Sigrún Davíðsdóttir's Icelog

Icesave: what next?

with 6 comments

According to Icelandic law, a referendum has to be called within two months of the president sending a bill for a referendum. Prime minister Johanna Sigurdardottir said today that the aim is to hold a referendum on Icesave in a month’s time. There is some discussion going on to hold another vote for the constitutional assembly at the same time but so far that’s only an idea.

At the referendum last year both the Dutch and the British government said that a referendum was a domestic issue for Iceland. Most likely, that’s still their position. This time however, it’s not in sight to renegotiate. Sigurdardottir said today that the Dutch have made it quite clear that there will be no new negotiation. The latest agreement is also a final offer. She hopes that the two nations will not retract the last agreement.

The president’s decision gives rise to quite an exceptional situation. It’s clear that, contrary to the constitution which stipulates a representational democracy through parliament, the president now holds the power and can simply on his own stifle decisions by a democratically elected parliament. This unprecedented situation will no doubt cause a hefty debate, yet again, on the powers of the president vs the parliament. Today, there were already many who voiced concern that the president went against a parliamentary vote where 70% of the MPs, from all parties, had supported the Icesave bill – a decision that the president has now overturned.

If the Icesave agreement will be overthrown in a referendum it’s completely unclear what will happen. The question is whether the government would survive though the opposition would most likely not be too keen to come to power to solve the Icesave dilemma. With Icesave unsolved and not yet settled, it seems rather obvious that the Icelandic membership of EU will stall. Neither the Dutch nor the Brits will accept that a country they feel doesn’t honour its words should become a EU member. ESA might also have a say on a new situation, after its two recent moves regarding Iceland. The dispute might possibly end up in the EFTA court, a move that Lee Buchheit, who led the last Icesave negotiation, has warned might turn against Iceland.

There certainly are those in Iceland who will feel fine about having Icesave an unsolved issue since it distracts the attention from other things. The conservative old power elite connected to Morgunbladid and its editor, former PM and governor of the Central Bank David Oddsson, who earlier saw the president as an arch enemy has now discovered a new ally in him. This power elite will keep on bashing the leader of the Conservative party Bjarni Benediktsson as they have been doing so mercilessly in the last few weeks. Their aim seems to be to drive Benediktsson out of office. It remains to be seen if Benediktsson will actively campaign for a yes in the coming referendum but he will most surely be fighting for his political life.

Follow me on Twitter for running updates.

Written by Sigrún Davídsdóttir

February 21st, 2011 at 12:11 am

Posted in Iceland

6 Responses to 'Icesave: what next?'

Subscribe to comments with RSS or TrackBack to 'Icesave: what next?'.

  1. I enjoy your most informative blogs, Sigrun, but on this occasion I have a doubt or two to express:

    It seems to me that the president went out of his way to explain that it was the nation’s dissatisfaction with Parliament itself which led him to overlook the fact that a majority passed the agreement. This dissatisfaction is on a constitutional scale, and so it makes sense for him to let the people have a say. But it’s not as if he’s handing over the reins of power to a crowd of random citizens, and those in the press who voiced concern looked to me like angry people who had an axe to grind – either personal, or on behalf of a partisan employer.

    The Icelandic people are accustomed to honouring their agreements, and the president’s decision doesn’t alter the fact that they may yet decide to agree to the latest Icesave deal.
    But if they don’t, they have my fullest support for the idea that the unscrupulous, reckless and secretive actions of private banks are none of their business, and that the bill for these shady dealings belongs firmly back on the desks of the chief bankers concerned.

    If what I hear is true, namely that the assets of the National Bank could just about cover the costs of Icesave, then why hasn’t the bank just paid its debt and left the rest of us out of it?
    I know – the bank now has a “new” management… but that’s something which few Icelanders believe…

    In any case, thanks for your brilliant work – and best wishes always.


    21 Feb 11 at 4:03 am

  2. Apart from the issue itself, Icesave, there is now a lively debate in Iceland regarding the constitutional aspect of the president’s decision. The log above reflects that debate. As I’m writing these words, I’m listening to a debate on the constitutional side of the decision on Ruv, the Icelandic Broadcasting Corporation. The Icelandic media is full of this right now.

  3. Thanks for that. I’ll try to keep up with the debate as well as I can.


    21 Feb 11 at 12:15 pm

  4. I think this is a very wise President and that it is perfectly normal that the honest, hard-working Icelander should not accept to clean up the mess of the disgraceful, greedy, incompetent bankers.

    Iceland should punish the bankers severely and make them pay or else this abuse of the taxpayer will go on unstopped as it is in London.

    If nothing is done about the destruction the bankers have caused, they will do much worse in the future and governments will be as weak as the British and American ones and the banks will cripple everyone but themsleves.

    Rachael Williams

    21 Feb 11 at 2:14 pm

  5. Just wanted to thank you for the great blog and the balanced view. I consider Icelog as the best source besides Bloomberg for keeping up to date with Icelandic affairs. Any other sources in English you would recommend, btw?


    21 Feb 11 at 3:24 pm

  6. Hi MTF, thanks for kind words. For general news on Iceland there is Iceland Review, and for the more quirky expat things, as well as news, there is Grapevine, the English newspaper published in Reykjavik,

Leave a Reply