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About that phone transcript

Know what’s surreal? When your readers are one step ahead of you and have started a whole new topic in your comments box without you even knowing about it.

Power to the reader!

[Ahem.]

Anyway – yes – the transcript of THAT phone conversation between Alistair Darling and our Minister of Finance Árni Mathiesen is now available in English on the Iceland Review website, and in Icelandic on mbl.is.

So if you could kindly move the debate about the transcript over to the comments below this post I’d be most obliged. Ta!

In other news:

The demonstration that was scheduled to take place at 3 pm tomorrow on Austurvöllur [as a follow-up to last week’s demo] will now be taking place at 4 pm. The idea is that people gather on Austurvöllur and walk with torches over to the Ráðherrabústaður – the government’s official meeting place. [Presumably not with the purpose of torching it, though.]

The organizers have clearly changed their tactics and are now no longer calling exclusively for Doddson’s resignation, which I think is good. The downside is that it’s not quite clear what the demonstration is about. The official heading is “Rjúfum þögn ráðamanna” which translates as “Let’s break the silence of our leaders,” but what that means exactly is a bit nebulous. What silence? Are they demanding to be kept better informed? Or something else?

Anyway, I’m somewhat on the fence now about whether or not to take part. I prefer to have a clear agenda.

THAT STORM THEY THREATENED US WITH WASN’T THAT BAD
It certainly blew through with a vengeance last night, but there was no snow, at least not here in the capital. They got hit pretty hard on the West Fjords, though, with power outages and other exciting stuff. It’s relatively calm now and the sun even came through the clouds a few minutes ago. We have 4°C [39F], sunrise was at 8:46 this morning, will set at 5:36 pm.

Comments

comments

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  • Doesn't matter October 24, 2008, 12:08 pm

    You are a little late this tame. I already said what I had to say, no need to repeat myself here.

    Just… Thank you for the blog.

  • trev london October 24, 2008, 12:38 pm

    Sorry alda….taking over your blog! I do apologise!

    The “nebulous demo” reminds me of the one in “Father Ted” (did it ever reach Iceland?) when a sexy film was being shown on Craggy Island and the locals demonstrated with placards saying “Down with this sort of thing”.

  • alda October 24, 2008, 12:44 pm

    DM – Ókei.

    Trev – nonono, don’t apologize. Discussion is good [within the boundaries of decency, obviously].

  • Francis October 24, 2008, 1:05 pm

    I wasn’t going to comment on this, but you’ve made the invitation, Alda, so here goes…

    I assume the Icelandic government leaked this transcript to support their version of the events, ie they had every intention of meeting their legal obligations to British savers.

    So far so good. But a couple of things come out of the transcript that are highly damaging to the Icelandic government and you wonder why they would want to reveal them.

    Firstly, they appear to have previously misled (close to “lied to”) Darling and other British officials about the true state of Landsbanki.

    Secondly, Árni Mathiesen made it clear that the Icelandic authorities had a guarantee that discriminated on nationality, within the same bank Icelandic authorities are responsible for regulating British as well as Icelandic depositors, unlike Kaupthing for instance. This discrimination is probably illegal, although Mr Mathiesen didn’t think so.

  • Marc October 24, 2008, 1:24 pm

    I read the transcript. I wouldn’t say the Icelandic minister sounded very reassuring (on the contrary). What I am mostly surprised about is that neither party of the phone conversation was talking about the steps needed to be taken to restore confidence. I would have expected the Icelandic minister to have offered some kind of information on the status of Iceland’s efforts to secure an overseas bailout. I would have expected the British minister to inquire about just what it was that Iceland needed in order to be able to give a firm reassurance to the British customers they would at least get back the supposedly insured 16000. It is perfectly natural to be very upset when a bank collapse threatens your citizen’s savings, but these citizens are not helped by the bullying of a smaller nation, already down.

    Just my thoughts

  • KK October 24, 2008, 1:46 pm

    The Icelandic Government was not guaranteeing deposits because they owned/controlled the banks, they announced this much earlier, when passing the emergency law.

    They were saying, the Icelandic Gov. will guarantee Icelanders savings within our domestic banks (they were privately owned when this was said). They even said if I remeber correctly if account was on “kennitala” that is social “security number” so only registered companies and individuals registered in Iceland have this guarantee.

    This announcement was made by our gov. to protect us, we pay taxes to the Icelandic gov. we vote for the Althingi and they are supposed to protect our interests.

    The Icelandic gov. has no such obligation to the UK. By law the compensation scheme fund should give all the money they have to the people wich had deposits and then go bust. The Icelandic gov. has promised from the beginning to back up that fund so it can pay the whole amount of the guarantee, 20.887 euros.

    By doing that – Iceland is fullfilling all its obligations by law, nothing more nothing less.

