Iceland President Blocks $5 Billion Icesave Bailout: "The People Should Decide"

Photo - Hundreds of people gather to submit a petition outside the home of Iceland's President Olafur Ragnar Grimsson in Reykjavik.

The people of Iceland are speaking loud and clear.

• Read the text of Grimsson's speech

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Grimsson Blocks Icesave

Source - Bloomberg

Iceland’s President Olafur R. Grimsson refused to sign a $5 billion accord struck in December with the U.K. and Netherlands to repay foreign depositor losses and said the bill must instead be put to a referendum.

Grimsson, whose announcement comes after 44 of parliament’s 63 lawmakers passed the bill, said he was responding to popular demand for a plebiscite after more than 42,000 of Iceland’s 318,000 inhabitants signed a petition asking him to block the accord.

“There is support for the view that the people should once again, as before, act together with the parliament as the legislator in this matter,” Grimsson said.

Today’s announcement marks the second time Grimsson has rejected an agreement designed to compensate the U.K. and Netherlands for depositor losses stemming from the October 2008 failure of Landsbanki Islands hf. His Jan. 5, 2010, refusal to sign an earlier accord prompted Fitch Ratings to cut Iceland’s credit grade to junk. Moody’s Investors Service and Standard & Poor’s give Iceland’s debt the lowest investment grade.

Grimsson’s decision threatens to sour relations with the U.K. and Netherlands after the government persuaded the two countries to negotiate a new deal following last year’s rejection of the previous accord.

“We have taken note of the decision, negotiations are over and an initialled agreement is on the table,” Niels Redeker, a spokesman at the Dutch Finance Ministry, said by phone today. “We expect the Icelandic government to consider the new situation and to contact us about what will follow.”

The U.K. Treasury said it also has “noted” Grimsson’s decision to block the latest agreement and that it looks forward to “clarification of the Icelandic position in the coming days,” in an e-mailed statement.

Continue reading at Bloomberg...

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Grimsson Says Iceland May 'Wave Good-Bye' to IMF in 2011

Bloomberg Video - Iceland's President Olafur R. Grimsson talks about the country's progress since receiving a $4.6 billion IMF bailout - Nov. 30, 2010

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Comments

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Iceland president rejects Icesave bill

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[Cheyenne]

"more than 42,000 of Iceland’s 318,000 inhabitants signed a petition asking him to block the accord."

That's a staggering figure. The same percentage in the U.S. would require 40 MILLION+ people to sign a petition.

[m_astera]

The UK and Netherlands banks who talked their depositors into putting money into Iceland should eat this loss and compensate their investors and depositors. End of story.

[john]

http://www.icelandreview.com/icelandreview/daily_news/Iceland_and_Palestine_Sign_Political_Cooperation_Deal_0_380000.news.aspx