Icelanders reject paying for others' mistakes
PAOLA TOTARO
March 8, 2010
Taking to the streets ... protesters outside the Icelandic parliament in Reykjavik . Photo: AFP
THE people of Iceland have delivered a defiant message to their bankers and politicians, voting against repayment of a $5.8 billion debt spawned by the collapse of the tiny nation's banks.
In a referendum which brought a record 60 per cent turnout of voters to the ballot box, 93 per cent relished the opportunity to reject responsibility for an economic disaster they argue was foisted on them by irresponsible financiers.
The results reflect the level of national anger felt over the disastrous one week in October 2008 when the krona plummeted, the Icelandic internet bank Icesave collapsed and property prices plunged in the wake a construction boom.
The Icelandic economy was the first to collapse and its government the first in Europe to be swept out of power in the wake of the worldwide credit crunch.
Icelanders went to the ballot box to express their views on a plan to return $3.8 billion to Britain and $2 billion to the Netherlands, paid out to salvage the savings of 400,000 Dutch and English investors who had accounts with Icesave. It had offered high interest rates before it failed along with its parent, Landsbanki.
The British Government infuriated Icelanders when it used anti-terrorism legislation to swiftly seize the banks' assets in the wake of the collapse.
Icelanders responded by wearing T-shirts emblazoned with slogans including ''Brown is the colour of poo''.
The funds were to be repaid under a staged, 14-year plan approved narrowly by the Icelandic parliament before Christmas. However the President, Olafur Grimsson, read the nation's mood and refused to sign the legislation, calling the nation's first referendum since 1944.
The Government has made clear it remains committed to the deal but both the Prime Minister, Johanna Sigurdardottir, and her Minister of Finance, Steingrimur Sigfusson, chose to publicly abstain from voting. The President voted but refused to make public where his sympathies lay.
But while Ms Sigurdardottir's government reiterated over the weekend that Iceland and its people would not renege on repaying its debt, she repeated the nation's demand for an apology from Britain over the way it froze the bank's assets.
The referendum is clearly being seen by her government as a way to strengthen the government's hand in its continuing negotiations with London and the Netherlands.
Talks are expected to resume this week after Britain and the Netherlands both stymied a request for IMF funds to help meet the $1.5 billion in foreign debt that is already due next year. Iceland, which for decades has been reluctant to join the EU, applied for membership last year and negotiations, aimed at a 2012 conclusion, have also been dragged into the controversy.
Icelanders argue that it is the banks and politicians who failed to put brakes on a booming economy, encouraging profligate spending and failing to regulate interest rates adequately.
Anti-repayment organisers have calculated that the repayments are equivalent to every Icelander being responsible for repaying $16,700 over 14 years and reject the notion that it is they who must bear the burden for others' mistakes.