    We are not like the UK wich does not guarantee deposits of Brits in banks in the channel islands or island of Man, they are discriminating UK nationals based on what? Wich branch they choose to have business with. ?

    It seems like the Icelandic Gov. isn´t as discriminating as the UK gov. is, in these matters.

    This isn´t a very complex procedure, the compensations scheme, it is only hard for people to bear the loss and accept it.

    This is the law, UK and Icelandic Govs. approved of it and we all will have to deal with the consiquences…

    Be it as it may, we will learn a lot from this.

  • alda October 24, 2008, 2:07 pm

    Just for the record, the transcript wasn’t leaked – the Icelandic media (and people) insisted that it be made public.

    Personally I’m interested in seeing the letter Mathiesen refers to.

  • Gray, Germany October 24, 2008, 2:11 pm

    “The Icelandic gov. has no such obligation to the UK.”
    Uhz, excuse me, pls, but if you operate an international bank, you have obligations to ALL yor customers, regardless where they are. It’s important where the bank is registered and paying profits, not where the customer is. And don’t forget that the Iceland government especially built that guarnatee fund in order to inspire confidence in its banks! They only” forgot” to promote the fact that there wasn’t even remotely enough money in it…

    And Darling rightly pointed out that the UK recued Northern Rock and garanteed the savings of ALL customers, regardless of nationality. Despite Mathiesen’s inistence on the contrary, there isn’t a recent example of a nation bailing out only its own citizen. And I don’t believe such a procedure can be legal under EU rules.

    Btw, KSF IOM and Landsbanki Guernsey are not branches, they are seperate entitites and don’t belong to the UK. Guernsey isn’t even taking part in EFTA. Whoever invested there should have been aware of the risk.

  • Gray, Germany October 24, 2008, 2:16 pm

    “Personally I’m interested in seeing the letter Mathiesen refers to.”

    Exactly! An important point.
    But this raises another question: We’re licing in the 21st century, the communication age. Now, if you’re a government official who has to break some urgent, disturbing news to your neighbors, why would you sent it with SNAIL MAIL? The only reason I can think of is that you’re not eager to let the shit hitting the fan, and you try to buy some additional time before the inevitable shitstorm.

  • Francis October 24, 2008, 2:41 pm

    KK, you’re right. I assume it’s not illegal to treat Icelandic residents differently under domestic Icelandic law. What I meant is that Iceland regulates British Landsbanki savers under the the European Economic Area Passport scheme. Therefore it has treaty obligations towards them.

    This is not the same as Kaupthing where there were three separate banks in Iceland, UK and Isle of Man, each regulated by their respective authorities. Another, different mess.

    I’m sure all this will end up in court ten years from now.

  • trev london October 24, 2008, 3:21 pm

    I have some hot news. Gordon Brown has just announced on all BBC channels that, despite earlier statements to the contrary, Icelanders are indeed terrorists of the most dangerous order and all UK citizens are to be vigilant and report any suspicious behaviour by nordic neighbours, including but not limited to:

    a) an over fondnes of fish, fishy smells, fish logos on clothing, loitering around fish counter in Tesco, fish skeletons poking out of waste bins etc, etc.
    b) the wearing of sweaters of the type last seen in 1980 on Top Of The Pops worn by Haircut 100 singing their chart topper “Favourite Shirts”
    c) displaying intelligence too highly developed for their own good
    d) a tendency to be out drinking and enjoying themselves in the early hours when they should be in bed with a good book
    e) Bjork or Sigur Ros ringtones
    f) the opening of windows in cold weather
    g) ordering of £40 bottles of wine in restaurants, whilst declaring “that’s very reasonable”
    h) the putting of West Ham United on e-bay with a £1000 “buy now” opportunity
    i) mastery of the English language way in excess of the indigenous population
    j) the preparation and ingestation of disgusting liquidized animal entrails

    The anti-terrorist branch of the Metropolitan Police have launched a “Terrorist Iceline” which should be called immediately any such tendencies are noticed. Within 10 minutes, an armed squad of specially trained officers (headed by Chief Insepector “call me” Darling of The Yard) will be around to kick the door down, seize their hard disks, Range Rovers and bank accounts.

    Asked if this would not be against the law, PM Brown declared “the safety and security of hard working British families is our priority, and in any case we make the laws so we can do what we want. It will give the police a nice change from raiding mosques”.

    A spokesperson from the Muslim Council of Great Britain was unavailable for comment.

  • KK October 24, 2008, 3:25 pm

    Gray, Germany

    Official letters are sent to embassy, embassy delivers to treasury right ASAP = no postal service… … very quick for formal letters tht need to be in writing.

    Francis

    What? Icelandic FMA in cooperation with UK FMA regulated Landsbanki…

    Do you really think that the UK (who are obsessed with surveiling everything would ever regard any other nations banks in their country as “hands off”…

    It is plain stupid to think that …

    UK FMA = regulating operations in the UK

    Icelandic FMA = regulating operations in Iceland

    How can you even imagine the Icelandic FMA having any juristiction over what is done in the UK?

