In These New Times

A new paradigm for a post-imperial world

Sinister revelations concerning the Icesave agreement

Posted by seumasach on July 24, 2009

Alda

Iceland Weather Report

22nd July, 2009

Pretty significant piece of news today: a Memorandum of Understanding was made public which reveals that British, Dutch and Icelandic authorities met in 2006 to discuss what would happen if Landsbanki went into default and could not cover the deposits of British and Dutch savers in the Icesave accounts.

The MoU makes clear that the rights and obligations of the Icelandic state were discussed at the time and a stipulation made that the Icelandic deposit insurance fund should cover the rights of Icelandic citizens if push came to shove with regards to Landsbanki. However, no mention was made of a state guarantee in this context.

Those of you who have been following this sorry tale will know that there is currently massive dissent in Icelandic society and in our parliament over arecent agreement between Icelandic, Dutch and British authorities for repayment of those deposits. The deal is that the assets of Landsbanki should go towards paying the Icesave debt, and the Icelandic state should be liable for the rest. These are colossal sums that will place an extraordinarily heavy burden on the 300,000 of us who make up this tiny nation, and the Big Question is this: should the Icelandic state, a.k.a. we the taxpayers, be responsible for repaying the debts incurred by private institutions – the banks? Before the big meltdown, the only stipulation was that we had to have a deposit insurance fund in place – but obviously a deposit insurance fund in tiny little Iceland couldn’t support the collapse of an entire banking system, as British and Dutch authorities were clearly aware. So – is it right to demand that the state guarantee the deposits, since the legal framework was all in place? Or is this a case of force majeure?

There has been an incredible amount of secrecy surrounding the whole Icesave debacle, which of course is insufferable – we who are being made responsible for the debts should have all the documentation and information up on the table, not shut in some big vault with only a select few being granted access. The secrecy being lifted from this MoU today is merely a tiny step in the right direction … and look at the information it contains! British and Dutch authorities were clearly very aware of the risk that was being posed. And even more infuriating is that, in the above-mentioned agreement, there is a clause STIPULATING that this MoU should be considered invalid in the current agreement.

Which raises a whole new set of questions.

In any case, the Icesave agreement has yet to be passed by Althingi [our parliament] and with each new piece of information that surfaces it looks less likely that it will gain majority approval. Meanwhile, Icelandic authorities are getting veiled threats from Dutch authorities – that if the Icesave agreement is not passed, they will not support our application for the EU, Dutch media reports today. Similar rumours have been circulating concerning the British. Delightful.

One Response to “Sinister revelations concerning the Icesave agreement”

  1. Adrian Peirson said

    I can’t speak for the UK population but this member of the Public says your people should not suffer any more, if the debt needs to be written off, so be it.

    If it were up to me I’d say all credit card debts, mortgages and bank loans are null and void, that would give people more money and punish the banks.
    The people would have more money, because their debts are wiped out, so they would spend, that would stimulate the economy.

    New banks would spring up in their place.

    Best regards from the UK

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