Icelanders go to polls on Icesave repayment deal

9th April 2011, Comments 0 comments

About 230,000 Icelandic voters went to the polls Saturday to approve or reject a renegotiated deal to compensate Britain and The Netherlands over the 2008 collapse of Icesave bank.

The latest opinion polls put the "no" vote on the 3.9 billion euro ($5.6 billion) deal slightly in the lead.

The Netherlands and Britain spent this amount to compensate some 340,000 of their citizens who lost money when Icesave, an online bank, went under at the height of the global financial crisis.

The latest deal, laboriously negotiated among the three nations over more than two years, is considered more favourable to Iceland than a previous accord rejected in a January 2010 referendum by 93 percent of Icelanders.

It will allow Iceland to repay the debt gradually until 2046, at a 3.0 percent interest rate for the 1.3 billion euros it owes The Netherlands and at a 3.3 percent rate for the remainder owed to Britain.

The amount works out to some 12,000 euros per citizen of the 320,000-strong island nation, before interest.

Following predictions of a "yes" vote in recent weeks, the most recent opinion polls put the "no" camp ahead -- with 54.8 percent according to the Frettabladid daily and 52 percent according to the Capacent-Gallup institute, with both however admitting a large margin of uncertainty.

If the "no" bloc wins, Iceland could face up to two years of litigation before the European Free Trade Association (EFTA) court, which plays the role of the European Court of Justice for European Economic Area members Iceland, Liechtenstein and Norway.

A negative ruling by the court "will bring about significant consequences for Icelanders," Gudmundur Olafsson, an economist and professor at the University of Iceland, has warned.

Iceland's negotiator, US lawyer Lee Buchheit, said the new accord "was the best agreement that could be negotiated at the time and under the circumstances."

The head of the centre-left governing coalition, Johanna Sigurdardottir, said a "yes" vote was of key importance.

"The longer (the matter concerning) Icesave remains unresolved, the more serious the consequences will be for the Icelandic nation," she said last week.

Both sides campaigned intensely ahead of the vote, trying to convince undecided voters through the Internet.

The "no" side, through, warns that the agreement would put "an incredible financial burden on Icelanders", insisting "there never was any legal obligation for Icelandic citizens to shoulder the losses of a private bank."

"Yes" advocates, backed by the government and by the main conservative opposition party, say the deal was the only way to end the dispute "through an agreement that minimises the costs and risks for Iceland."

Polling stations opened at 9:00 am (0700 GMT) and were to close at 10:00 pm. The results were expected by Sunday morning.

© 2011 AFP

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