So – an accord was reached late last night in the Budget Committee [which has been working on amendments to the Icesave agreement] between the reps of all political parties, except the Progressive Party, on conditions for a sovereign guarantee of the Icesave debt [in plain talk: conditions for having us commoners pony up the dosh]. The amendments make up a four-page long PDF document and at a glance the appear to cover all major issues. In brief:
- The unprecedented circumstances in which Iceland finds itself shall be taken into account
- No Icelandic state assets may be seized, including assets located abroad
- Iceland shall maintain full and unconditional control of its resources
Economic:
- Payments shall not exceed 4% of GDP to the UK and 2% of GDP to the Netherlands in the years 2017-2023
- Payments shall be 50% of the above during the first and last years of payment
- Calculations of payments, which are to be in pounds Sterling and euros, shall be in line with the median exchange rate set by the Central Bank
- If the debt payments exceed the above ratio of GDP, negotiations shall be held about the impact on the agreement
Legal:
- The Icelandic state does not abandon its right to have legally determined whether or not it is obliged to undertake such payments in the event of a systemic collapse
- If it is legally determined that no such obligation exists, the sovereign guarantee shall contain the proviso that negotiations shall take place about the impact on the loan agreement and the obligations of the state
- If such negotiations do not take place, Iceland’s parliament shall be authorized to limit the sovereign guarantee
- The Ministry of Finance, Ministry of Business Affairs and Central Bank shall regularly evaluate the situation of the Icelandic state and the Minister of Finance shall present a report to parliament annually
- Parliament can request a review of the agreement no later than 5 October 2015
- The government shall undertake all necessary means to recover the funds that were deposited into the Icesave accounts, in collaboration with authorities in the UK, Netherlands and European Union
[NB - translation by Yours Truly taken from the RÚV evening news, i.e. not an official translation.]
I think it’s safe to say that the collective Icelandic nation breathed a massive sigh of relief when this news was announced. The Icesave nightmare has had an impact on absolutely everyone here and the longer it’s dragged on, the heavier it’s become. I believe in the last few days most of us were just praying for a resolution [albeit an acceptable one - obviously] so parliament could begin to focus on other things, like helping households cope and the general reconstruction of the country. This dispute in parliament has commanded far too much time and energy.
The next step is for the amended agreement to be voted on in parliament. I’d say it’s 99.9% certain that it will be ratified.
Both Jóhanna [our PM] and Steingrímur J. [Finance Minister] were interviewed by RÚV this evening and expressed their satisfaction with the amendments. Asked if they feared an adverse response by British and Dutch authorities they said they did not – and that it was their belief that neither party could contest the amendments on any legal grounds. And in any case it was in everyone’s interest that Iceland would not be bankrupted by the agreement – that would serve no one.
I guess we’ll find out in the next few days.
IT’S BEEN A GREAT DAY
Worked this morning, then headed out for a run and then to the pool outside to enjoy the sunshine. We can certainly feel the autumn chill creeping in [there was a slightly cool wind] but it was still warm enough to lie in the sun and soak up some rays. Right now it’s getting pretty dark, 12°C [54F]. Sunrise this morning at 5:17 am, sunset at 9.44 this evening.
MORE ON THE ICESAVE AGREEMENT:
On the status of the Icesave debacle
On becoming an Iceslave
Eva Joly: Iceland is being blackmailed
For freedom and life
{ 34 comments… read them below or add one }
…seems like a sane accord on a very bad issue. I would say well done, congratulations to all involved on this proposal.
Hope it works out.
I baffles me how you speak of an accord that is reached when only 1 party was involved negotiating with the British and Dutch governments seems a quite essential part of any deal to me
an accord was reached late last night in the Budget Committee [which has been working on amendments to the Icesave agreement] between the reps of all political parties
– The political parties in Iceland’s parliament have been fighting over those amendments for weeks. They finally reached an accord. Just as the first sentence says.
KlaasVaak, now we have to see if the Brits and the Dutch will approve. We still needed an accord between ourselves – you should just know how much fighting there has been over this, around here. The common people who haven’t done anything wrong except (for too many of us) to trust the wrong politicians are going to be paying out their noses and other orifices for the greed of only a handful of people and the inefficiancy of a few officials – we just need to be assured that we will actually be able to pay and not for half the population to run away, leaving old, sick and disabled people who won’t have a chance in hell of paying. NOBODY gains by that, and definitely not the Brits and Dutch.
