Iceland refuse to sign bill

Olafur Ragnar Grimsson

The president of Iceland, Olafur Ragnar Grimsson has refused to sign what was described as a controversial bill to repay GBP£3.1 billion to the UK and the Netherlands.

The president instead has said that he will hold a referendum on the bill, following public protests, the BBC reports.

GBP£2.3 billion of the money was to go to Britain to repay the loan from the British taxpayer, which the British government paid out in 2008 to compensate UK investors inIcesave, whose parent bank, Landsbanki had collapsed.

Alistair Darling, the Chancellor, handed over the money because he had promised that UK savers would not lose a penny to Landsbanki's bankruptcy, the British paper The Times reports.

Bills

Grimsson vetoed a bill which would have enforced the repayment of the money by 2024.

An existing "Icesave bill" he ratified in August, which is still in force, proposes that repayments can cease if the money is not paid back by then. Britain has objected to this bill as it gives Iceland a "get out clause."

Yet, Grimsson today refused to sign off the second, more tightly-worded bill after fierce political pressure from the country's opposition party and a petition against the bill signed by nearly a quarter of the country's voters.

Campaigners against the bill say that the Icelandic public are being forced to pay for the mistakes of banks. The total compensation package equates to around 12,000 euros (GBP£10,804) per Icelandic citizen.

In August, a poll found that 70 percent of the country were opposed to the money being repaid.

A UK Treasury spokesman said, "The Treasury will consult with colleagues in Iceland to understand why this bill has not been passed and will work with them, the Netherlands and within the EU to resolve this issue as soon as possible.

"The UK Government expects Iceland to live up to its obligations."

Thousands of savers in the Netherlands were also hit by the collapse of Landsbanki. The Dutch government said today that it was "extremely disappointed" by the veto.

The British and Dutch governments say more than 320,000 savers lost money when Landsbanki collapsed in October 2008.

Iceland's response

The Icelandic government issued a statement to try and reassure Britain and the Netherlands. It said: "Despite the President‘s decision, the government of Iceland remains fully committed to implementing the bilateral loan agreements and thus the state guarantee provided for by the law."

Last week, Iceland's parliament approved the bill by only a narrow majority. The passing of the bill was seen as a way to help boost the country's bid to join the European Union and get its economy back on track.

Despite parliament passing the bill, it still required the approval of Grimsson, who was petitioned by 40,000 people asking him to refuse to sign it.

Many of Iceland's 320,000 population resented bailing out foreign banks that were supposed to be supervised by other nations.

The bill is also opposed by the main opposition party.

This is only the second time in Iceland's history that the president has not signed into law a bill approved by parliament.

The money represents 40 percent of the country's gross domestic product.

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