Somewhat unexpectedly, the Norwegian Foreign Minister announced today that Norway is no longer making the IMF’s review of their aid plan a condition for awarding loans to Iceland. This is reported by RÚV.
Norway and all the other Scandinavian countries have, until now, made potential aid to Iceland conditional on the IMF plan. The IMF plan, meanwhile, has been conditional on the resolution of the Icesave dispute.
In other words, accepting the terms of the UK and Holland in Icesave been a precondition to getting any sort of financial help from our neighbours.
The announcement comes in the wake of reports of growing pressure within the Norwegian political sphere on Norwegian authorities to re-think their stringent conditions.
I must say I’m pleased. Icesave has become much more than the sum of its parts, and using it as a form of coercion is undignified for all concerned – whichever way it finally ends.
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OUCH!! what a blow for sjálfstæðisflokkurinn!!!
That is brilliant news! And it puts Iceland in a much stronger position now in dealing with the UK and the Dutch, especially any further attempts at bullying. I must say I was puzzled at Norway’s reluctance to help. But as the old saying goes, better late(r) than never. Frabaert! (Sorry about the English keyboard!)
sylvia from viking wirral
Its just like the Eurovision with all the Scandies voting for one another
Norwegian taxpayer has StatOil bringing in the pennies, so they can spare a few bob.
There’s been an on-again, off-again thing going on in Norway on this for a while, but this is the clearest message yet that they might break ranks. Or even that they might seriously attempt to get the others to change their positions.
Finland and Sweden have both reiterated their requirement for Icesave to be solved. I think they’re all meeting tomorrow, so it’ll be interesting to see what’s been released this time tomorrow.
I’d take very minor issue with this statement:
In other words, accepting the terms of the UK and Holland in Icesave been a precondition
Consider the natural starting position of the UK/NL – they’d want the loans to be at market rate, moderated down to make repayment more likely. Iceland and the NL established that rate as 6.7% back in Oct 2008. So the UK/NL have hardly been able to completely dictate the terms here.
Then again, I do belive this is just another game of words from Norway like the IMF has been doing, “if scandinavia pays we pay” and the nordic countrie say “if the IMF pays we pay” and I get the feeling that Norway will say: “yes, we do not hold the loan depending on Icesave anymore, BUT if the other nordic counties, don’t support the IMF plan, we can not do it either” anyways like Bromley says: “it’ll be interesting to see what’s been released this time tomorrow” I would better say “next week or even month”
Here is the link to Aftenposten
http://www.aftenposten.no/okonomi/article3560611.ece
Not so sure that it’s all that good news
I like it when the nations act like dignified neighbors instead of bloodthirsty business competitors!
My first Icelandic phrase is:
Gud blessi ikkur oll
“May life make all of you truly happy!”
My first Icelandic phrase is:
Gud blessi ikkur oll
“May life make all of you truly happy!”
Um, actually it is: Guð blessi ykkur öll, and it means “God bless you all”.
Sweden’s prime minister and finance minister both re-iterated their comments that IceSave must be sorted first, and Anders Borg made some extremely inappropriate comments more which I’m not going to repeat.
You have to forgive him. The man is worried witless that Estland and Latvia will rise up and refuse to pay the Swedish banks which are holding them to ransome, and then Sweden will be in the same class as Greece, Ireland, Italy, the UK….. old uncle Tom Cobley and all, old uncle Tom Cobley and all.
Well I hope at tomorrows meeting they tell the imf that they will handle this and then send check to help Icelands citizens. Oh and may be file charges against those who brought this on. That would be another first.
Thanks. I was borrowing that from the Peace Arch history in Vancouver and one of their gatherings in 1966. Oops.
Interesting discussion, guys. As we’ve learned Norway hasn’t yet protested against the reluctance to go on with the IMF-program. But today seems to be a first step – Norway has broken the ranks in Scandinavia. That means ministers from Sweden/Denmark can no longer say there is a consensus, as Anders Borg of Sweden did on tuesday.
I’ll be happy to hear your views on our reporting in Aftenposten as well. I write most stories on Iceland in Aftenposten, so feel free to click my name and send a comment. And keep up the good work on the blog!
