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Will the government collapse over the Icesave agreement?

Big news today: our Minister of Health Ögmundur Jónasson has resigned over the Icesave issue. Apparently the pressure is on to make everyone in government walk in step concerning Icesave – and he’s just not behaving. So instead of being pressured into going against his own convictions he’s decided to bow out.

There has subsequently since been a flurry of speculation as to what is going to happen to the government, whether it will collapse over the Icesave nightmare issue. The two coalition leaders [Steingrímur and Jóhanna] maintain vehemently that it will not – but if there’s one thing we Nicelanders have learned over the past 12 months is not to give much credit to anything anybody in politics says.

Another amazing piece of news this evening was a report that a socialist MP in Norway is lobbying the Norwegian government to grant Iceland a loan that would exceed that which the International Monetary Fund is lending this country. According to the minister, the Norwegians have the resources to do so and should, on the basis of the “deep friendship” between our two nations.  Ögmundur Jónasson discussed on Kastljós this evening what an incredible boon it would be to get out from under “the yoke of pressure and threats” that is being applied on this country from the international community – the EU, the UK and Holland, and the IMF. Referring, of course, to the pressure that is being put on Iceland to concede to all the demands of the UK and Holland concerning the Icesave agreement.

I have to say that I don’t know exactly what the status is of the Icesave debate right now – I know the Dutch and British were displeased with the amendments that were made to the agreement and there have been ongoing talks, but essentially we, the Icelandic people [who note bene will be the ones to pay] are kept in the dark about the progression of things. [The more things change, the more they stay the same.]

Ögmundur did reveal, however, that an MP from his party [Lilja Mósesdóttir] who is in Brussels right now for a meeting was pulled aside last night and told in no uncertain terms that if Icelanders did not “finish” the Icesave agreement, there would be no hope in hell for us in joining the EU.

Is it any wonder that support for joining the EU is waning fast around here?

Anyway, slightly hasty post this evening as I’m packing my bags – heading to Italy tomorrow for a week [wOOt!]. Scheduled to be a guest at the Internazionale Festival in Ferrera this weekend, and when that finishes I plan to take a couple of days to shop for shoes do some exploring.

Let’s hope this country will still be here when I come back.

Occasional sun, moderate winds from the north. Right now it’s a measly 4°C [39F]. Sunrise was at 7:32 am, sunset at 7.01.

On the status of the Icesave debacle
On becoming an Iceslave
Eva Joly: Iceland is being blackmailed
For freedom and life



Comments on this entry are closed.

  • Marc September 30, 2009, 9:30 pm

    The desire (or lack thereof) should not be material in the decision of such an important issue as the bank debts and how to repay them. Also, be wary, very wary of institutions, countries or people who want to lend you huge amounts of money. You should not be surprised that the current government is less stable than you might have wanted. I don’t see any stable government in countries hit hard by the credit crisis. It’s about making hard choices, but alienating your constituency or not making hard choices but leading the country further down the hole. You just can’t win if you’re a politician.

  • sigga September 30, 2009, 10:19 pm

    I just want to be really naive right now and hope that the Norwegians come through, I would rather be indebted to the old crown than to the EU and the IMF. Also, being really naive, why the hell hasn´t this been taken to the international court? if there is such a thing. Have a wonderful time in italy – buy all the shoes that you can…. I would

  • Scott September 30, 2009, 10:28 pm

    I suspect that OJ would rather bail before he has to make far too difficult choices regarding the cuts that must be made in the health care sector. That will be a career ender for anyone who needs to be seen as a “good guy” for their political future. Which sucks, because if you get paid to do a job, and you invest time in that position to get a grip on it, you should carry out what needs to be done, regardless. Perhaps they will be able to find another outsider (Norwegians seem to do nicely) to come in, clean up what they can, and leave afterwards to avoid the shrieks of the damned.

  • Mike September 30, 2009, 10:34 pm

    There’s a problem with you Icelanders 😉

    You’re all too nice. The British and Dutch governments know that their Icelandic counterparts crave international respectability and can be bullied into agreeing a completely unfair deal.

    If your government became a little more Viking and made threats that the Icesave settlement would be on their terms, or the country would have no choice but to default then there might be a little more flexibility from Britain and the Netherlands.

    Compared to the amount of money Britain has flushed down the toilet bailing out Scottish banks and far-Eastern car manufacturers; the amount of money in dispute with Iceland is insignificant.

    You deserve better than us for neighbours. But if the Norwegians do offer a loan, make sure it doesn’t come with any conditions like the last time Iceland agreed to Norway’s terms in 1262 😉


  • 9uy September 30, 2009, 11:00 pm

    After the crisis Iceland needed a “boot” and a “restart”. There was an attempt to do it with the new government, but the attempt failed. It is not enough solving the icesave problem, a change of approach is what needed. Iceland needs to decide what kind of country it wants to be. A restart.

  • Easy October 1, 2009, 12:16 am

    This is all just a show to distract attention from the 1st. october strike, the icesave deal will go through because it will go through, Iceland has no choice. I can tell you that sooner or later the Icesave deal will go through with whatever condittins UK and Holland want, as simple as that.

