ICELAND HAS insisted that a looming referendum on a disputed scheme to repay €3.8 billion lost by British and Dutch savers in its banking collapse will not derail its application to join the EU.
As the British and Dutch governments threatened the country with international isolation if its citizens refused to endorse the settlement, the government has repeatedly stated that it will meet its obligations.
The European Commission sought yesterday to avoid becoming involved in the controversy, a spokesman saying the affair was primarily a bilateral matter between Iceland and Britain and Iceland and the Netherlands.
However, he said Brussels was monitoring developments closely and would take the issue into account when assessing Iceland’s membership application.
The dispute erupted after Icelandic President Olafur Ragnar Grimmson refused to sign a Bill to defray costs incurred by the British and Dutch governments when they reimbursed more than 300,000 of their citizens who lost money in the collapsed “Icesave” arm of the lender Landsbanki, which was seized by the Icelandic state in October 2008.
The Icelandic parliament had approved the deeply unpopular Bill, which had been promoted by the coalition government of prime minister Johanna Sigurdardottir.
Her administration has insisted the controversy is more about the modality and timing of the repayments than the principle of repayment itself, but said a resolution of the dispute was a precondition for credit facilities from the Nordic countries.
The affair has been termed “Ice Slave” in Iceland, where critics argue that ordinary people have been left to shoulder a huge fiscal burden as a result of the risky practices of errant bankers and lax regulation abroad.
Sources within the Icelandic administration acknowledge that the affair is a setback to its ambitions to join the EU, but they maintain it is not so serious that it cannot be overcome.
Iceland’s ambassador to the EU, Stefan Johannesson, said last night that the Icesave issue was not linked to the accession process.
A new opinion poll yesterday indicated that opposition to the repayment Bill was strong, but diminishing. Polling firm MMR said some 58 per cent of respondents would vote against the Bill in a referendum. Earlier polls had put the figure prepared to vote against as high as 70 per cent.