ICELAND’S EFFORTS to reach a new deal on repaying $5 billion in “Icesave” debts to Britain and the Netherlands are at a critical stage ahead on Saturday’s referendum, the prime minister said yesterday.
The widely expected rejection of an 2009 agreement on Icesave in the referendum may freeze foreign aid needed to resuscitate Iceland’s economy, hit the centre-left government and cloud Iceland’s prospects of joining the European Union.
“Today and tomorrow are make or break,” prime minister Johanna Sigurdardottir told reporters when asked about Icesave as she was coming out of a cabinet meeting. “We need to be hopeful until all avenues have been exhausted.”
Surveys show nearly three-quarters of Icelanders want to nullify the old agreement on repayment of debts owed to Britain and the Netherlands after they compensated savers in their countries who lost money in Icelandic deposit accounts.
Icelandic negotiators again met with British and Dutch representatives yesterday to come up with a new deal that would avoid the referendum.
“There was a meeting this morning with a few representatives of Dutch and UK authorities,” said finance ministry spokesman Elias Gudjonsson, adding that more meetings were expected.
Britain and the Netherlands have proposed softer terms than those agreed to late last year, but talks broke down last week as Iceland held out for a better deal.
The two states want Iceland to settle the Icesave matter before funds from the International Monetary Fund can resume. That means Iceland’s attempts to rebuild its economy, shattered by the 2008 financial crisis, could take longer than hoped.
Finance minister Steingrimur Sigfusson said the referendum would go ahead “unless we are faced with a totally different situation”.
To cancel the ballot, the government would need to strike a deal with the Dutch and the British and get help from opposition parties, which are seeking to turn the referendum into a popularity contest for Ms Sigurdardottir’s cabinet. Opinion polls show support for the government falling. – (Reuters)
