Icesave-Discussions to Start Again? Skip to content

Icesave-Discussions to Start Again?

There are some indications that the governments of the UK and Holland may be ready to start negotiations with the Icelandic negotiations committee as early as next week. Bjarni Benediktsson, Chairman of the Independence Party, the opposition leader, said that the governments have said that they may fall from the one-sided conditions that they set for continued negotiations with Iceland.

According to Morgunbladid the negotiations would have to take place in the next few weeks since elections are approaching in both Holland and Britain. Steingrímur J. Sigfússon, Iceland’s Finance Minister declined to comment on details of the negotiations, but said that he was hoping for a meeting between the opposing parties soon after the Easter weekend. He did say that it had been hard to get the different parties to the negotiating table after the Icesave-election, but did not elaborate further.

Photo: Páll Kjartansson/Iceland Review

On March 12 published an analysis on the Icesave-dispute and covered possible terms:

What is acceptable?

Under the negotiations in London in late February and early March it came out that the two governments had been charging Iceland a surcharge on interest with a fixed rate of 5.55%. It seems that the interest paid by the two governments was much closer to 3%. So the so called offer that Iceland could not refuse of two interest free years turned out to be mostly giving away the profits the two countries were making on the interest rate.

In an article in Vísbending, a weekly newsletter on Business and Economics, an article called What do we want in the Icesave-case? appeared in the issue this week. A passage from the article reads:

“It seems natural that a political solution to the matter would lead to a joint responsibility for the fall of Landsbanki. That would involve that if the assets of Landsbanki are insufficient to pay the debt in full the remainder would be paid by the three countries proportionally. The interest burden would be split so that Iceland would pay half of the interest rate or 1.5% for the whole period. This would reduce the yearly interest burden to 10 billion Icelandic krónur (57 million €) or 27 million krónur per day, which many people would undoubtedly think is quite enough. If Landsbanki really repays 90% of the principal then the payment of the Icelandic state would be about 25 billion krónur (143 million €) or 70 thousand per person in Iceland. There would be nothing wrong with such an agreement considering that the legal obligations are by no means indisputable, and all countries carry some responsibility for what happened, even though the main responsibility rests on those who ran the bank.”

It seems likely that Iceland could quickly agree to an agreement close to the terms above. All three countries would claim victory and the economic recovery in Iceland, which is the foundation for payment, will quickly start. It is not only the loans package from the IMF and others which is at stake, but many foreign and domestic investors have waited on the sidelines until the dispute is settled. A solution of this type would be a win-win solution for all.

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