Thx Hildigunnur. Very well put.
I believe KlaasVaak´s comment refers to the fact that, even though this compromise seems sure to be ratified in the Alþing, there is no indication that these conditions will be acceptable to the UK & NL governments.
Thanks Alda – first with the news in English
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Not sure how important that waiver of soverign immunity was to the UK/NL. The big problem as I see it is going to be the refusal to accept the liability once and for all, but IANAanything.
GDP caps seem fine to me but I got he impression from your wording that any excess above the GDP cap was to be written off? Also, I take it the exchange rate is important only in the context of determining what the GDP cap for a given year is?
What’s with the amendment in about the Icelandic government chasing the stolen funds (well, duh!)? There must be more to it than that? Perhaps trying to crack open Luxembourg/Tortuga (or whatever pirate island it is) bank secrecy?
Glad to see a reasonable conclusion to this, under the circumstances.
I’m still trying to wrap my head around the idea that the citizens of the nominal home nation of a rogue bank which really only did (incredibly questionable) business outside the country’s borders are somehow responsible for both the failures of that business and the stupidity/recklessness of everyone who played along with the impossible game this questionable business was running (and that the country in which they did do business that failed to even cast a cursory glance at the books is somehow guiltless) .
The amendmends appear reasonable on a cursory reading. I would expect, it won’t take long, until somebody tells about its catches. But hopefully, it works out, particularly preventing people from leaving the country.
Why did the Progressive Party not participate? Are they pretending, not to have anything to do with the whole thing? But weren’t they in the government at the time of the privatization of the banks, which established the basis for all bad thing happening in its wake?
Not so sure the Dutch are going to buy this. I lived there for awhile and found them to be the stingiest folks that I have ever met!
Alda, the story progresses; herewith a view from today Sunday telegraph in UK (OK posted last night but it’s silly season here!)
http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/6034654/Iceland-what-ugly-secrets-are-waiting-to-be-exposed-in-the-meltdown.html
Any thoughts
best dave and hazel (who found the article, I had missed it!)
For the UK, I bet Gordon Brown personally reviews the wording of each amendment late one night (probably over a ready-meal) and makes the decision himself. There’s little chance the amendments will be put out for debate within government and absolutely no chance they’ll be put to a parliamentary vote. The inspiration for “Brown is the colour of poo” T-shirts has an opportunity to redeem himself.
Hi Alda,
I hope my own and the Dutch government won’t decide to play bully boys again and will not contest these amendments. It’s unfair you should have to pay anything, but it’s in our interests to make sure we don’t double your pain over what is (in UK debt terms) a drop in the ocean.
Mike.
Bromley – What’s with the amendment in about the Icelandic government chasing the stolen funds (well, duh!) — lol! Yep, it does seem totally self-evident and I don’t know quite how to interpret that clause. Maybe they just want to pacify the nation because there are such loud demands for this being made.
LDE – I’m not sure why the PP didn’t agree to the provisos, nor in fact why the others did agree to them (and not to others). We didn’t get much detail about the actual debates taking place within the committee (for weeks on end) – or maybe I just missed them.
Dave – I gave that article a quick read yesterday and it doesn’t seem to add anything new to what we already know. We’re very much aware of all the dirty secrets being uncovered! A new day, a new scandal. :/
PS – a reader got in touch to point out that the agreement is not, in fact, being amended [which suggests additions to it] but rather that provisos are being introduced. I’ve added an update to that effect above [but it's a bit hard to change the title at this juncture - when it's already all over the interwebs on feeds and such ...]