Hi Lars – thanks for dropping in! I’m afraid I had to run the article through google translate and it’s not the greatest translating job, but I get the gist. It was pretty much what RÚV reported today.
It will definitely be interesting to follow developments, i.e. what Sweden, Denmark and Finland decide.
If not Norway – then it will be China. And I guess Norwegians understand that
I knew Norway would eventually support Iceland independently of Icesave, but am still surprised it took Norway so long to break ranks from the rest of the herd. It’s interesting to think that the level of Norway’s sovereign wealth fund makes it in some ways neutral regarding debt repayment when compared to all the countries with excessive national debt (such as UK, US, etc).
Well, looks like we didn’t have to wait to long to see that this was too good to be true, like I said, here we go with the throwing the ball game again:
http://www.tradingroom.com.au/apps/view_breaking_news_article.ac?page=/data/news_research/published/2010/3/71/catf_100312_070400_0429.html
I’ve been trying to find the titillating comment by Borg that James refers to. So far I’ve only come up with a pretty boring “Icelanders can not simply decide to ignore their obligations”.
BTW it looks like that meeting has already occurred. IR referred to a meeting in Copenhagen “tommorrow” in an article yesterday, but all the Norwegian press from yesterday seems to be reporting the results of that meeting. So it looks like the current position has just Norway wanting to relax the Icesave link.
As far as I understand, there still seems to be dissent about this question among the Nordic countries as the article in Aftenposten linked to by John indicates.
I don’t know, if the softening of Norway’s position does have any immediate practical consequences. They don’t seem to be linking the loans of the Nordic countries to the solution of the Icesave issue any more but they link it to the IMF procedure. So, if the IMF doesn’t move, nothing is going to happen.
It will be interesting to see if anything – at all – happens now. But When it comes to calling for an IMF board meeting (to get another review started) – the Nordic countries and the Baltic states share just one seat in the IMF. What needs to be seen is that the Nordic countries agree on what this single member should stand for.
The confusion of dates was partly my fault. I made a mistake and wrote “tomorrow” instead of “today” when I filed my story. A classic mistake for journalists in print newspapers.
(And our competitor Dagens Næringsliv today followed up on my story and wished our foreign minister good luck in Copenhagen “today” in an editorial – sadly the meeting was yesterday.
If Iceland has access to the funds it will mean that can repay the guarantee immediately doesn’t it? There won’t be the option to say – “we can pay for Icesave” and a loan from UK/NL won’t be required so the whole term and interest rate discussion will be out the window.
When do we get a webcam feed on the top secret negotiations, Have any British and Dutch warships been spotted off the coast, or maybe it has not registered on their radar, the no vote, as Gordon has bigger fish to fry than icelandic cod ie to avoid becoming political toast in 2 months from now.As far as the now reimbursed icesave crowd are concerned its all been settled as they got bailed out,apart from the councils of england,but what the heck a few speed cameras and clamp and tow away zones should get their revenue streams raised. Maybe Johanna was right along with that finance minister guy the whole referendum has turned out to be a non event.
Here they go, they are just throwing the ball to each other:
http://www.icelandreview.com/icelandreview/daily_news/?cat_id=16539&ew_0_a_id=359239
http://www.tradingroom.com.au/apps/view_breaking_news_article.ac?page=/data/news_research/published/2010/3/71/catf_100312_070400_0429.html
What Johanna and Seingrimur are trying to do is to give some pice of mind to the people, give us the impretion that things are working their way up and that the goberment is strong and not crumbling and I will refer you guys to this:
“In October of last year, the Financial Times reported that the Public Health Institute of Iceland had urged the Icelandic media to spin stories to make them more positive, allegedly to save us Nicelanders from depression.”
In my opinion This “Norway is ready to lend us the money” is exactly what this is all about.
