There are three reasons why Althingi won’t approve the IceSave deal.
1. Ambiguity: There is too much ambiguity surrounding IceSave. If the whole picture is really known then it needs to be explained better by the government. Right now all we get is wild and varied speculation by all kinds of politicians and economists instead of cold, hard facts. What will really happen if the deal is rejected? International isolation or just a second try at the negotiation tables? Frozen credit-lines for eternity or no difference? Could someone please explain instead of just taking a wild guess?
2. Shameless Politics: The opposition in Althingi has been trying what it can to use the IceSave issue to get back into power. The game the Independence Party and Progressive Party are playing is one of trying to dump the whole mess behind the IceSave accounts onto the current government, claiming acceptance as treason on their behalf. It is well rich, seeing as IceSave was the Satanic spawn of their own governance, but it might work as too many people have peas for brains. And that is the constituency they are aiming for. As soon as they would be in power, they would sign the agreements themselves.
3. What lurks within: There are MP’s within the government parties that really should belong to the Independence Party or the Progressives. They might be the biggest roadblock.
If the government would pay attention to getting the first one squeared, then the other two would be deflated.
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Bromley86
2 years ago
Totally agree with (1). Back when Perkins, Hudson etc. were talking about refusing IMF help, no one – not a single one – tried to describe what sort of economic environment Iceland would face without the IMF loan.
The only thing I could do was extrapolate from the three stated reasons for the IMF loan. So no loan would mean nothing to back the currency, which would mean capital controls for a long time. But is that bad?
More importantly, no loan would mean a sudden and large contraction in public spending, as you just cannot run a deficit if no one will loan to you. The contraction is problably going to happen anyway, but I doubt that it will be better to take all the pain at once. Still, presumably it’s doable.
Which leave the big one, for which I think about half of the IMF/Nordic loans were earmarked for. Recapitalisation of the banks. How important that is I simply don’t know – does it matter if they’re undercapitalised if exchange controls prevent people taking their money out of Iceland in the first place? This is the one that would have benefited from a little public analysis by those trying to encourage Iceland to default/refuse the IMF.
At the end of the day though, both of the governments, representing the entire spread of political opinion in Iceland, have wanted the IMF loan and both have been willing to be pinned down on the Icesave issue to get it. So they must think that it’s important, at least when they’re the ones in charge.
As to the import of the timing, that’s another thing no one has bothered to explain. It seems pretty clear that there’s not going to be any more loans until Icesave is concluded, but I’ve no idea how urgent those IMF-led loans are. I’d like to think that the IP wouldn’t unnecessarily endanger the county just to score political points, but if enough of them are at risk of exposure unless they’re in government, perhaps they would act for themselves first. After all, they’ve done that before
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C.A.K
2 years ago
One thing: If Iceland says NO the Icesafe agreement, then forget anything regarding a membership in the EU.
This means: A politician could easily have supported the EU appliance, knowing a “no” to the Icesafe agreement is a far more powerful on the matter anyhow..
kría09
2 years ago
Fearmongering seems to be a prevalent element in Iceland politics as opposed to demanding and providing hard facts. It appears similar concerning Iceland’s membership in the EU – without even the first round of negotiations in sight, there are zillions of fears on the market about loosing sovereignty, fishing quotas, whatsoever, should Iceland become a member of the EU. Isn’t it too early for this?
The current ambiguity seems favour the opposition, so I don’t understand, why the government doesn’t take better care of it, particularly in the case of the Icesave agreement, where the facts should be on the table by now.
Has anybody from the Icelandic government talked to the British/Dutch government to clarify some of the questions raised above?
AB
2 years ago
Well, today the Icelandic Parliament approved the revised Icesave agreement… so I guess you were wrong. The president will probably sign the new law tomorrow, in spite of considerable public opposition. So that’s that.
Dadi
2 years ago
AB – fortunately this prediction did not come true… but point #2 was tried to the utmost… I still haven’t seen point #1 cleared up though… there is still too much ambiguity surrounding the deal, for example the Dutch National Bank’s responsibility in allowing a dangerously unsound bank to operate in the Netherlands.
The IceSave ghost is not dead in my opinion… but can we please think about something else now