ESA: Iceland Should Pay Icesave Skip to content

ESA: Iceland Should Pay Icesave

ESA, the EFTA Surveillance Authority, notified the Icelandic government in a letter yesterday of its opinion that the Icelandic state should repay the minimum deposit insurance of Icesave to the British and Dutch states.

The ESA rejects the argument by Icelandic authorities that European regulations on the repayment of deposits don’t apply when a country’s entire economic system collapses, reports.

“We have been alone in the opinion, which we have tried to maintain, that there is a legal uncertainty in this case,” Finance Minister Steingrímur J. Sigfússon told Fréttabladid. “This is not a ruling but an evaluation. Nonetheless it is clear that ESA, after thorough consideration, takes this position and it is unfortunate for us.”

“The upside is that the evaluation only refers to the minimum deposit insurance,” Sigfússon added. He said the ESA letter doesn’t change the fact that the best way to resolve the Icesave dispute is through agreements with British and Dutch authorities.

Icelandic Minister of Economic Affairs Gylfi Magnússon told that the letter doesn’t compromise Iceland’s position of negotiation.

Icelandic authorities have two months to answer the letter. The next steps will be taken depending on their answer. If Iceland, the UK and the Netherlands fail to reach an agreement on repayment, the Icesave dispute could end up before the EFTA Court.

The letter is 15-pages long. The ESA concludes that Icelanders violated the EFTA agreement by avoiding payment of the minimum deposit insurance to British and Dutch savers who deposited their money in Landsbanki’s Icesave.

The ESA also concludes that it is not in accordance with European regulations to treat Icelandic and foreign savers differently, as was done when the Icelandic government guaranteed all deposits in Iceland with the emergency legislation of October 2008.

Chairman of the Progressive Party Sigmundur Davíd Gunnlaugsson told Fréttabladid that the ESA’s conclusion is not surprising as it only confirms what the EU has maintained from the beginning. He believes it actually strengthens Iceland’s position for negotiation.

Gunnlaugsson stated indications that the Icesave dispute will end up in the EFTA Court opens up a new position for Iceland since British and Dutch authorities have until now always refused to resolve the dispute in court. “I believe it is an attempt to force us into an agreement.”

Click here to read more about Icesave.

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