is the title of an email a friend sent to me about the threats made by Britain and the Netherlands to Iceland, when Iceland’s President refused to ratify a bill which would have required Iceland to pay 5.5 billion US to the Netherlands and Britain. When Iceland’s banks failed, Britain and the Netherlands made up the deposits, and now they want Iceland to pay. If Iceland doesn’t, they have threatened to spike both its entry to the European Union and its 10 billion dollar aid package from the IMF.
The President’s decision means there must be a referendum to determine the fate of the bill. A lot of folks are decrying this and insisting that Iceland should pay, but the background and the consequences aren’t that simple.
First, by European law, only the first 20K of each account is covered. Iceland already passed a bill in which they agreed to pay that back, and that bill was not vetoed. England and the Netherlands insisted that they cover all of the money, not just the amount legally required.
Second, Iceland is a small country,with a population of 316,960. That isn’t even as large as most Canadian suburbs. The cost per citizen, including children, people out of work, and seniors, would be $17,352. Given Iceland is in complete economic collapse, that is a massive burden they simply can’t afford.
Third, the banks were essentially unregulated. Britain, yes Britain, gave them licenses to operate despite the fact that other European nations lobbyed against it. Given how lightly regulated British banks were, this means that Icelandic banks were being used by the City (London) to do things too dubious even for the City. And given what the City was (and is) willing to do, that means they were black holes. You put your money in a country like Iceland where the banks are set up for those sort of unregulated operations, you take your bloody chances. The old saying “you can’t cheat an honest man” applies. The depositors wanted largely unregulated earnings. In exchange they need to accept the risk that comes with it.
Fourth, a fifth of the population had signed a petition asking the President to block the law and force a referendum. Responding to that is democracy.
Fifth: the corporations are limited liability corporations. Are countries responsibility for all the debts of limited liability corporations in their country? I don’t think so.
Britain and the Netherlands are extorting money with what amounts to threats to turn Iceland into a third world country where people may well starve to death. They are doing so to bail out depositors who were greedy or stupid enough, or both, to be put money into banks set up precisely because they were doing stuff too risky even for London to do and which are limited liability companies.
After Gordon Brown used anti-terrorism laws to seize Icelandic assets, this is a further descent into thuggery and blackmail and those who say that Icelanders should pay it all off should think very carefully if they want their country to be forced to pay off all its private companies debts to foreigners.
For shame.