Iceland is still melting

After the country 0f 320,000 had its banks taken over by the government and its economy stood at the brink of a nationwide collapse, the list of problems is not yet done for Iceland.

This time, there is the big issue of repaying the UK and the Dutch government for the loans amounting to €3.9bn the two have given Iceland for “compensating more than 300,000 British and Dutch citizens who lost money in high-interest “Icesave” accounts run by Reykjavik-based Landsbanki.”

The problem lies with the country’s parliament. From the FT:

Lawmakers had been expected to push towards a final vote on the accord this week after two months of fierce debate since Iceland’s government reached agreement with London and The Hague.
But legislation to ratify the pact remained stuck in a parliamentary committee on Monday as the issue threatened to tear apart Iceland’s coalition government and jeopardise international support for the country’s economic recovery efforts.

Lawmakers had been expected to push towards a final vote on the accord this week after two months of fierce debate since Iceland’s government reached agreement with London and The Hague.

But legislation to ratify the pact remained stuck in a parliamentary committee on Monday as the issue threatened to tear apart Iceland’s coalition government and jeopardise international support for the country’s economic recovery efforts.

Read the rest here.

An easy resolution to the matter could provide other nations to gain trust in Iceland once again, as well as make it easier for it to receive membership to the EU and tap other economic aid from sources such as the IMF.  Otherwise, it could spell a longer curse for it.  And the argument against honoring the debt are there: the burden that the government and its taxpayers face if repayment is agreed upon.  However, it seems Britain is once again frowning upon the development (or lack thereof) saying it “expects Iceland to live up to the original deal and there is no appetite in Whitehall for talks to be reopened.”

Hmmm.

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