Sunday, April 10, 2011

Democracy is very "disappointing"

Or at any rate, our and the Dutch government are terribly disappointed as is Joe Lynam of the BBC, not to mention Iceland's Prime Minister. For the second time the people of Iceland have voted in a referendum against paying out their money for what was a monumental cock-up on the part of the EEA, EFTA, the banks, people who put their money in those banks (often our local councils) and the UK and Dutch governments.

The Dutch and the British governments are now contemplating court action in the European Free Trade Association Surveillance Authority. This may not be such a good idea as the whole process will take at least a year and a half, probably more and all sorts of interesting things might come out about the lack of proper stringency in the financial processes that allowed the Icesave fiasco to happen.

Joe Lynam thinks Iceland might be the loser:
The consequences of this referendum vote is that Iceland's years in the financial wilderness could be extended much further.

Moody's and other ratings agencies look set to downgrade the country even further, making it prohibitively more expensive to borrow on the open markets.

Iceland's bid to join the EU will be paused or even vetoed by Britain and the Netherlands. And the tiny Atlantic economy is facing legal action in the EFTA court which might force it to pay up sooner than planned and at a punitive interest rate.

Democracy doesn't pay if you're an Icelander.
That is not quite the way it looks at present. Icelanders have voted against their tax money being used in this exercise and they are not going to be joining the EU. Sounds to me like they might be winners. As for Moody's and other rating agencies, they are not quite as predictable or reliable as Mr Lynam seems to think.

The Governor of Iceland's Central Bank thinks that this could impede foreign borrowing. Whereas, of course, what is happening within the EU, apparently the now unattainable goal for Icelanders, is a fiscal paradise.


  1. The Icelandic government may be applying to join the EU but, according to opinion polls, the Icelandic people don't want to. I assume they will be granted a referendum on this but do you happen to know whether this is the case Helen?

  2. Yes, there will have to be a referendum on whether to apply and, later, on whether to join.

  3. Thanks Helen. I've just read Mary Ellen Synon's column in the Mail. It seems that the EU is already throwing money at Icelandic politicians to encourage a Yes vote in any referendum and making sure the Yes campaign has a huge financial advantage.

  4. You can understand the BBC using loaded propaganda language about Iceland being "losers" because the country "might not" be able to join the EU. But extraordinary, isn't it, that even commentators in other palces who you would think know better talk about it in the same way. It's as if they have bought into the propaganda in spite of their own views (often quite genuine if muddled). And really. If Iceland were to say it would join today, does anyone really think that they would be stopped? The EU would lean on the UK and Netherlands, some sort of "deal" would be hatched. Empires don't take kindly to satellites preventing other conquests. Once the EU has the country in its clutches, it could (and would) do what it wanted anyway.

  5. Absolutely true on all counts, Damian. As ever, the Telegraph disappoints while nothing more is to be expected from the Beeb.

    I am not sure throwing all that money at Icelandic politicians will help, kenomeat. The Icelanders seem to have got the bit between their teeth. What a shame, eh?