Finance Minister: "Iceland Will Pay" Icesave Debt - The Reykjavik Grapevine

Finance Minister: “Iceland Will Pay” Icesave Debt

Published April 11, 2011

With the final results from the Icesave referendum giving a resounding “No”, many politicians in the UK and Holland are already talking about taking Iceland to court, believing that the country no longer intends to pay anything on Icesave. Minister of Finance Steingrímur J. Sigfússon has, however, emphasised to the media that as far as payment to the British and Dutch is concerned, “nothing has changed.”
As the Grapevine reported, the No camp made a far stronger showing in last Saturday’s referendum vote than Gallup polls had been indicating. In the end, 59% said No to the Icesave agreement, while 39.6% said Yes.
The news prompted an immediate reaction from British and Dutch authorities. Chief Secretary to the Treasury Danny Alexander told the BBC in part, “It now looks like this process will end up in courts. We have an obligation to get that money back, and we will continue to pursue that until we do.” The Dutch finance minister, Jan Kees de Jager, said that the time for negotiations are now “over”, and that “the issue is now for the courts to decide.”
Iceland’s Minister of Finance, Steingímur J. Sigfússon, has nonetheless emphasised to the press that Iceland will pay back on Icesave.
“It is very important to underline that [the No vote] will not have any effect on repayment,” he said in part. “We believe that repayment from Landsbanki branches will begin later this year, and so depositors will begin getting their money back.”
How much of the Icesave debt claimed by the UK and Holland can be covered by Landsbanki’s assets remains unclear, however. Estimates range from “all of it” to most of it. At this time, there is no clear answer.
Reaction to the No vote has been mixed. President Ólafur Ragnar Grímsson, in an address to the world, said in part, “The people have now spoken clearly on this matter on two occasions in accordance with the democratic tradition which is Europe’s most important contribution to world history. The leaders of other states and international institutions will have to respect this expression of the national will. Solutions to disputes arising from financial crises and failures of banks must take account of the democratic principles which are the foundation of the constitutional structure of the West.”
Not everyone was impressed with the president’s performance, however, as Leftist-Green MP Atli Gíslasson remarked, “I thought he was in a kind of champagne media bath. He was so happy, childishly happy, and he was delivering a very strong political message.” Ragnheiður Ríkharðsdóttir, an MP for the Independence Party – who have long opposed the Icesave agreement – also said she felt the president’s speech was inappropriate, in particular to hold a press conference right after the election results came in, instead of waiting for the government to respond first.
The ESA – the surveillance authority for the European Free Trade Association – has given Iceland two months to respond to a Letter of Formal Notice of May last year. This letter of notice informed Iceland that by refusing to pay the Icesave debt, the government has violated terms of the European Economic Agreement. “If Iceland continues to be in breach of the agreement, the case will be sent to the EFTA Court,” the ESA statement promises.

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