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Iceland president promises to pay | Iceland president promises to pay |
(about 4 hours later) | |
Iceland's president has told the BBC's Newsnight programme that the country will pay its debts to the British and Dutch governments. | Iceland's president has told the BBC's Newsnight programme that the country will pay its debts to the British and Dutch governments. |
President Olafur Grimsson said that Iceland would "honour its obligations", despite effectively vetoing new repayment laws. | President Olafur Grimsson said that Iceland would "honour its obligations", despite effectively vetoing new repayment laws. |
On Tuesday, the president called a public vote on a new bill committing Iceland to repaying $5.4bn (£3.4bn). | On Tuesday, the president called a public vote on a new bill committing Iceland to repaying $5.4bn (£3.4bn). |
There has been significant opposition to the bill among Icelanders. | There has been significant opposition to the bill among Icelanders. |
Opponents say the repayment plan could harm the Icelandic economy further, and force taxpayers to pay for bankers' mistakes. | Opponents say the repayment plan could harm the Icelandic economy further, and force taxpayers to pay for bankers' mistakes. |
The debt stems from the Icelandic banking crisis in 2008, when the UK and the Netherlands were forced to compensate savers with accounts in Icesave - a subsidiary of the collapsed Landsbanki bank. | The debt stems from the Icelandic banking crisis in 2008, when the UK and the Netherlands were forced to compensate savers with accounts in Icesave - a subsidiary of the collapsed Landsbanki bank. |
Laws already in place | Laws already in place |
Icelanders' reluctance to dig into their pockets to the tune of £3.4bn is understandable Robert Peston, BBC business editor Read Robert Peston's blog | |
"The view which is being put forward that we will not honour our obligations is completely wrong," President Grimsson said. | "The view which is being put forward that we will not honour our obligations is completely wrong," President Grimsson said. |
He argued that legislation signed by him in September already ensured that Iceland would repay the money. | He argued that legislation signed by him in September already ensured that Iceland would repay the money. |
"The law which I signed in September is based on the agreement that we have made with Britain and the Netherlands, where Iceland acknowledges its obligations," he added. | "The law which I signed in September is based on the agreement that we have made with Britain and the Netherlands, where Iceland acknowledges its obligations," he added. |
But this earlier agreement is unlikely to be acceptable to the UK and Dutch governments. | |
Unlike the later agreement it does not include a sovereign guarantee, committing Iceland to repaying the loan in full. | |
Public vote | Public vote |
THE STORY SO FAR... Early October 2008: Icelandic banks collapse forcing the government to take controlOctober 2008: Amid a bitter row with Iceland over who should pay, UK and the Netherlands promise to compensate their nationals who have Icesave accountsNovember 2008: IMF approves $2.1bn loan for Iceland. Financial support from other countries brings total amount to $10bn June 2009: Iceland's new government agrees to reimburse UK and NetherlandsAugust 2009: Icelandic parliament approves first Icesave bill detailing payment scheduleSeptember 2009: UK and the Netherlands reject payment terms following amendmentsDecember 2009: A second bill including sovereign guarantee approved by parliamentJanuary 2010: President calls referendum on second bill | |
The referendum is currently scheduled for 20 February, according to draft legislation to be discussed by the Icelandic parliament on Friday. | The referendum is currently scheduled for 20 February, according to draft legislation to be discussed by the Icelandic parliament on Friday. |
President Grimsson said that it was his duty to ensure that the public will on the matter was followed. | President Grimsson said that it was his duty to ensure that the public will on the matter was followed. |
The latest opinion polls suggest the referendum is not necessarily simply a rubber stamp to blocking the bill. | The latest opinion polls suggest the referendum is not necessarily simply a rubber stamp to blocking the bill. |
The latest opinion polls, quoted by the Reuters news agency, suggest a lessening of hostility. | The latest opinion polls, quoted by the Reuters news agency, suggest a lessening of hostility. |
Between 51% and 58% are against, down from about 70% formerly. | |
A successful resolution to the dispute is essential if Iceland is to continue accessing the $7bn of financing from the International Monetary Fund and other Nordic countries. | |
The funds are seen as crucial to Iceland's economic recovery plan. |