Two days ago, a group of Dutch people who had their savings in Icesave accounts arrived in Iceland, along with a film crew. They’re here to visit the bank and government officials, and they want some answers.
A couple of them were interviewed on the TV news and I must say, my heart goes out to them, as it does to anyone who had money in Icesave accounts. Hearing people’s stories, putting faces to the statistics, really brings home what an awful scenario the Icesave debacle really is.
For anyone who’s lost track, Icesave was a branch of Landsbanki that was opened in the UK and the Netherlands and into which private individuals and local authorities, charities, etc. deposited their money. Icesave was a runaway success story – within the space of 18 months, the bank had managed to collect over 6 billion British pounds in deposits in the UK, and in six months a few billion euros in Holland. With the collapse of Landsbanki, that debt was rolled over onto the Icelandic state.
Those are the accounts over which Gordon Brown decided to invoke terrorist legislation against Landsbanki and which caused the very deep diplomatic rift between Iceland and the UK – a rift that sadly will probably endure even beyond the resolution of the issue. Happily, though, Icelandic authorities announced today that every effort will be made to reach a resolution in the next couple of days – and not a moment too soon, since the immediate survival of this country seems to hinge on its resolution.
In essence, the dispute revolves around to what extent the Icelandic State should be responsible for compensating Icesave depositors. According to the EFTA agreement, a depositors’ insurance fund in the bank’s home country is responsible for guaranteeing deposits in the bank’s branches outside that country. The conflict here is about whether the Icelandic State is responsible for guaranteeing those deposits if the insurance fund does not have enough money to cover the deposits – which it doesn’t.
According to an EFTA directive, the fund is an independent entity and does not require a guarantee from the government. On this point, British and Dutch authorities and Icelandic authorities disagree. Until now there has been talk of the dispute being settled in court, which would be a sensible solution. However, evidently no court exists that could settle it, so the only option is an arbitration court. According to reports released today, that option was in the pipelines until early this month, but again there was conflict over the terms of the settlement [too long to explain here] so it was put on hold.
While the legal stipulations seem to indicate that the Icelandic government isn’t legally obligated to cover all deposits in those accounts, the Dutch and British have pointed out that the Icelandic government has promised to guarantee the deposits of all Icelandic citizens within Iceland, and therefore it must do the same for all depositors of the bank’s branches overseas. Failing to do so would be a breach of the EFTA agreement, which states that all nationals in the EFTA countries must be equally treated.
I don’t think there is any Icelander above the age of 20 or so who doesn’t feel the gravity of this situation. It affects us on so many levels. On the one hand, it’s very hard to be seen as thieving scoundrels who don’t care about other people and who are only out to cover our own asses – which sadly is the image of Icelanders propagated throughout the world today. Also, it is very hard to have had such a serious falling-out with countries who until a month ago most Icelanders felt very warmly towards and considered friends – over something that none of us – save for a few corrupt individuals – had no control over.
On the other hand, there’s the huge issue of having to be saddled with colossal debts – debts that will seriously debilitate our nation and that the next generations and generation after that will be saddled with. And all due to the deluded mistakes of a handful of unscrupulous bankers.
It’s like being between a rock and a hard place and, indeed, as a nation we seem to be at an impasse. Our application for assistance from the IMF is being held up while the dispute remains unresolved, and all the while more companies and individuals here are going bankrupt since our economy is effectively paralyzed.
It has been said that Landsbanki’s assets may well cover most if not all of the debts – and, really, that is the only ray of hope in this whole sorry mess. But since a bank’s assets are largely tied up in loans to its customers, how substantial those assets are can’t be determined until those loans mature and are paid back.
All of this begs the question why the assets of Landsbanki’s owners have not been frozen until a settlement has been reached in the matter. Why should the Icelandic nation – and our children and grandchildren – have to shovel the shit while the people who are responsible still own fricking football clubs in the UK?
And on that note – because the Icelanders tend to deal with trauma by poking fun – these, featuring the owners of Landsbanki, have been making the rounds in the last couple of days [from this site]:
And one last one, featuring our fearless leader:
IT’S A DAMP AND GRAY DAY
With slight winds and mild temps. RIght now 4°C [39F]. Sunrise was at 9.51 and sunset at 4.32.