Icelanders head to the polls once again on Icesave deal

8th April 2011, Comments 0 comments

Some 230,000 Icelandic voters will head to the polls Saturday to approve or reject a renegotiated compensation deal with Britain and the Netherlands over the Icesave bank, which collapsed in 2008.

Negotiators have been struggling for more than two years to reach an accord on how to repay both countries the 3.9 billion euros ($5.3 billion) they spent compensating around 340,000 of their citizens who lost money when Icesave, an online bank, went under at the height of the global financial crisis.

The deal to be voted on Saturday is considered much more favourable to Iceland than a previous accord rejected in a January 2010 referendum by 93 percent of Icelanders.

But still, a poll published Thursday showed the two sides neck-and-neck, with 52 percent of those who had made up their minds planning to vote "no" and 48 percent set to vote "yes."

The Gallup poll, for which 1,900 poeple were interviewed, also indicated 15 percent of Icelanders were still undecided.

Another poll published earlier Thursday put the "no" slightly in the lead, with 54.8 percent of decided voters set to reject the deal, against 45.2 percent in favour of the accord.

Previous surveys had put the "yes" in the lead.

Both the "no" and "yes" sides have been campaigning intensely over the past week, trying to reach the large proportion of undecided voters through the web.

The "no" side, through, warns the agreement would put "an incredible financial burden on Icelanders."

Acknowledging the decision is difficult, the group argues "there never was any legal obligation for Icelandic citizens to shoulder the losses of a private bank."

"Yes" advocates, supported by the centre-left government and by the main conservative opposition party, claim through that "yes is the way forward."

If the "yes" wins, "it means that the Icesave dispute is formally over through an agreement that minimises the costs and risks for Iceland," the website says.

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

"It was not easy," he told Icelandic television this week about striking a deal with British and Dutch negotiators.

If the "no" wins, he said, Iceland could face litigation in front of the European Free Trade Association (EFTA) court -- a court which fulfills the European Court of Justice's role for European Economic Area members Iceland, Liechtenstein and Norway.

"That will take a year or two, so there will be a year or two before anyone knows the outcome," Buchheilt said.

If Iceland were to lose such a court case, "it will bring about significant consequences for Icelanders," said Gudmundur Olafsson, an economist and professor at the University of Iceland.

In addition to the diplomatic tensions between The Hague, London and Reykjavik, the Icesave dispute also created divisions within sections of Icelandic power, with the president opposing parliament and the government.

Saturday's referendum is a consequence of President Olafur Ragnar Grimsson's refusal to sign the bill into law, putting it to a popular vote just as he had with the last deal approved by parliament.

Finance Minister Steingrimur J. Sigfusson has said the deal put to Saturday's referendum is the last chance to solve the Icesave question.

"Icesave is not going to go away, no matter how many times the bill is rejected by the president of the nation," he said after Grimsson announced he would use his veto again.

Under the new deal, Iceland would be able to repay the nearly four billion euros very 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 rest it owes Britain.

It represents an amount of about 12,000 euros per citizen of the 320,000-strong island nation, before interest.

Iceland hopes to slash the bill by using the assets of collapsed bank Landsbanki, Icesave's parent company, to repay part of its debt.

© 2011 AFP

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