Iceland ditches bank compensation deal
Iceland’s president today refused to sign into a law a bill to compensate Britain and The Netherlands for losses from the collapse of an internet savings bank.
The decision by Olafur Ragnar Grimsson means the controversial legislation will now go to a national referendum. No date has yet been announced for the poll.
The law would have given £2.3bn (€2.55m) to Britain and €1.3bn to The Netherlands from 2016 to repay them for compensation claims from people who lost money in the collapse of internet bank Icesave.
The bill was passed by Iceland’s parliament late last month after weeks of heated debate.
Mr Grimsson said he made his decision to block the bill after receiving a petition signed by a quarter of Iceland's voters.
It is only the second time since Iceland’s republic was founded in 1944 that the president has not signed into law a bill approved by parliament.
“It is the cornerstone of the constitutional structure of the Republic of Iceland that the people are the supreme judge of the validity of the law,” Mr Grimsson said.
“It is ... the responsibility of the President of the Republic to ensure that the nation can exercise this right.”
He said the poll would take place “as soon as possible” in accordance with Icelandic law.
The Icelandic parliament’s decision to pay back the money was widely seen as a move to boost the country’s hopes of swift entry to the European Union and to aid its economic recovery. But public opposition to the bill was strong.
Mr Grimsson said that the recovery of the shattered Icelandic economy “is a matter of vital urgency” and that agreement with other nations would have an impact.
However, he added that it has “steadily become more apparent that the people must be convinced that they themselves determine the future course.”
“The involvement of the whole nation in the final decision is therefore the prerequisite for a successful solution, reconciliation and recovery,” he added.
