So, the Icesave debate rages on here in Niceland and is the main news fodder in any given news hour or current affairs programme these days.
Brief recap for anyone who’s just joined us: the debate revolves around whether or not the Icelandic taxpayer should be made liable for the colossal debts incurred when Landsbanki’s online banking unit Icesave collapsed in the UK and Netherlands last fall. Transposed onto the UK or US, the debt would be equivalent to the UK having to pay £700 billion or the US $5.6 trillion – in a foreign currency.
An agreement was signed a few weeks ago with British and Dutch state negotiators in which Iceland agreed to take on the Icesave debt*, albeit with a clause stipulating that the agreement would have to be ratified by the Icelandic parliament. That agreement was signed under massive pressure from the EU and the International Monetary Fund, which threatened to cut off Iceland’s current aid package until the Icesave dispute was settled. Indeed, the most recent IMF loan payment, which was to be paid earlier this month, was postponed until the end of August – all because Icesave was still being debated in parliament. The EU, also, has made it clear that there will be no aid for Iceland until it faces up to its “responsibilities”.
The Icesave agreement is wildly controversial. You have two extremes – the people who are absolutely adamant that the Icelandic public should NOT have to pay for the f*ck ups of a bunch of reckless bankers, and those who feel that we HAVE TO pay, if for no other reason than that we’ll be totally cut off from the international community if we don’t and will then suffer another economic collapse that will be the kiss of death for this country. Literally.
Then there are the myriad people placed somewhere between those two extremes – and that seems to be where the debate is at the moment. More specifically, the majority of MPs say they will not ratify the agreement unless there are some serious amendments made. Two main ones have been primarily under discussion – a clause that would limit the sovereign guarantee for the debt [basically meaning that we won’t be forced to pay something that we simply cannot pay], and another that would ensure that the creditors will not be able to take control of our resources if all else fails.
To sum up: This country is fighting for its freedom and its life.
For weeks now, most of us have had the impression that the external world looked upon us as a bunch of greedy incompetents who like irresponsible children were trying to wrangle our way out of doing the right thing. However, in just the last few days the wind has seemed to turn ever-so slightly. First, there was Eva Joly’s wonderfully supportive and outspoken stance on Iceland’s behalf. Then today, there was an editorial in the Financial Times in support of Iceland’s plight. Also today, Lee Buchheit, an American expert on sovereign debt, had a long meeting with parliament’s budget committee and had this to say when he emerged – in short, that ratifying the Icesave agreement at this time is premature, since it is impossible to determine the amount of the debt until we can see how far the outstanding assets of Landsbanki will go towards covering it.
The frustrating thing is that people like Mr. Buchheit are being called in NOW, when everything is at boiling point. Why couldn’t he have been called in earlier, say before the Icelandic negotiating committee met with the British and Dutch negotiators? Indeed, why could Icelandic authorities not have recruited his assistance in the negotiations? Because the word on the street is that the [amateurish] Icelandic negotiators were no match for their hard-nosed British and Dutch counterparts and that they basically got bulldozed. Having someone like Mr Buchheit or Mme Joly on board would undoubtedly have made a massive difference.
At any rate, it is comforting to know that the voice of tiny little Iceland is being heard in some capacity, whatever the ultimate outcome of the Icesave debate turns out to be.
A CHILL IN THE AIR
This evening, at least. I spent a couple of hours at a meeting of the Ministry of Ideas and was, as ever, totally inspired by the excellent work the grass root in Iceland is doing. More about that later, perhaps. Walking back home along the sea, I realized how cold it had gotten. Fall just around the corner. Currently 11°C [52F]. Sunrise was at 5:08 am and sunset at 9:55 pm.
* Whatever is left over when Landsbanki’s assets have been sold towards the debt, which could take years.