Icelanders expected to vote No in debt repayment referendum

ELAINE BYRNE in Reykjavik Irish Times March 6, 2010


ICELANDERS ARE expected to overwhelmingly vote No in today’s referendum on the controversial Icesave deal agreed last year with the Netherlands and the UK.


President Olafur Ragnar Grimsson triggered Iceland’s first referendum, since it achieved independence from Denmark in 1944, when he refused to sign the Icesave Bill into law in January.


Mr Grimsson’s decision was motivated by widescale public opposition to the original €3.9 billion Icesave repayment package which would have saddled each of Iceland’s 317,000 citizens with €12,000 in debt. Although the Icelandic negotiations committee returned from London yesterday after three weeks of talks were adjourned, it was reported that terms for a new deal between the governments were not far off.


Describing the talks as “constructive”, the government said yesterday they were “confident that a mutually acceptable solution can be reached”. However, time was not on the side of the centre-left coalition, now just over a year in office, and talks are expected to restart next week on reducing Iceland’s payment burden.


In an interview with the Frettabladid newspaper yesterday, prime minister Johanna Sigurdardottir said: “I see no meaning in participating in this referendum.”


Frettabladid editor Olafur Stephensen told The Irish Times “the people don’t have a clear choice. Nobody in their right mind would say Yes where there is a better deal on the table”.


In the absence of a new deal, many Icelanders are confused about why there still is a referendum. Some feel the Icelandic public has been put in the intolerable position of being participants in financial negotiations between countries.


A researcher at Reykjavik university said: “I’m torn between wanting to say Yes to the law that has already been passed and wanting to ignore the referendum altogether, because of the charade it has turned into.” On Reykjavik’s main shopping street, Laugavegur, the sentiment of Icelandic citizens was one of frustration and defiance. Icelanders are angry that they are being asked to pay the price for the irresponsible behaviour of reckless bankers.


When asked how he was voting, Ogmundur, a small shop owner in Reykjavik’s 101 district, said “absolutely and definitely No”.


Pointing to the front page of a local freesheet, which carries a large photograph of an Icelandic financier blamed for the economic crash, he said: “The government say Yes but the people say No”. His exasperation at Icelandic politics is not helped by the anticipated report of the Icelandic Truth Commission, which is expected to be published within days and will detail events leading up to the country’s 2008 banking collapse.


Southern Iceland was shaken yesterday by an earthquake measuring more than three points on the Richter scale, and tremors continue to vibrate in the region.


The outcome of the referendum, however, may cause even greater fault lines within Ms Sigurdardottir’s fragile coalition. Iceland’s delay in agreeing the terms for a new deal has long-term consequences for a country in desperate need of foreign investment. The $4.6 billion rescue package by the IMF is on hold, and Moody’s credit agency has warned it may downgrade Iceland’s debt to junk status.


Moreover, public opinion has dramatically shifted away from initial support to join the EU.


The large international media presence in Reykjavik for the referendum reflects a growing international awareness of the potential fissures the Icelandic people may create in defying their government and risking financial fallout.

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