banker criminal oligarchy, will compel some salutary punishment of the Icelandic people, perhaps even a "no-fly" zone (just joking).
Personally I applaud the stand the people of Iceland are taking and agree entirely with their reasoning. I hope that they NEVER give in to these demands. The UK and Netherlands governments approved the licensing of these banks within their jurisdictions and should seek compensation from those involved in that decision, including the governors of THEIR central banks.
I also believe that ALL of the assets of ALL the executives and directors of the entire banking community in Iceland, all those who benefited from the banking bubble, should be forfeited to the state. Indeed any and all individuals connected with the decisions made that gave rise to the promiscuous lending, including central bank governors, should be stripped of everything they own and their entire estates liquidated to compensate the people of Iceland for their losses which I believe have been onerous, especially in residential properties.
icelanders do not want to repay drbt.
that is sad, and wrong for the icelanders vote not to repay their debts, i hope as an american we dont loan these people money,if they go to the chinese and not pay their loan back china wouls just invade them probally...
Iceland is the only nation
Iceland is the only nation will the guts! The people didn't incur the debts and aren't responsible for reckless gambling schemes. Hey America, neither are we!
Iceland
It's all just wealth redistribution. Why should Icelanders have to pay back their debts? In a Utopian world everything is free. As for the Icelanders who voted NOT to pay back their debt, it's all about their socialist upbringing. They're entitled to the money from Britain and the Netherlands because it's, it's, it's, it's just because it's theirs now.
Vive le Iceland
I wish they would have had the same kind of referendum here in the U.S. on the bank bail out. It would have been a NO as well. Good for you citizens of Iceland!
Why?
Why did Britain and the Netherlands compensate their nationals who lost money in the first place? If you're going to "chase yields" and put your money at risk you need to be willing to bear the consequences.
Hurray for the people! Stay
Hurray for the people!
Stay free Iceland!
Never pay a penny you didn't owe!
Iceland
Enough! Enough the the anti-semitism! It is disgusting to read such ignorance and hate!