With this talk of 50% of GDP and the loan finishing 2023 scary date, does this mean that every Icelander has signed for like a car loan of €15000 (given a gdp per capita of lets say €30,000 I dont know the exact gdp per capita these days),given a mythical Icelandic family of Ma and Pa and 2.2 kids you are looking at €60,000 well that is a whole bunch of Euros, I personally would be upset into being signed up for that
These are not emandments, this is just a clarification of the undesrtanding of one party(Iceland) of the contract, in other words: They are accepting the Icesave Deal!!! In other words at any moment in time Uk and Holland can say about this… foot notes to call them properly, “well that was your understanding of the contract, but look here in page X… clearly says what your responsabilities are” emandments should be added where ever the correction in the contract needs to be done, not in an extra paper that can… to say it some how just be throun away and keep the contract. Iceland IS ACCEPTING the Icesave Deal, they are just trying to make it sound nice for Icelanders, off course UK and Holland wont argue anything, they perfectly know that what ever paper they attach to it, is worth nothin legally. The only legal way to change something in the contract is to acctially reject the contract and send another one with the acctual emandments on it. It is not true that if we send it with some changes it means that we dont accept it.
It would be very interesting to know, what the government parties had to pay or to threaten with to make the IP behave more cooperatively.
I wonder, which kind of court is supposed to legally determine Iceland’s obligations, this seems not to be specified. An Icelandic one? I can’t believe, other countries would accept this.
If it holds, such an accord should be welcome. Because, as you noted, Iceland’s bankruptcy in no one’s interest. Save those perhaps who would just as soon get their hands on her resources and exclude the population. This one proviso to protect resources, thus environment and basis of life, is key.
I do wonder at some of the language which seems to leave room open for future negotiation, as if looking for a way later to renounce all or some of the accepted debt. If so, this probably does no one any good. If not wishing to accept it best to just refuse to. This a chance now to accept an acceptable level of debt, even if unjust and unwelcome, but on viable terms, and be done with it. Always looking back, in a sense, not a good way to move forward. If all parties understand the terms, they can be accounted for and dealt with. Iceland, as you also noted, can then turn her attention to other things.
Weather
Presently in St. George, Utah, 1122h MST, 80ºF/27ºC. Expected high and low: 99ºF/37ºC and 69ºF/20ºC. A bit cool today, most days high about 102ºF/39ºC.
If provisos are added to an agreement, then that agreement is amended. Specifically, any kind of change (deletion, addition, etc, including the addition of provisos) to a contract is classified as an amendment. The reader may be suggesting that the provisos won’t be added to the original contract as conditional clauses to create a new contract and, instead, the original agreement will hold and there will be an additional agreement containing the provisos. Subtle!
What kind of government would agree to 6% of the GDP?
This is a ridiculously high figure and one which will impact generations of Icelanders.
Of course it will also lead to many more Icelanders going to work abroad(and who could blame them)which places further burden on those who stay.
I would imagine both the Dutch and British governments would want,at least,minor changes so this could still run and run.
Why would Iceland want to be part of a community(EU) which has allowed this to happen and,certainly as far as central Europe is concerned,hasn’t offered any help.
I hope the protests continue because this isn’t good for Iceland now or in the future.
I commented about provisos being amendments before reading Easy’s comment. So, to clarify: does this mean that Althingi will vote on the original agreement and the separately-documented provisos, but the UK and Netherlands won’t be asked to agree the provisos because they’re intended only for Iceland’s internal understanding and not intended to be part of the formal agreement between the countries?
More importantly, why didn’t they just offer to cave on the Green Room issue to get the Progressive Party onboard?
I commented about provisos being amendments before reading Easy’s comment. So, to clarify: does this mean that Althingi will vote on the original agreement and the separately-documented provisos, but the UK and Netherlands won’t be asked to agree the provisos because they’re intended only for Iceland’s internal understanding and not intended to be part of the formal agreement between the countries?
As far as I know this is a 4 paper document attached to the contract, the moment they sign this, they SIGN THE CONTRACT, no matter how many pages they add to it, and they know it, what they are actually doing is to find a way tho apeace people here, but this is just one more scam from the goberment to the people, and once more people are buying. My only hope is thet the IP´s that were “opossed” to it , just accepeted this scam last night so they could go to sleep, and actually vote agaist it next week, but I doubt it. They are all in the same game.
Easy, I don’t think so. Actually, agreeing to the previous agreement with the amendments attaching is a REJECTION of the existing agreement and a COUNTEROFFER to the British and Dutch. The current Icesave agreement is DEAD. There may be an Icesave agreement IF and ONLY IF the British and Dutch sign this “counteroffer”.
