Iceland leader vetoes bank repayments bill

Source: BBC News

Iceland’s president has refused to sign a controversial bill to repay $5bn (£3.1bn) to the UK and the Netherlands.

President Olafur Ragnar Grimsson said he would instead hold a referendum on the bill, following public protests.

The legislation was designed to compensate governments forced to bail out their savers with Icesave accounts following Iceland’s banking collapse.

Opponents argue the terms of the payments will unfairly hurt Iceland and its recovery from economic crisis.

Some reports say those opponents form a large majority of Icelanders – some 70% are said to be likely to vote “no” in a referendum.

Legislation to repay the money was approved by Iceland’s parliament in December, but the approval of the president is also required before it can be passed into law.

It is now up to the government to decide how to proceed. It must consider whether to go ahead with a referendum or whether to withdraw the bill and reopen negotiations with the UK and the Netherlands about a repayment schedule.

The right to choose

The government has seen significant public opposition to the bill.

THE STORY SO FAR…
Early October 2008: Icelandic banks collapse forcing the government to take control
October 2008: Amidst a bitter row with Iceland over who should pay, UK and Netherlands promise to compensate their nationals who have Icesave accounts
November 2008: IMF approves $2.1bn loan for Iceland. Financial support from other countries brings total amount to $10bn.
June 2009: Iceland’s new government agrees to reimburse UK and Netherlands
August 2009: Icelandic parliament approves first Icesave bill detailing payment schedule
September 2009: UK and Netherlands reject payment terms
December 2009: Amended bill with more stringent conditions approved by parliament

On Saturday, the president received a petition calling for the bill to be vetoed, signed by almost a quarter of the country’s population.

Campaigners against the bill say that the Icelandic public are being forced to pay for the mistakes of banks.

The total compensation package equates to about 12,000 euros ($17,300; £10,800) per Icelandic citizen.

Announcing the decision to hold a referendum on the bill, President Grimsson said that the Icelandic public had the right to choose.

“It is the job of the president of Iceland to make sure the nation’s will is answered,” he said.

“I have decided… to take the new law to the nation. The referendum will take place as quickly as possible.”

Lending doubts

In response to the decision, the Icelandic parliament, which approved the new bill last month, said the move could further tarnish Iceland’s image abroad.

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