Wednesday, 6 January 2010

Icelandic Repayments Frozen

After the collapse of Icelandic banks in the UK and Netherlands forced the British and Dutch Governments to cover the losses of bank customers, there are demands that the Icelandic Government pay back the shortfall. Interestingly, for a proponent of Direct Democracy, a petition signed by nearly a quarter of Iceland's electorate has forced their President to allow a referendum on the issue. The fact that each Icelandic citizen needs to repay £10800!!! But this is just... er... the tip of the iceberg. I'm curious to see how the debate covers all of the other international perspectives: how it will effect IMF loans, EU prospects, their international trade and relationships with other financial markets. Personally, and having listened to a debate on the subject on Jeremy Vine's Radio 2 programme, I suspect a vote against repayments will really be a vote for a re-negotiation of the terms of the deal. Who knows, they may even want us to arrest those Icelandic bankers who have fled to London with their millions!
(More here from the BBC. What they don't report is that part of the issue is to do with the high interest charge (5.55% I think) included in the repayment which many Icelanders believe to be excessive.)


Anonymous said...

Maybe the British government should make a representation to the citizens of Iceland - this puts a whole new complexion on international deplomacy!

About Interactive Democracy said...

MoneyObserver: "Under this new deal Iceland will pay an interest rate of 3 per cent on its Dutch loan and 3.3 per cent on its UK loan, starting in 2011. The previous revoked deal included an interest rate of 5.5 per cent.

"Britain and the Netherlands will receive different interest rates because they had to pay different amounts to raise funds on the open markets back in 2008."