The current situation in Iceland regarding the Icesave legislation referendum
8.1.2010
Recent events in Iceland relating to the international dealings between Iceland on the one hand Holland and the United Kingdom (UK) on the other have been the source of much confusion in the past few days. This confusion has had a very detrimental effect on diplomatic and trade relations between the relevant parties. It has also resulted in considerable damage to the international reputation of Iceland. In an attempt to shed a light on the main issues at play the Federation of Icelandic Trade (FIT) has compiled the below memorandum. The memorandum is divided into a summary and a full text below.
We hope that this may serve to clarify the matter and help to reinstate integrity and trust between the countries in question.
Summary:
- It is wrong that Icelanders are not going to pay the debt in question. This is entirely false.
- The Icelandic government has stated, in no uncertain terms, that it remains fully committed to implementing the bilateral loan agreements.
- Despite being referred to a public vote the bill in question has taken full legal effect and will remain in effect pending the outcome of the referendum.
- The public vote will only decide whether or not the bill in question will be rejected and therefore seize to exist or if it will be approved and therefore continue to exist as law.
- Should the public vote reject the legislation there is however nonetheless a alternate state guarantee in place that Parliament has previously approved and has been implemented into law by the President.
- The bilateral loan agreement between Iceland and the Dutch and UK governments remains unaltered.
Full text:
The Icelandic government and the Dutch and the British governments have reached a bilateral loan agreement regarding outstanding of the Icelandic Depositors‘ and Investors‘ Guarantee Fund. This loan is intended to cover payment of the minimum deposit guarantees to depositors in the UK and Netherlands branches of the failed Landsbanki Íslands hf.
To fully implement that agreement the Icelandic Parliament much pass into law a state guarantee for the debt in question. This State guarantee is the second guarantee approved by the Icelandic parliament as the first was not deemed acceptable to the Dutch and UK governments. On Wednesday the 30th of December parliament, in line with the loan agreement, passed such a bill the so-called Icesave legislation. However, on Tuesday the 5th of January the President of Iceland, for only the second time in the country''s history, declined to enact the bill into law with his signature and referred it to a public referendum.
Firstly, for the past two days this action of the Icelandic president has been misunderstood and misinterpreted all over world. It has for instance been publicly flaunted in the world media that Icelanders are not going to pay the debt in question. This is entirely false. The Icelandic government has stated, in no uncertain terms, that it remains fully committed to implementing the bilateral loan agreement and thus the state guarantee provided for by the law.
Secondly, it must clarified that, regardless of this action of the President, the bill in question has taken full legal effect and will remain in effect pending the outcome of the referendum. The public vote will only decide whether or not it will be rejected and therefore seize to exist or if it will be approved and therefore continue to exist as law.
Thirdly, should the public vote reject the legislation there is nonetheless a state guarantee in place that Parliament has previously approved and has already been implemented into law by the President. This guarantee is limited in time and contingent upon certain economical factors but should, if all goes to plan, fully suffice. Moreover the bilateral loan agreement between Iceland and the Dutch and UK governments remains unaltered.
We hope this has helped to clarify some of the misunderstanding surrounding the matter. Anyone having questions or comments regarding the above should not hesitate in contacting FIT or simply send an email to me on pall@fis.is
Respectfully,
____________________________
Páll Rúnar M. Kristjánsson
District Court Attorney
Head of Legal
Federation of Icelandic Trade
Phone: +354 588 8910
Fax: +354 568 8441,
Mobile: +354 661 5455,
Email: pall@fis.is
The Building of Commerce, Kringlunni 7, 103 Reykjavík, Iceland
www.fis.is