rejected in a referendum to pay for the mistakes of their banks The 'no' ends in the consultation yesterday to approve the compensation of 4,000 million euros that require Britain and the Netherlands by the bankruptcy of an entity.
What would you do if one of the big English banks would have gone bankrupt in the UK and the British Government to Spain require a payment of 50,000 euros per family to pay off that debt? Iceland, which had already once refused to pay the bill, yesterday faced a second referendum on whether to approve-or not to return to the UK and the Netherlands 4,000 million euros by the bankruptcy of one of its financial institutions. And they say no again: according to partial results even with 70% of ballots counted, 57.7% of voters have rejected it, compared with 42.3% that have approved.
The result can be interpreted as a triumph of the revolution called pans: yes would have marred the Icelandic sample, which grabs more and more people on the periphery of Europe, by the irritation caused by the efforts of Brussels and the ECB to defend the banks even cost of a wave of austerity and draconian cuts.
"It's a difficult decision.'s Probably best to vote no, but that will pose enormous problems in the short and medium term." Asked by referendum, the economist Magnus Skulasson was not yet far from clear, mid-afternoon yesterday, the meaning of his vote. Polls are not a winner for sure: the self-that is, pay for the excesses of the banking seemed clear winner two months ago, but polls have turned around in recent days.
The referendum was called two months ago by Icelandic President Olafur Ragnar Grímsson, who refused to sign an Act of Parliament which stipulated the terms of agreement: a payment with interest of 3% at 37 years. Grímsson is a repeat offender: in December 2009 and forced a similar query, when against all odds, refused to sign a law requiring paid back with interest of 5.5% in 15 years. The time did not win a landslide. "The old payment terms were very unfair: the new are best, but if the Icelanders will have to pay a debt of banks should have the right to decide. Iceland is a democracy, not a financial system, "said Grímsson to this newspaper last week.
The dispute dates back decades. In the middle of the last decade, a major Icelandic banks, Landsbanki, opened a branch on the Internet at United Kingdom, Holland and Germany which had a dazzling success by the high interest paid into an account called Icesave. In early October 2008, just 15 days after the bankruptcy of Lehman Brothers, the United Kingdom found that the Icelandic banks were transferring money from UK accounts to Reykjavik and the Terrorism Act were applied: freeze all funds. The banks were indebted (their assets accounted for 12 times the GDP), and that decision, together with the international crisis, led to bankruptcy. The State does not rescued them. Let them fall, and later nationalized and injected money to continue operating, but only in Iceland. London and Amsterdam paid to depositors of Icesave (300,000 people) 100% of deposits and from then claim the money. That amounts to 4,000 million, may not seem an exorbitant figure, but a third of the Icelandic GDP.
The Government, however, defended itself saying that the referendum failed bank's assets, when settled, will pay most of the debt. Supporters of not arguing that people should not pay for the follies of their banks, arguing that international law-full of shadows, does not oblige a country to take astronomical debts far exceed the amount accumulated in guarantee funds. Fragile recovery
Iceland still in a deep crisis following the events that ended in the collapse of the banking system and forcing the country to turn to the IMF. Then the stock market collapsed, the Icelandic krona lost 80% of its value and the fall in GDP was 15%. Unemployment has risen from 1% to 8%, there are capital controls-yard, there have been sharp increases in taxes and spending cuts public. The nascent recovery is still very fragile. And that fragility may increase for that overcomes not: Executive advised the public that the rejection would take the case to court, where the bill can be much higher. In addition, if the assets of the failed bank are lower than expected and the crown falls down, the numbers would skyrocket.
The consultation will also have side effects in the political arena. The refusal left in a difficult position the government of Social Democrats and red-green coalition, and would complicate the access of Iceland to the EU and IMF loans and other Nordic countries. Icelanders know all that and still won the no. "We have the option of ending this unfortunate matter with dignity, or embark on a new period of uncertainty", warned yesterday the Finance Minister Steingrimur Sigfusson. "Okay, but the crisis is already hard enough. Do not want to pay more," interjected the film director Arni Sveinsson.
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