    But responsibility for regulating the mother company regardin liquidy and exposure of course would be in the hands of the Icelandic FMA.

    Sending money from Guernsey to Heritage bank or from UK to anywhere else or transfers within the UK and from/to UK = UK FMA responsibility – no doubt (dream on thinkin Icelandic FMA could get info to regulate or control)

    Who does the UK compensation scheme cover? All depositors in some brances in the UK (not channel Islands)

    They chose to do it that way, Iceland chose to cover everyone with an Icelandic social security number (even foreigners who are registered) 100% and everyone within the EEA 20.887 euros.

    Iceland isn´t handling things very different than the UK.
    But the UK gov. does i against its own nation (fx. Island of Mann, Kaupthing or Kaupthing EDGE in Germany and other EU countries).

    So whats the big deal?

  • icegrl October 24, 2008, 3:40 pm

    This is what I sent got from the Facebook group about the demo:

    “Næstkomandi laugardag kl 16 verður gengin Kyndilganga – blysför – frá Austurvelli að ráðherrabústaðnum. Krafan er einföld, og þverpólitísk, RJÚFUM ÞÖGN RÁÐAMANNA.

    Mætum öll á Austurvöll – til að hittast, til að sýna fram á að við höfum rödd, að við erum til. Sýnum hvert öðru samhyggð, að við stöndum saman, og ef ekki einfaldlega til að finna að við erum ekki ein – og að við finnum til.

    Kyndla er hægt að kaupa í Rúmfatalagernum (en búast má við að kyndlar verði til sölu á Austurvelli, ekki komið á hreint)”

  • Gray, Germany October 24, 2008, 4:07 pm

    “Official letters are sent to embassy, embassy delivers to treasury right ASAP = no postal service… … very quick for formal letters tht need to be in writing.”
    Yeah, I imagined that this would be diplomatic post, delivered by a messenger. However, it was sent “the night before last” and still hadn’t reached it’s destination yet. That’s, hmm, strange…

    “So whats the big deal?”
    Several points!
    – No other western nation discriminated foreigners in this crisis
    – This isn’t in sync with international banking policies.
    – The investors haven’t been made aware of this legal handicap.
    – The legal base is shaky. Where’s this in the October 6th bill?
    – Not even the promised guarantee fund is adequately financed!
    – the discrimination is a breach of EEA articles40 and 42.1:
    “Within the framework of the provisions of this Agreement, there shall be no restrictions between the Contracting Parties on
    the movement of capital belonging to persons resident in EC Member States or EFTA States and no discrimination based on
    the nationality or on the place of residence of the parties or on the place where such capital is invested. Annex XII contains
    the provisions necessary to implement this Article.”
    “Where domestic rules governing the capital market and the credit system are applied to the movements of capital
    liberalized in accordance with the provisions of this Agreement, this shall be done in a non-discriminatory manner. “

  • alda October 24, 2008, 4:12 pm

    Trev – HAHAHA!! Best comment of the day, hands down!

    In fact, I’m going to take the liberty of posting it. Hope you don’t mind [and don’t invoke terrorist laws to seize the Weather Report!] 😮

  • Leighton October 24, 2008, 5:44 pm

    Let’s hope the financial mess and the diplomatic standoff is a little like that storm that came through ….. not as bad as predicted.

    If you are interested, the weather in Preston, Lancashire, UK has been half decent: sunny intervals, moderate winds with a max of 11 deg C (not sure where exactly) and min of 7 deg C. The sun rose while I was on my way to work and the sun set a while ago. This is my one and only weather report.

  • KK October 24, 2008, 7:11 pm

    – No other western nation discriminated foreigners in this crisis

    Ohh yes some racist have been doing pretty weird shit.fx. the UK against Iceland using special provisions/Terrorist laws to freeze assets and take over banks, sell their assets and etc. Also they discriminate not only foreigners, but their own people by not guaranteeing deposits in UK branches in the Channesl Islands, Isle of Mann, Germany (K-EDGE) they only guarantee 20.887 euros within the EU like Iceland does…

    According to EU law the compensation fund was operated, not law made in Iceland or only icelandic, international law same as UK.

    Icelandic gov. clearly said from the beginning that it would back up the fund so it could pay (Icelandic treasury did not owe a dime in september = has credit)

    According to what international bank policies ? Iceland is working 100% according to every law and policy we have ever agreed to follow and operate by.

    This isn´t a legal handicap, this is the EU law, according to it Iceland has three months to settle this. But UK gov. is making it hard by standing in the way and freezing assets we need to sell (they are selling it or trying to, to friends of GB fx. Phillip Green) hipocrits.

