Iceland’s Prime Minister Geir H. Haarde criticized British authorities in a press conference yesterday, saying that the Icelandic government was displeased and shocked that Britain had invoked anti-terrorism legislation to freeze Landsbanki’s assets in the UK.
The anti-terrorism laws were invoked to seize control of the bank’s assets because of insolvency in Landsbanki’s online savings program, Icebank, and out of fear that Icelandic authorities would not take responsibility for Icesave’s deposits.
Haarde characterized the use of the anti-terrorism laws as “quite a hostile measure,” mbl.is reports.
Haarde added that he had spoken with the British Chancellor of the Exchequer Alistair Darling and expressed his views on this matter. Haarde said Darling had promised during the phone call that Darling would make sure that all normal trade between Iceland and Britain would continue as usual. Darling has confirmed this in a letter to Iceland’s prime minister.
Darling also agreed to send a delegation to Iceland to discuss financial matters between the two nations, Haarde revealed, adding that Iceland’s Minister of Finance Árni Mathiesen would also meet with Darling at the general meeting of the World Bank in Washington later in the week.
In an interview with Sky News yesterday, British Prime Minister Gordon Brown defended his decision to use the anti-terrorism laws to seize Icelandic assets in Britain. He said he believed the Icelandic nation was in fact bankrupt and that Icelandic authorities could not simply refuse to honor their obligations, Fréttabladid reports.
Both Haarde and Iceland’s Minister of Commerce Björgvin G. Sigurdsson said during the press conference that it had been a great disappointment when Kaupthing Bank decided to hand over control of the bank to the Icelandic Financial Supervisory Authority (FME) on Wednesday night.
In a statement released to the media yesterday by chairman of the board of Kaupthing Bank Sigurdur Einarsson, Kaupthing’s resignation was linked directly to Darling’s announcement on Wednesday morning, when Darling claimed that Iceland would not take responsibility for Icesave’s deposits and that Britain would therefore take legal action against Iceland.
Following Darling’s announcement, the British Supervisory Authority seized Kaupthing Edge from the bank’s UK subsidiary Kaupthing Singer & Friedlander, according to Einarsson’s statement. A moratorium was implemented on Kaupthing Singer & Friedlander, which Kaupthing’s creditors considered tantamount to defaulting, despite the parent company having sufficient liquid assets and maintaining a solid position.
Newspapers have speculated whether Darling had drawn his conclusion that Iceland did not intend to pay its foreign debts because of an interview with chairman of the Central Bank of Iceland board of directors Davíd Oddsson on RÚV’s news magazine Kastljós on Tuesday evening.
However, according to Morgunbladid’s sources in the British Ministry of Finance, Darling based his decision on a conversation with Iceland’s Minister of Finance Árni M. Mathiesen on Tuesday, after which Darling was under the impression that Icelandic authorities had no intention of compensating British account holders for what they had lost through their savings accounts in Landsbanki’s Icesave.
Mathiesen claims that it is not at all what he had said. “I told [Darling] during the conversation that we would stand by the declarations that we have made and that we would honor our commitments. We have a national insurance fund and would support the fund. We have been enacting legislation that would give deposit holders priority to money coming out of the fund.”
Mathiesen said it was possible that Darling had expected a different kind of message in the phone call. “Perhaps he expected me to tell him that I would guarantee things, which I obviously couldn’t do. I told the minister [Darling] that Icelanders would honor their obligations according to the [European directive on the protection of deposit holders].”
Mathiesen said he did not know why Darling interpreted his words the way he did. “He probably wanted me to tell him something more. The minister [Darling] probably wanted to receive the message that Iceland would compensate British savings account holders fully.”
Prime Minister Haarde said during the press conference yesterday that the entire Icesave affair was based on a misunderstanding and that Icelandic authorities have worked hard on correcting that misunderstanding ever since Darling’s announcement on Wednesday morning.
According to a press release from Iceland’s Prime Minister’s Office, Iceland’s Ambassador to the UK, Sverrir Haukur Gunnlaugsson, had a meeting at 10 Downing Street with a number of high officials from the UK Prime Minister’s office and the UK Exchequer on Wednesday.
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