Wednesday, April 13, 2011

This explains the whole Icesave story

Hjortur J. Gudmundsson, and Icelandic free-marketeer, journalist, blogger, academic and opponent of the EU, gives a very cogent account of what has been going on in connection with Icesave and the two referendums the Icelanders have had imposed on them by their government.

We should note a couple of things (though the whole piece is worth reading and is not long). The turn-out was 75 per cent, something most of us can only dream of. The result was: No: 58.9 percent, Yes: 39.7 per cent, Empty or flawed votes: 1.3 per cent. Decisive is the word I would use. Let us hope that the Icelandic government will not do any more faux renegotiating.

Mr Gudmundsson adds, in connection with the proposed legal action:
The Icelandic people have always wanted the Icesave dispute to be dealt with in the courts and now after two unsuccessful attempts to find a fair solution through political negotiations, it will probably at last have the legal handling it should have had right from the start.

Many legal experts have claimed that Iceland would most likely win using the legal route, which is probably one of the reasons why the British and Dutch governments have repeatedly dismissed the idea of taking the matter to the courts.

But no matter how such court cases should go, it is highly doubtful that the results would serve the interests of London and the Hague or the EU. If Iceland wins, the two governments would not win a penny or a cent from Icelandic taxpayers.

They would, however, still be paid from the foreign assets of the failed Landsbanki ├Źslands when they are sold in the coming years (the first payment is scheduled this summer) - and probably more than they are entitled to according to the EU directive on deposits guarantee schemes.

On the other hand, in the unlikely event of an Icelandic legal defeat, it would mean that not only Iceland but every single country in the European Economic Area (EEA) – which includes all the EU member states – would be responsible for all deposits in their private banks, both domestically and in foreign branches within the EEA, and would have a clear obligation to step in with their taxpayers' money if necessary.
He also thinks that a lengthy court case will do nothing to increase trust in banks, would force the UK and Dutch governments to open up sensitive documents and would " shine a spotlight on how badly funded and insufficient deposits guarantee schemes in most European states really are as a result of EU legislation".


  1. I used to travel to Iceland on business (but nothing connected to banking) a couple of decades ago. It was clear that Icelanders are proud of their independence of Europe, that resulting from a long history of looking after themselves, acquiring over the centuries a unique outlook on life. The big surprise, for me, is that about 40% voted "yes" in the referendum.

  2. Worried about fiscal repercussions, I suspect.