Understanding The Icesave Ruling

28.1.2013
Words by Paul Fontaine
Iceland won in EFTA court, and the reaction here has been decidedly jubilant.

As reported earlier today, the court of the European Free Trade Association (EFTA) ruled in Iceland's favour over the Icesave dispute, saying that Iceland did not violate the Deposit Guarantee Directive. This directive is an international agreement which ensures that any depositor, regardless of their nationality, has the right to have at least 20,000 euros of their account guaranteed for withdrawal from any bank within the organisation.

When Landsbanki - and with it, Icesave - collapsed in late 2008, the bank only allowed Icelandic depositors to withdraw their savings. British and Dutch depositors were denied access, so their respective governments covered the deposits for Landsbanki. And so began the Icesave negotiations. The matter made its way to EFTA court, and today, the court gave their reasoned opinion that "the Court dismissed the application [of charges] on all points". Why? We don't know yet.

Political leaders were quick to congratulate themselves over the ruling. Prime Minister Jóhanna Sigurðardóttir told Vísir that she "said all along that Iceland had never violated the Directive." Her partner in the ruling coalition, Minister of Industry and Innovation Steingrímur J. Sigfússon, was more pragmatic in his response, saying, "We should be satisfied that we've arrived at a conclusion on the matter, and should be in a good mood for the next couple days." When asked how he felt European officials might respond to the ruling, Steingrímur speculated, "We could expect that their feelings are hurt, especially in Brussels. The British and Dutch might also want to think about how aggressively they went after us."

Iceland's Minister of Foreign Affairs, Össur Skarphéðinsson, was in an especially good mood, telling reporters, when asked what the next step for Iceland was, "We're going to throw a party." He added that he hoped for "messages of congratulations" from the British and the Dutch. He would later address parliament, congratulating the country as a whole.

Even Björk commented on the ruling, posting on Facebook: "congratulations to the icelandic nation on winning the icesave case !! it gives me hope that we didnt have to pay for the crimes of few banksters !! justice occasionally happens"

In the midst of all this, it should not be forgotten that President Ólafur Ragnar Grímsson told Sky News last week that whatever the ruling of the EFTA court would turn out to be, it "would not be legally binding" and would be "strictly advisory". Fortunately, he was wrong, as the EFTA's ruling essentially means that the UK and Holland cannot sue Iceland for up to 400 billion ISK (2.3 billion euros) in damages. Among the first to credit the President with the EFTA ruling was, ironically enough, former Landsbanki director Sigurjón Þorvaldur Árnason, who said, "If he hadn't used [the veto], we would be in a much different place than we are now," referring to the President's refusal to sign two iterations of the Icesave deal, referring them to public referendum, where they were overwhelmingly defeated.

In the meantime, the management of the old Landsbanki will continue to pay the UK and Holland for the deposits the two countries covered over four years previous. Last summer, this debt was half paid. Maybe, some day, the word "Icesave" will disappear from Icelandic news, and move into the annals of history.

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