Icelanders demand referendum on Icesave compensation

by Gill Montia

Story link: Icelanders demand referendum on Icesave compensation

Plans for Iceland to pay compensation of £3.4 billion to authorities in the UK and The Netherlands could be under threat.

The debt relates to the collapse of Landsbanki in October of 2008, which left over 300,000 British savers with the bank’s online Icesave brand with their accounts frozen.

The Treasury stepped in with a 100% guarantee for individual savers and stumped up £2.35 billion in compensation.

Last week, the Icelandic parliament passed a bill authorising the compensation, but by only three votes.

President Olafur Ragnar Grimsson has since received a petition, signed by almost one quarter of Iceland’s voters, calling for a referendum on the issue and demanding that he veto the Bill in its current form.

Speaking to the BBC, campaigner Magnus Arni Skulason claimed that the interest rate on the Icesave agreement “is like running the National Health Service of Iceland for six months”.

The debt also equates to around €12,000 per Icelander, or 40% of the country’s gross domestic product.

Repayments are scheduled over the next 14 years and any hitch could impact adversely on Iceland’s ambitions to join the EU.