Dutch minister urges Iceland to repay loans

22nd July 2009, Comments 0 comments

Foreign Minister Maxime Verhagen has suggested to his Icelandic counterpart it is ‘absolutely necessary’ to repay the EUR 1.3 billion loan should Iceland want to enter the EU bloc.

The Hague – Dutch Foreign Minister Maxime Verhagen is urging Iceland to approve a draft deal under which it would repay EUR 1.3 billion to the Netherlands and EUR 2.6 billion to Britain.

On Tuesday, it was reported Iceland's parliament could possibly veto the repayment of EUR 1.3 billion lent to the country by the Dutch government.

The money was used to reimburse more than 120,000 Dutch people who lost savings when the Icesave internet bank went bust in October 2008. Clients had their Icesave accounts frozen during the nationalisation of Landsbanki, the parent group of the online banking unit.

Dutch Foreign Minister Maxime Verhagen on Tuesday linked Iceland's bid to join the European Union with an agreement to compensate for losses stemming from bailed-out Icelandic bank Icesave.

"It is absolutely necessary that the agreement is approved," said Verhagen in a statement issued after a talk with his Icelandic counterpart Ossur Skarphedinsson.

"A solution to the problem of Icesave would encourage rapid consideration of Iceland's bid to join the European Union," he added. "It would show that Iceland takes European directives seriously."

De Volkskrant reports a Labour MP is rather more direct about the debt: "We'll only start talks with Iceland when it's all signed and sealed. First the money, and then the talks".

The draft deal, which can still be rejected by the Icelandic parliament, would foresee the money being paid by Iceland with interest between 2016 and 2024.

De Volkskrant questions whether either Verhagen's veiled threat will affect the outcome of the Icelandic vote.

It points out that Iceland's Left Green party will hold the balance of power in the vote and that the party is Eurosceptic. It also says most people in Iceland are against repaying the money.

On July 16, Iceland's parliament voted in favour of applying for EU membership in the wake of the country's economic meltdown, opening the way for negotiations to begin with the 27-nation bloc.

Radio Netherlands / AFP / Expatica

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