Iceland’s Prime Minister Geir H. Haarde said at the Althingi parliament yesterday that the government had recruited a British law firm to look into the legal position of Iceland and prepare a lawsuit against British authorities because of the damage caused to the Icelandic state with the downfall of Kaupthing Bank.

“The behavior displayed by the British government, unsubstantiated misrepresentation of the bankruptcy of the nation, caused enormous damage to a number of companies and had nothing to do with saving British interests,” Haarde said, according to ruv.is. 

Steingrímur J. Sigfússon, leader of the Left-Greens, the largest opposition party, said it is important to investigate what had caused the collapse of the Icelandic banking system and identify who is responsible for it. He called on wealthy Icelanders to relocate their assets to Iceland and assist in reconstructing the economy.

Leaders of all opposition parties criticized the conduct of British officials. Leader of the Progressive Party Gudni Ágústsson went as far as to ask whether Iceland should consider terminating diplomatic relations with Britain as Iceland did during the Cod Wars.

Iceland’s largest bank Kaupthing was nationalized last week following public announcements by British officials that Iceland did not intend to honor its obligations to British account holders, which led to the seizure of Kaupthing’s assets in the UK and subsequently the bank’s collapse, as claimed by Sigurdur Einarsson, Kaupthing’s chairman. 

Click here to read more about Kaupthing’s fate and here to read more about relations between Icelandic and British authorities.