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Cóir Date: 15.03.2010 Last Saturday, Iceland held its first-ever referendum. To say it was a landslide is an understatement, as a whopping 94% of voters cast a ‘No’ vote against what many felt was an unfair agreement between their Government and those of Britain and The Netherlands. The agreement focused on the issue of the repayment of loans owed to the British and Dutch Governments by Icelandic bank, Landsbanki, in the wake of the collapse of its off-shore unit, Icesave, in 2008.
The referendum was triggered because the President of Iceland, Olafur Ragnar Grimsson, refused to sign the accord into law, even though the Icelandic Government had already agreed in principle to repay the loans and even though the Althingi (Iceland’s Parliament) had already debated the issue for more than eight months.
When Icesave collapsed in 2008, Iceland’s Investor Guarantee Fund was too small to cover the account-holders’ deposits. And since many of the account-holders were British and Dutch, their respective Governments stepped-in to rescue their savings. This situation left the Icelandic Government, then, responsible for the debt, which amounted to 3.9 billion Euro, roughly half of Iceland’s GDP. And, of course, there was the interest to be added on top of that figure – reported to be 5.5%, over fifteen years.
However, many ordinary Icelanders, including the President, felt, and still feel, that they were being punished for the mistakes made by bankers and politicians. And although the Icelandic Government are saying that the result of the referendum does not mean that Iceland is going to renege on its obligations, and although better conditions for Iceland are now being renegotiated by the three Governments, a recent poll shows that about 50% of Icelanders want a referendum on any Icesave agreement – and many might vote ‘No’ again.
On hearing of the massive rejection by the Icelanders, Richard Greene of Cóir said: “There are many parallels between the economic sagas of Iceland and Ireland, though, at least in this instance, the Icelandic people were given a chance to vote on their version of NAMA. They were given a chance to vote on their versions of the speculator-developer and the non-regulated bankers, and the people of Iceland said, ‘This is not our fault, so if we are going to pay back a debt that we did not ourselves incur – and saddle many future generations with this debt – we want a significantly better deal!’ And it appears that democracy is working in this case, and that they are, indeed, going to get a better deal.”
Mr Greene went on to say: “The way that the EU was seen to be using the IMF as their repo-men has also gone down very badly in Iceland. Actually, their Foreign Minister even said that the EU were ‘abusing the IMF to hand-collect debt’. Unfortunately, the EU does not deal in niceties when it comes to small states. However, as a member of the European Economic Area, Iceland still has access to the internal market of the EU, without having yet given up their sovereignty and their main source of income – their fisheries.”
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