Reykjavik's payback plan cuts no ice
Share
Iceland's government is scrambling round for a new plan after voters said a resounding "no" to a tough scheme for repaying debts to the UK and the Netherlands this weekend. If it cannot find a solution, the economically battered nation risks being cut adrift by the EU and the IMF.
More than 93% of voters who turned out on Saturday to have their say in the republic's first referendum rejected the terms of the payback deal. The plans are massively unpopular among ordinary Icelanders who feel angry that they are being asked to shoulder the financial burden caused by the collapse of the Icesave bank in 2008.
Reykjavik has been struggling to find a palatable way to package up the payback of €3.9 billion forked out by the UK and the Netherlands to reimburse British and Dutch Icesave customers. This latest plan scraped its way through parliament last year, only to be felled at the last hurdle by the president, who bowed to intense public pressure and insisted on a referendum.
Euranet correspondent Perro de Jong says that the conservative Independence Party, which was ousted last year after the financial crisis, have played a large part in scuppering the new government's plans as part of their bid to weaken their opponents.
"All they have to do at the moment is to sabotage behind the scenes any attempt the government makes to get a deal, so that the government is in a position where it isn't getting the support from the IMF to repair the economic damage that the previous government, now the opposition, left," he explains.
The weekend's no vote leaves Prime Minister Johanna Sigurdardottir in a tricky situation. If her government fails reach an agreement on paying back its international debts then the IMF has said it will not release much-needed financial assistance. The lack of a deal would also have a negative impact on Iceland's bid to join the EU on a fast-track basis.
Speaking on Saturday, Ms Sigurdardottir insisted that Reykjavik will continue negotiations with the British and Dutch governments to come up with a revised payback plans. She also dismissed rumours that the vote would force her government to step down.
