Thursday, 14 April 2011

Iceland shows the way

I've got a massive backlog of articles worth blogging, but this one stands out:

Iceland's President Olafur Ragnar Grimsson has said that the UK and the Netherlands will get back the 4bn euros (£3.5bn) they paid when Iceland's banking system collapsed in 2008.

That is despite the country rejecting the latest repayment plan in a referendum at the weekend.

Mr Grimsson told the BBC assets from the collapsed bank Landsbanki would "in all likelihood" cover what was owed.

The UK has said the matter will go to an international court.

I'm delighted that the Icelanders were given a referendum on whether to assume the liabilities of their banks (they made the obvious choice).

I'm dismayed that we weren't offered the same choice.

I'm unsurprised by the BBC's use of "the UK" to refer to "the British government". To them, it is plain, l'etat c'est nous.

I'm bemused and concerned by the notion that an "international court" could require Icelandic taxpayers to compensate those who foolishly invested in Icelandic banks.

The BBC article continues:

Landsbanki ran savings accounts in the UK and the Netherlands under the name Icesave.

When it collapsed, the British and Dutch governments had to reimburse 400,000 citizens - and Iceland had to decide how to repay that money.

"British and Dutch governments had to reimburse", or "British and Dutch taxpayers were forced, by their elected dictators, to reimburse"?

And did Iceland have to decide how to repay that money? Was Iceland liable? What is Iceland? And whatever it is, is it not distinct from 'Icelandic banks'?


The weekend result marked the second time a referendum has rejected a repayment deal.

Mr Grimsson said that it was not an issue about paying or not paying, but a question of whether there is a state guarantee and how that would be interpreted under the European regulatory framework.

"I think the primary message [from the referendum] is that before ordinary people are asked to pay for failed banks, the assets inside the estate of these banks should be used to pay the subs," Mr Grimsson told Radio 4's Today.

"That is why the people of Iceland emphasised that Britain and the Netherlands are going to get certainly up to $9bn out of the estate of Landsbanki.

"The first payment will be this December, and in all likelihood this will cover what was paid by Britain and the Netherlands two years ago.

"But to ask for a state guarantee and that ordinary people should shoulder the responsibility is highly doubtful and definitely can be disputed within the European legislative framework."

If only more of our politicians spoke as much sense as Mr Grimsson! It is a shame that he feels the need to defer to "the European legislative framework".

It is not merely the case that "before ordinary people are asked to pay for failed banks, the assets inside the estate of these banks should be used to pay the subs". Ordinary people should never be asked to pay for failed banks. If anyone should suffer, it is the shareholders in those banks, and after that, the depositors.

Let us hope that the Icelandic people stand firm, and refuse to pay a penny to 'their' banks, or to those to whom 'their' banks owe money.

It amazes and saddens me that the British and Irish people were not so resolute.

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