| Author (Person) | Ward, Andrew |
|---|---|
| Series Title | Finance and Development |
| Series Details | Vol.43, No.3, September 2006, p |
| Publication Date | September 2006 |
| ISSN | 0015-1947 |
| Content Type | Journal | Series | Blog |
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Iceland’s prime minister has hit out against the International Monetary Fund and the British and Dutch governments for holding up recovery efforts a year after the country’s banking sector collapsed. Johanna Sigurdardottir, the prime minister, said that it was “not acceptable” that the IMF had delayed a review for months. This review is needed before Iceland can access more of its $5.1bn (£3.2bn) international rescue package. She also renewed criticism of Gordon Brown, the UK prime minister, for his decision a year ago this week to use anti-terror laws to freeze Icelandic assets – a move that deepened Iceland’s crisis and damaged relations between the Nato allies. “To stamp a friend and a long-time ally as a terrorist is an act we will hardly forget,” she told the Financial Times. “It hurts.” Iceland remains locked in a dispute with Britain and the Netherlands over compensation for nearly €4bn (£3.67bn) of money lost by depositors in Reykjavik-based “Icesave” accounts. Ms Sigurdardottir said that it was “unfair” that the IMF and Nordic donors had made access to additional aid conditional on Iceland’s resolving the Icesave issue. But the prime minister voiced hope that the IMF review would start “within the next few weeks”. In written answers to FT questions, she said that the UK and Dutch authorities “cannot wash their hands” of regulatory responsibility for the failures of Icelandic banks that operated in Britain and the Netherlands. She suggested that the UK was contradicting Mr Brown’s own principles by making Icelanders pay for the mistakes of a private Icelandic bank. “The British prime minister has said that it’s not the general public that should suffer from the wrongdoings of the banks but the banks should compensate the public. Obviously he does not count the Icelandic public in [that].” Ms Sigurdardottir accepted that Iceland bore primary responsibility for the failure of its banks, which she blamed on “uncontrolled capitalism and greed” and the “megalomania ... and crossownership of a few players”. “The global credit crunch brought the Icelandic banks down, but politicians and regulatory institutions in Iceland should have demanded a [reduction in size] of the banks,” she said. Icelandic politicians and regulators had allowed the country to stray from the welfare model of its Nordic neighbours “into an abyss of turbocapitalism and mounting inequalities which proved fatal, especially for a small nation”. She vowed to return Iceland to the Nordic path with an emphasis on “equality and fairness”. Ms Sigurdardottir, the leader of the centre-left Social Democrats, was elected prime minister in May after voters ejected the conservative-led government that had steered Iceland into crisis. But her grip on power has looked shaky in recent weeks amid divisions within the coalition government over the Icesave issue as negotiations with the UK and the Netherlands have hit a fresh roadblock. It was a year ago today that Iceland passed emergency legislation to authorise intervention in the financial sector as its three main banks – Landsbanki, Glitnir and Kaupthing – teetered on the brink of collapse. Ms Sigurdardottir said Iceland had “taken large strides” towards normalisation. Copyright The Financial Times Limited 2009. Report of a FT interview with Johanna Sigurdardottir, the Prime Minister of Iceland, October 2009. She hit out against the International Monetary Fund and the British and Dutch governments for holding up recovery efforts a year after the country’s banking sector collapsed. |
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| Source Link | http://www.imf.org/external/pubs/ft/fandd/2006/09/index.htm |
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| Countries / Regions | Iceland |
