The European Free Trade Agreement’s Supervisory Authority (ESA) says that Iceland has not proven that it did not break international law during the Icesave debacle of 2008, and should admit it did so.
As reported, EFTA believes Iceland may have broken the terms of the country’s treaty with the organisation by delaying repayment to foreign depositors in Icesave. As such, they are taking Iceland to EFTA court over the matter.
Specifically, EFTA contends that part of the treaty dictates that governments ensure depositors of any national origin should be able to withdraw their many from a bank within an EFTA country. But when Icesave collapsed, the decision made at the time was to allow Icelanders to withdraw their money, and no one else. Although the governments of the UK and Holland have paid Icesave depositors, and Landsbanki has begun repaying the Icesave debt, the delay is considered by EFTA to be a violation of this party of the treaty.
Iceland responded to the charges by saying they did not break the treaty, but RÚV now reports that the ESA is less than satisfied with the response.
The ESA contends that there can be little doubt that Iceland violated the basic principle of international banking that depositors should be allowed to withdraw the money they put into an account, and that ultimately, the government of a country’s banks are responsible for making sure this happens. They say Iceland could have sought other means to ensure the deposits but chose not to, and they want the Icelandic government to admit it violated the treaty.
Iceland has until May 11 to respond, and the Ministry of Foreign Affairs say they are already preparing their retort.