    Is that what you call international policy?

    Talking about a shaky legal base in the 6. october bill?

    It only allowed the Icelandic gov to overtake the power of “shareholder meetings” decision making for the firms = not owning them.

    Here is the law in english, made public in english the 8. oct.

    http://eng.forsaetisraduneyti.is/news-and-articles/nr/3037

    The fund according to EU law is to receive some percentage every year from deposits in the banks, (every 25.mars I think) Icesave was 1,5 years old and last mars, about 100.000 had deposits there so the number had been growing fast, no fund within the EU could handle all banks collapsing at once, don´t be stupid an think that any fund could…

    The Icelandic gov. did not freeze anything, the banks were taken into administration, if the fault was anyones, it´s the banks, then UK gov froze everything, thats what stalling this matter.

    They did not discriminate, where it worked it worked, where it didn´t it didn´t. Like saying if one ATM didn´t operate they should shut all of them down…

    (I would still like a detailed description of what went wrong – good point)

    According to the latter part of EFTA article, what rule regarding movement of capital does discriminate against anyone ?

    I know it feels wrong, but read the /&$/()$%(%&$ things you are quating before you post them…

  • Gray, Germany October 25, 2008, 9:00 am

    KK, you almost totally miss the points:
    – UK freezing was in reponse to illegal Is action. That’s allowed under EEA.
    – KSF IOM and Landsbanki Guernsey are NOT UK businesses. Why should the UK taxpayer pay for them?
    – Icelandic government only said it HOPES to fund the guarantee fund. They took no action, like borrowing money, to actually do it.
    – Nothing in the October 6th law says anything about unequal treatment of domestic and foreign creditors.
    – The banks have been taken into some kind of administration now (after nationalisation failed). But the procedure so far is quite unusual, no court hearing, no creditor assembly, direct interference by the government…
    – Freezing all the bak operations of foreign branches, not only in UK, but continuing service in Iceland is discrimination, not doubt about it.

    “read the /&$/()$%(%&$ things you are quating before you post them…”
    That’s really rich! You distort almost every single fact, haven’t admitted any wrongdoing by Iceland so far, but accuse others of not being informed about the facts? Mann, du hast doch ‘ne Macke!

  • KK October 25, 2008, 1:17 pm

    OK, you´re right… … I´m pissed and I should behave, sorry, truly sorry.

    I would be glad if we could put up some kind of a debate to get our facts straight. There must be something you know that I dodn´t know and vice versa.

    I build my case on:

    1) Chain of events as I see them:
    *Icelandic CB anounces it will buy 75% of Glitnir (end of september).
    This was very disputed descision of the CB, and would have used up much of their funds/cash. The stockholders of Glitnir were going to meet and vote on the proposal but before that could happen the Icelandic FSA had to take it into administration as it did Landsbakinn and later Kaupthing.
    2) When the news came out that Landsbanli was in serious trouble the CB had no means to back the bank up, it had promised teh funds elsewhere, other CB´s were not lending creating a total lack of “liquid funds” to back up a run against the banks. To prevent a default the Icelandic government created these emergencylaws and passed them through congress in one day. If you read the law you will realize that their sole purpose is to protect depositors deposits. Instead of letting the bank default they are volenteer into administration to the Icelandic FMA who takes over the power of “shareholders meet”.

    They did this to prevent creditors from tearing their asset portfolios to peices and sell them cheap to each other (like they usually do) and the only ones who have bno say in that process are the depositors. So in few words, they created a process were depositors intrests are safeguarded when liquidating the assets of the banks.

    3) Icekandic government, according to Darling/Árni conversation fx. and the law, commits to backing up the compensation scheme so it could pay, guaranteeing enaugh fund for it to take the blow.

    4) I thought Landsbanki and Kaupthing in the Channel Islands and Isle of Mann were UK branches, my mistake – sorry.

    5) No one has pointed out what illeagal action the Icelandic government took that deserved the “anti-terror or special provisions” response from the UK. The only argument I´ve heard from Darling is, “I was sure they wouldn´t”

    6) http://indefence.is/News/News/~/NewsId/13

    Makes me angry, the brits would themselves be angry if they were categorized with these terrorist regimes on any list (even a guest list to a party) It would create political havoc in the UK seeing the “Great Brittain next to Iran or Al-quieada” on a guest list to an embassy perty, the heading of the page differs in our case though..

    7) By freezing the assets of Landsbanki and saying Iceland wouldn´t pay, of course every foreign creditor of Kaupthing had a panic attack and when UK took KSF into administration (we still havent heard the argument, what standard it didn´t fulfill by the HMT), when a daughter company is taken into administration a standard loan agremeent to the mother company states “technical default”

    This means that Kaupthing went down because of UK actions, nothing else took it down. There was no other apparent reason (not that I know of).

    Grey, your turn…