I doubt either country will sign it, in fact the Icelandic counteroffer / amendments are probably lying on the floor of some British and Dutch foreign ministry, either with footprints all over it or torn into little pieces.
If they did sign it, then the agreement consists of both the original agreement and the new amenments. The problem is, what do you do if the amendments conflict with the amendments, as they most certainly do here? Let’s say the Icelandic GDP will be 1000 billion ISK for the foreseeable future (or its equivalent in present day money), 6% = 60 billion ISK. If Iceland were to pay that for 15 years then you have 900 billion ISK and the contract more or less makes sense. But 8 years @ 60 only results in 480 billion ISK (vs 700-900, the original estimate), so the contract & amendment provisions conflict and are inreconciliable. Which terms are decisive then? A neutral court is supposed to reconstruct and reconcile the intention of the two parties. But in this that task would be impossible, so the result is that there is no binding contract.
In fact I would say that the “new agreement” is “void for uncertainty”, meaning some or many of the crucial terms are so vague and unclear that you cannot say that there is a binding contract. What is the actual amount owed? What if Althingi doesn’t like the payment schedule? What if the Icelandic courts reject some or part of the agreement?
Putting in all these unclear qualifiers (though they may be “fair) further confuses things. It’s like buying a car and then the buyer puts in clauses like “if I have the money available”, “if I don’t need the money to buy food”, “if it turns out that I change my mind and don’t want the car”.
I’m not saying Iceland was wrong in rejecting the original Agreement (a terrible contract), but really this amended agreement is pretty much a waste of time, except as a public relations stunt for foreign consumption and a feel-good ploy for the Icelandic people by the Althingi.
There is and will be no Icesave agreement. So Icelanders should start flying their pirate flags and buying information books on Cuba, Venezuela, Serbia, Iran and North Korea – - meet your new friends. The IMF will not give any loans, the EU is closed, and the foreign creditors will try to grab any Icelandic possessions abroad. The IMF and the EU doesn’t give a rat’s ass about economic justice, they just want “their” money.
Hello,
Easy is right IMO. It sounds like the ‘accord’ is just for internal consumption. It is my understanding that the terms are so harsh that they virtually guarantee failure. So, the gov will at some point default on the agreement. What then? Are the ‘provisos’ legally binding according to international law? I doubt it. They essentially say that if Iceland cannot pay, the IMF cannot take any property (at least the good stuff) in compensation for damages, which makes no sense.
You’ll end up back at the negotiating table in a worse bargaining position.
Like Easy said, reject it and start over again. Offer 20 cents on the dollar.
There seems to be a lot of fear mongering in the media trying to push this through. Don’t buy into it. The idea that Iceland will be sealed off and unable to trade is nonsense. It is just a tactic that is being used to get you to go along with the deal.
If I had a couple of minutes with the PM, I would recommend that she hire a good PR firm (think Madison Ave) and get some good lawyers– people with experience swimming in shark infested waters.
Over here in the US, they have a saying for this kind of accord: Putting lipstick on a pig.
Kris
Thanks, Flygill, for the honesty and common sense. This is what is needed now.
This is really a very interesting discussion – about moral, responsibility and money. And what strikes me the most – the spirit of the discussion. With few exception it sounds like I’m listening to the priest who is prying… communism
Should Iceland and Icelanders take responsibility of their actions and carry the burden in full? Hell we should. But what about others involved?
What about rating agencies? Are they just a bunch overpaid morons or liers?
What about UK and NL governments? That failed to inform their people that Icesave is not a bank (as well as Icelandic “banks” were not really banks)?
What about Icelandic government and other agencies that either by stupidity or by intention bent laws and ignore their direct duties? Icelandic people voted for them, that’s right. But by that vote they didn’t authorized illegal action of specific persons in the government. If I let any of you to drive my car – that doesn’t mean I’m responsible when you get drunk and run someone over.
So maybe we should stop praying about “responsibility” in general? And finally get the guts to get responsible those who was supposed to do just their job…
This is about moral aspect of the discussion.