  • Luna_Sea October 1, 2009, 12:52 am

    Skál Norway.

  • Pat Donnelly October 1, 2009, 4:47 am

    Niceland but not nicelanders!
    Norway is now a financial empire, looking to expand. As you say Sigga, it is a known and somewhat loved quantity. And nicelanders cannot rule themselves ……!
    Niceland has extensive maritime claims on the seabed ……! You are rich! But lazy. The Norwegians will get you all working on the seabed.
    Tell them that the Argentine has more in common than a war with Her Britannic Majesty!
    Tell them all to go to Hell!

  • Bob Beck October 1, 2009, 5:12 am

    gedanken, if iceland was an EU member using the euro currency and then the banks melted down would icelandic taxpayers be better off or worse? what advantage if any is there to have a small currency? i wonder.

  • Pat Donnelly October 1, 2009, 5:40 am

    A lot of bull on that site! And very American, but it seems that 27 countries said sod off! to those wanting money they had not earned!

  • James October 1, 2009, 10:42 am

    It’s Icelandic politics: the health minister is surely just positioning himself for after the coalition collapses.

  • Cammy October 1, 2009, 11:01 am

    Were all the failing banks/building societies in the UK who were bailed out actually Scottish or is that some attempt at splitting the union before its actually fallen apart(i.e when the oil runs out) ?

  • Mikael October 1, 2009, 11:07 am

    Just a minor quibble, the astonishing Norwegian which informed the Progressive Party that a megaloan from Norway might be possible is not a socialist but a member of the Centre Party named Per Olaf Lundteigen. The Centre Party is the third party in the Norwegian coalition government and it is totally anti-EU, and this “offer” should perhaps be looked at in that context.

  • Chris October 1, 2009, 12:09 pm

    Lets hope the best for the government. And have fun in Italy.

  • Gwrhyr October 1, 2009, 2:19 pm

    I wonder if a Norwegian loan goes through if Iceland would replace compulsory Danish with Norwegian in the Icelandic national school curriculum.

  • Gunnar D October 1, 2009, 6:15 pm

    Norwegians are only too pleased if told to go to Hell .. (http://en.wikipedia.org/wiki/Hell,_Norway)

  • Knute Rife October 1, 2009, 8:12 pm

    Even with a 1262 rider, a Norwegian offer would be preferable to the Anglo-EU-IMF cabal. Ask any non-G20 that’s ever had to deal with the IMF.

  • Knute Rife October 1, 2009, 8:30 pm

    Another point. If there’s one thing we here in the US can tell you about trying to figure out why politicians are doing a particular thing, it’s “follow the money.” If Norway puts money on the table, but the government keeps chasing IMF funding, I guarantee someone has a side deal going down.

  • Mike October 2, 2009, 1:42 am

    Cammy asked:

    ‘Were all the failing banks/building societies in the UK who were bailed out actually Scottish’

    Two of the biggest bail-outs went to Scottish banks – the Royal Bank of Scotland and the Halifax Bank of Scotland (HBoS) consortium. HBoS has now been merged at gunpoint with the London-based Lloyds TSB. Between them they got about £37 billion from the taxpayer. The third big bail-out went to Northern Rock based in Tyneside which gobbled up another £27 billion.

    Scotland and the North East of England are the bedrock of Labour’s vote and return a disproportionate number of MPs to the House of Commons. Is there a connection…?


  • Bromley86 October 2, 2009, 1:09 pm

    >Is there a connection…?

    Unlikely. If those banks, especially the Scottish ones, had been allowed to fail then the whole UK banking system would have imploded and people would be sleeping on well-stuffed mattresses.

    Also, and I may well be wrong here, but I think that Scottish constituencies have been brought roughly into line with English ones.

    This refers to the boundry changes in 2005 to address the Scottish problem (–> reduction in seats by 13 to 59).

    This has all the constituencies listed with size. I haven’t averaged them, but the Scottish ones look similar to me.

  • Great Eastern October 2, 2009, 1:15 pm

    What icelanders need is to face the devil.
    Face the fact that Britain and Holland are the largest trading partners ( am I wrong may be ?)
    Face the fact of trading blockade, freezing of assets abroad, whatever.
    If it happens then it will hurt. Escpecialy in the beginning. But it will preserve some kind of independence. And pride. And self respect. Money will find their way around cause they always do. After all nothing consolidates a nation that well as a foreign enemy(ies). Sad but true.
    Beware of the dark side though: witch hunting will flourish if you go that way.
    All this happened before. My native post Soviet country including.
    Actually, the transformation Iceland took in front of my eyes from year arround 2000 was sort of deja vu. Privatization of state property ( einkavæðing) Oh yeaaah, that sweat word “own.” Pundit schemes. I’ve seen it before. Search for truth, trials including. The end result was no result. Not a single man charged and found guilty.
    I can safely bet Eva Joly and co. will deliver result equal to exactly zero. If not then icelanders do have some strong communal values after all. But well, too many people are actually well doing specially in crisis. So my bet stands – nil result.

