No debt yet: Iceland's President vetoes repayment of Icesave losses

January 6, 2010Ólafur Ragnar Grímsson, President of Iceland, refused to sign a bill to pay US$5 billion (£3.1 billion) to Holland and the UK. Savers in those countries lost out when Icesave's parent bank Landsbanki collapsed and was nationalised alongside Glitnir and Kaupthing.

The governments of those nations paid out the money individuals had lost and the bill is designed to compensate them. However, the bill is unpopular with the public as 70% of them are said to oppose the measure, which critics have claimed will slow recovery for the Icelandic economy. A petition was given to the President demanding he refuse to sign the bill.

The constitution states that there must now be a public referendum on the issue. The UK has threatened the island nation's 320,000 inhabitants with economic isolation and has requested intervention from the European Union, which is currently considering an application from Iceland for membership. The national assembly has brought forward a planned meeting from the 26th to Friday.

Minister for Foreign Affairs Össur Skarphéðinsson met with every foreign ambassador in Iceland yesterday to discuss the matter. He also met with Mark Flanagan of the International Monetary Fund (IMF), which currently has a deal to loan funds to Iceland. Flanagan later said that so long as the IMF scheme was funded repayment of the Icesave money did not affect this.