Now about “communist” side of all this mess. This is really amazing. (and very clever btw). This moral issue of “responsibility” is just a smoke screen to hide the very basic flaw. Private ownership is the basis of capitalism, the pillar of the system, right? Which means that owner is fully in charge of what he owes. If he is smart and lucky – he owes more. If he makes a mistake – he pays for it. In full. That’s the main rule. Like the Sun is in the center and the Earth is going around.
But let’s see what we are told here! Private entities got themselves in deep sh*t but want the state to “bail” them out. Even “nationalized”. So instead of letting “mighty market” to fix the problem – the governments are saving the as*holes. All over western world (whatever it means).
So, Flygill, you don’t have to buy any books about Cuba. The “communism” is right under your nose. A strange version of it – but at least this is not a capitalizm any more for sure.
So what is it then?
And why do IMF, EU and many, many very important people want to get the case closed as soon as possible? I mean – to get Iceland “to get responsibility” by signing Icesave agreement or face the concequences. Because neither IMF nor other very important bodies want any further discussion about Iceland.
Why? They can’t admit the full system failure. This is not about Iceland – this is about the so called world financial system. It failed spectacular in Iceland – because Icelandic “communist” government was too small to “bail” it out and other international bodies and government too stupid not to do it. In fact no government of the “western world” can do it with their national banking system but we haven’t seen such collapse only for one reason – the relative size of the banks.
Iceland was just a fly or a mouse in this world lab of finance. And this mouse just died. But nobody want to admit that it was the tested drug just killed the mouse. Rather the mouse is accused of taking too many pills at once.
So can the current Icelandic government do anything about that? I don’t think so. They are bound by backstage deals and promises or simply incapable cause many of them can’t do anything. They never done anything except being only elected politicians. So they mastered how to get elected but this is not what we need now. And no need to say about who is whose relative.
One more note about friends.
China is not the best friend of Iceland. But it might be the only friend at the end. They have real money, their size makes it easy to get “the mouse” back to life. And – most important – they are not IMF/EU. They would not just give loan (as this is just a temporary delay) but they would rather invest in Iceland to revive its economy to get out of sh*t.
What is needed – just an open mind of Icelanders.
PS. Don’t even think I’m going to leave the island
Interesting comments, and so many scenarios it makes my head swim. What? Something like the present health care bill the US congress has come up with, all 1,000 plus pages no one can understand. Such nebulous opacity only pleases those with something to hide.
Wouldn’t it be simpler to say something like this: Iceland agrees ONLY to pay the Netherlands and the United Kingdom X number of dollars each, at 3% of gross Icelandic GDP per year until said amount paid. This and this alone will satisfy our Icesave debt to you.
There, how long did that take? Well less than a page, and most can probably understand it as well.
Thanks for the clarification Easy, but Flygill’s follow-up seems a little more likely to me. If a contract is signed with a set of attached provisos, then surely those provisos require approval by the other party for the amended agreement to be binding. Also, some of the provisos (such as the Icelandic government trying to recover funds deposited into the Icesave accounts) seem irrelevant to a loan agreement and should perhaps be located instead in a separate commitment between the Icelandic government and the Icelandic people. As Flygill emphasises, provisos that are vague and potentially contraditory with the main agreement won’t be signed-off by UK or Netherlands. Did Iceland’s Budget Committee give the final set of provisos to a law firm to review (in which case, it would be interesting to see that firm’s legal opinion on them) or not (in which case, WTF!)?
Just to nit pick (or the complete opposite).. I think your original wording was fine.
The word “amend” is defined in the dictionary as:
a⋅mend
/əˈmɛnd/ Show Spelled Pronunciation [uh-mend] Show IPA
Use amend in a Sentence
–verb (used with object)
1. to alter, modify, rephrase, or add to or subtract from (a motion, bill, constitution, etc.) by formal procedure: Congress may amend the proposed tax bill.
2. to change for the better; improve: to amend one’s ways.
3. to remove or correct faults in; rectify.
Seems fully inline with what you wrote originally
.
Anton
Privatised gains, socialised losses. Plus ce change…
The English text of these amendments is now out:
http://www.iceland.org/info/news/features/nr/7313
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