In my last contribution for MyEurop.info, i explain why the icelandic bankruptcy case and the last referendum are highly misunderstood.
Contrary to what has been said and interpreted from the last two referendums in Iceland, the Icelandic People’ refusal to agree the ‘Icesave deal’ does not mean the country will not pay its debt. Actually, Reykjavík is even repaying its debt to British & Dutch counterparts, in a different (and fairer) manner.
The last referendum was about one specific agreement on how to repay UK and Holland for the refund of the Dutch and British customers of the former icelandic bank Icesave that went bust in 2008. This agreement stipulated that the Icelandic government would directly owe money to UK and NL under a reimbursement scheme of several decades and a 5% interest.
However, this agreement was flawed because Landsbanki (parent company of Icesave) actually do have financial assets that can be used to repay the British and Dutch financial authorities. It made much more sense that Landsbanki pays by itself if it can (which is the case). Which the bank has started to do since december 2011.
In short, the referendum was not about whether Iceland should pay or not for its banking debt. This referendum was about who should pay? In my opinion, the Icelandic People did right in refusing the deal. I argue:
Finally, the Icelandic crisis is not that much about snubbing capitalism. Instead, it highly relies upon some basic tenets of capitalism whereby investors that run risks for profits might loose sometimes; while customers that were said their money was guaranteed are getting refunded.
Want more explanations? Then read this (in french).
(a shorter version of my paper was also republished on the belgian’ RTBF)Tags: Iceland, Icesave