    My best wishes to all icelanders. I’d like to see you preserving some pride anyway. Even at the expense of loosing those damned foreign assets that mosy of you do not own nor care anyway!

  • Adam October 3, 2009, 10:56 pm

    Re the Scottish banks debate

    Bromley is right, but it is true that currently there are 72 Scots MPs, and they do make up a significant part or the Labour majority. However, though RBS and Bank of Scotland were largely Scottish banks, RBS had previously taken over National Westminister, the largest ‘English’ bank, and BoS had merged with Halifax, the 2nd largest ‘English’ building society, prior to the meltdown. RBS ran into trouble when it bought ABN Amro – a Dutch bank – while the blame over HBOS was in large part down to commercial loans made by the Bank of Scotland throughout the UK as well as Halifax having picked up a large chunk of dud securitised mortgages from the US.

    Again, Bromley is right, there was relatively little concern over whether they were ‘Scottish’ or ‘English’ banks, except as a swipe at the governing Scottish National Party on the grounds that – if like Iceland, it was independent – then Scotland would not have been able to save them.

    Overall, while there was some regional politicking over the bailouts, the main purpose was to save the City of London from the collapse of the financial sector. The Scottish financial sector – which includes a lot of insurance companies which were not heavily involved as far as we know – was not really directly involved in the trading activities which were responsible.

    A relatively small Scottish Building Society – the Dunfermline – has also failed, but Clydesdale Bank – owned by Australians and the third ‘issuing’ bank here – seems to be doing ok, as is the much smaller Airdrie Savings Bank, though there have been rumours. Oh, and the Credit Unions (which I’m involved with) are doing ok too. Nationwide Building Society – which is the biggest in the UK, and still a mutual, and also very big in Scotland, and the Co-operative Bank (also UK wide, and big in Scotland) are in good shape (tho Nationwide’s accounts show that their member’s equity has been nearly wiped out by the government encouraged acquisition of the failing Britannia Building Society just before the big crunch/kreppa).

    It is also true that the Tories, perhaps motivated by the regional politics, were against much of the bailout.

    As for the oil, there is still plenty ‘out there’ especially off Scotland, but oil politics have died down. While there is some English resentment of Scotland, the main impetus for Scottish independence comes from Scotland.

    As for the main controversy, I think it inevitable that Iceland will accept the Icesave ‘deal’, and that the Committee will not accept the amendments made in the Icelandic Althing. It is not a good position to be in; but Iceland needs foreign currency and access to the global trading system more than anyone outside needs what Iceland can offer.

    It seems that the only jobs going in Iceland just now are for currency enforcers – I wonder what the ordinary Icelander thinks of those who will take such jobs.

    Icelanders may not be aware that many many depositors – charities, businesses, local authorities – have no recourse even under the Icesave ‘deal’ – our local council is out £2.5 million. The Icesave deal will at most slowly pay back the UK and Dutch governments for money they have already paid out to the individual depositors under guarantee – it’s not quite like they are wanting money for nothing!

    The fact is that there were more (or at least a similar number of) individual foreign depositors in Icesave than there are people in Iceland, who thought their money was guaranteed – and who have at least lost the interest they were expecting. Yes, they were protected by their governments – and fellow taxpayers – and Icelanders may feel that they can’t afford to pay it back, on top of what they owe individually. But it is fairly clear that the money did indeed go to Iceland, and some Icelanders, and that the Icelandic government failed – not alone by any means – to regulate their banks as they had agreed to do. If Iceland fails to agree an Icesave deal, it is no more fair on UK and Dutch taxpayers than agreeing would be on Icelandic taxpayers. (And while the burden may seem disproportionate per person, don’t forget that UK taxpayers (and probably Dutch) have a pretty huge set of obligations to pay off themselves anyway – the estimated £300 billion in the UK is about £5k per head, while the Icesave deal will cost Iceland about £10k per head. Supposedly, and for a number of years, Icelanders have had a per capita GDP greater than the UK by something more than £5000 per person per year. So who is in better shape to pay?)

    Well, perhaps the Norwegians – but at least with the Dutch, UK and IMF you know the main agenda is to get the money back. History is not an issue…

  • Bromley86 October 4, 2009, 8:38 pm

    >but it is true that currently there are 72 Scots MPs,

    Not that it’s important, but this does not appear to be the case. A source other than Wiki:

    “Currently, out of 646 MPs overall, 59 are Scottish – down from the 72 before the Scottish Parliament was created.”

    However, it does go on to say:
    “But the IPPR report, entitled The End of the Union?, said “they are still over-represented compared to England”.”

  • cammy October 5, 2009, 8:49 am

    All the banks I assume paid their corporation tax to London, if they were Scottish in anything other than name then clearly they would be paying tax to Edinburgh(obviously not possible). Therefore I think its a little bit disingenious to imply that they are Scottish when they fail but are British when they produce income…These are clearly ALL British institutions.

  • cammy October 5, 2009, 9:44 am

    I agree that there is over representation at Westminster from Scotland and specifically Scottish MP’s voting on English only matters is wrong when Scotland has a devolved Parliament for Scottish matters. However eas been said that has been to Labour’s favor so there has been no rush to fix that anomoly.

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