UK/Holland have allready said it, “Just take your time to decide, we are not in a hurry, you are, but you will pay”
Peter: “If Iceland has access to the funds it will mean that can repay the guarantee immediately doesn’t it”
Ah bless. I wouldn’t count on it
From an Icelandic view, should they pay for regulatory failures overseas? Quite apart from the issue, should private companies have their losses socialised .. For people in the UK our problem is – should we have bailed out people who put their money into banks that are substantially based overseas. In my opinion , no. Its a tax on the sensible, to bail out the stupid.
“From an Icelandic view, should they pay for regulatory failures overseas? Quite apart from the issue, should private companies have their losses socialised ..”
Not this again.
Icesave was an Icelandic bank, regulated and guaranteed by Iceland. That is the whole point. Banks are not private entities, they are licensed by the government to take deposits and return them on demand. Icelandic depositors had their deposits protected (the accounts were moved to a new bank and the government recapitalised the bank), only non-Icelandic depositors were discriminated against.
Well, they are not because Iceland is going to honour the guarantee.
Most comments sound positive about Norway’s move… The Central Bank of Norway is still a Central Bank, same as BOE and ECB, or the IMF for that matter. They will print money out of thin air and loan it to Iceland with interest.
I still don’t understand when the Visa card is max’ed out, why everyone wants to get a new MasterCard to make the debt payments on the Visa card??? It just doesn’t make sense to pay off too much debt with more debt?
What about an honest money system? The Icelandic government can create its own currency interest and debt free.
Its a tax on the sensible, to bail out the stupid.
Or, another way of looking at it, those sensible people were themselves stupid.
Just because you disagree with the rules of the game, doesn’t mean that not taking advantage of them is the most logical course of action.
I’m of course referring only to deposits under £35k. Anyone who deposited more than that was taking a punt (whether they realised it or not) on the government stepping in. Good call, as it turned out.
Breaking News- At long last the mystery is solved what happened to the Norsave financial negotiator team, after the financial crisis 1000 years ago when they ventured down to discuss “matters” about the anglo-saxon business model with their britischer financial expert colleagues.
http://www.dailymail.co.uk/sciencetech/article-1257333/Decapitated-Viking-skeletons-Weymouth-ditch.html
PS Graphic Images only for the stoutest viking heart to gaze on !!
Career tip for Alda ,if the icelandic government offers you a job on their team, turn them down,say your too busy blogging at a furious pace. We would not want your journalistic talent to come to such a sad end.
“Good call, as it turned out.” That is very much open to question: their funds were highly illiquid. And and opportunity cost would have to be made to determine if it were a ‘good call’. Funds frozen for x amount of time, versus Funds invested for x amount of time. Few people would consider Icesave a ‘good call’ in investment terms.
Peter: “Not this again.” I’m afraid so, even though they operated through the passport scheme, the FSA still had a duty – arguably it was negligent in that duty. Given the gap between Northern Rock and Icesave, that is, an easy argument to make.
Michael
I see you passed over the core point regarding deposit guarantees and the difference between philosophy and the “correct” course of action.
@Kevin
Now you can see why referring to Icelandic businessmen as”Business Vikings” and the like has some rather negative connotations to the British!
http://m.guardian.co.uk/?id=102202&story=http://www.guardian.co.uk/business/2010/mar/08/iceland-business-vikings-icemen
To be fair, this is a VERY significant move. The IMF has suffered a number of defeats in recent years. The biggest defeat of all the impossibility of punishing Argentina for going about restructuring its debt outside the IMF. Then there was the part default of Ecuador. Then there was Haiti recently, where the demands put forward by the IMF for their debt to be cancelled were just swept off the table. And now there’s the defiance of Iceland. The IMF is wounded, so you can expect extraordinary political pressure to be applied on Norway to change its stance on this issue or at least make some comments that support the IMF way of going about things. I applaud this (and the referendum result) but you have to realize that you will need a strong prime minister to withstand the political pressure that’s about to be unleashed on your country.
At the very least it shows that the Icesave negotiations were not done with empty hands. There was a stick to beat the UK and Holland with.
“I see you passed over the core point ..” No, the point missed is this: if there is a regulatory responsibility on the part of the FSA (there is , even if they operated under the passport scheme) then it opens a legal question – would the guarantee valid – or responsibility shared – if that regulatory responsibility was not upheld.