Icelanders Should Not Pay Icesave, WSJ Argues - The Reykjavik Grapevine

Icelanders Should Not Pay Icesave, WSJ Argues

Published February 24, 2011

An opinion piece running in the Wall Street Journal argues that Icelandic taxpayers should not be obliged to cover costs incurred by Britain and Holland when they decided to fully reimburse Icesave depositors in their countries.
As has been reported, the presidential veto of the newest agreement between Iceland, the UK and the Netherlands will mean that the proposal will now be referred to public referendum, at a date to be announced this week. The latest opinion poll on the matter showed that most Icelanders intend to vote in favour of the agreement.
However, an opinion piece running in the Wall Street Journal argues that Icelandic taxpayers should not be held responsible for paying money that Britain and Holland decided of their own volition to pay Icesave depositors in their countries.
“The decision to bailout Icesave depositors in their countries cost those governments £3.1 billion ($5 billion)—but all of that money went to their own countrymen, those who had made the choice of investing their savings in Iceland,” the piece argues in part. “It did nothing to stave off the near-total collapse of Iceland’s banking sector or the collapse in its currency. And thanks in part to British and Dutch demands for repayment, Iceland remains, two and a half years later, shut out of global capital markets.”
While the newest agreement is considerably more fair than the previous one, the author says, “it’s unclear why Iceland should bear the costs of bailing out the Dutch and British at all.”
The article concludes, “If those countries’ governments felt it necessary to make their people whole, that is their affair. It’s hardly surprising that the people of Iceland would prefer to put the whole business behind them, as the most recent polling suggests. But that should not be taken as vindication of the U.K.’s and Netherlands’ two-and-a-half year campaign of vilification of Iceland.”


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