Mótmæli erlendum fréttum af málinu

Disgraceful reactions in foreign media

January 6^th, 2010, Kopavogur, Iceland 

On January 5^th, 2010, the Icelandic president decided to put a law already passed by the Icelandic government on December 30^th, 2009 to a national referendum. This law was about a state guaranty on a loan agreement between the Icelandic Depositors Guaranty Fond on one hand and the governments of UK and the Netherlands on the other to finance the repayment from the Fond to those governments that have already compensated IceSave depositors.

 

This new law that is now to be put to a referendum is an amendment to an existing law (96/2009) already passed by the Icelandic parliament and signed by the president on the same state guaranty, but that was not to the liking of the UK and Dutch negotiators.

The president’s decision has caused an immediate outrage in foreign media often under the misleading headline that Iceland is not going to pay. In spite of any (arguably weak) attempts by the Icelandic government to correct this, journalists like e.g. Jeremy Warner (who is introduced as an “assistant editor of The Daily Telegraph, is one of Britain's leading business and economics commentators.”) write articles like “Iceland's disgraceful decision not to pay up over stricken banks” on January 5th, 2010.

This is far from the truth and a surprisingly naive, arrogant and ill-informed message from a leading commentator. Unfortunately this is a very common position in foreign media.

 

Although nobody in Iceland (or elsewhere) is excited about paying the dept of others, there already is a law in effect about a state guaranty on the loan for the repayment. There is no dispute about that the assets of the failed banks will by used solely for the repayment and this will go 75%-95% of the way. The remaining amount is also to be paid by the Icelandic Depositors Guaranty Fond with a guaranty from the Icelandic government. There is no decision not to pay and such a decision is not even being contemplated. (There certainly are opinions supported by distinguished foreign lawyers and economists about the level of Icelandic obligation to pay. The current loan agreement e.g. obliges Icelanders to pay more than the amount guarantied the Icelandic Depositors Guaranty Fond. However we have already passed that point and I’m not going to dwell on that issue).

 

It should be noted that the disputed law now being put to a democratic referendum actually is already effective regardless of the president decision. It may however be refuted in the referendum that must be held within two months.

 

So what is the issue?

 

Let’s be clear about it: The issue is not that Iceland is not going to pay. The issue is that Iceland needs to pay a very high amount of money in foreign currency (about 40.000 UK pounds per family) as soon as possible. Iceland does not have the money at hand so Iceland needs to borrow it. Hence this is a loan agreement. The issue is that the terms of this loan agreement are very unfair, one sided to the UK and Dutch benefits and potentially disastrous for Icelanders.

 

The law 96/2009 already passed and signed by the president provides a state guaranty for the loan, but with conditions to ward of the most disastrous effects of the loan agreement.

 

The law now to be put to a referendum has watered out those conditions putting Iceland into an irresponsibly dangerously position not being able to repay the loan. Who benefits from that?

 

Iceland is going to pay. Iceland is going to need a loan to pay ASAP. Iceland needs a loan that it can pay back.

 

The mob-like reactions of some foreign media exciting sentiments against Iceland under the pretext that Iceland is not going to pay is a disgrace to those media. Unfortunately it is also damaging to Iceland and its ability to pay back. This harassment has already led to repeated attacks on Icelandic nationals abroad.

 

I would like to use this opportunity to encourage all leading commentators to provide for a more balanced and enlightened discussion on this issue and to stop misinforming their readers.

 

Best regards,

Þorsteinn Helgi Steinarsson

AGS: Icesave ekki skilyrði