I read the story Iceland, Mired in Debt, Blames Britain for Woes in the New York Times this morning. I’m appalled at what Britain is doing. The government is effectively labeling Iceland as a terrorist state in order to squeeze it for assets in a globally faltering economy. In effect, it’s bullying smaller it’s next door neighbor – but this bullying is in effect bankrupting Iceland.
According to the NYT, almost all cashflow has ceased into Iceland. I’m at least happy that Karen and I continue to have accounts with Eve Online (an MMORPG game that happens to be based in Iceland). It’s not much against the billions they’re talking about in the news, but I’ve got some hope that at least some folks up there will continue to have jobs and support their local economy with the value that I’m getting.
Thanks for the insightful comments! I do realize they claimed control of the assets under the bills from the anti-terrorism law – and the consequence of that, I’m to understand, is that Iceland is being labelled a terrorist state. I certainly don’t think Icelandic banks should be held harmless in this, but the forced asset seizure isn’t making things any better either.
2 thoughts on “Great Britain is claiming Iceland is a terrorist state”
Iceland’s problems go a lot further than having assets frozen by the British government. They allowed their banking system to run up foreign debts many many times their GDP before they collapsed. UK government action came *after* the collapse of their top three banks.
For Landisbanki to be allowed to operate in the UK and offer accounts to UK citizens, they and the Icelandic government agreed to the deposit guarantee scheme where the Icelandic government would cover the first 20,000 euros of the deposit in case the bank failed. After the failure, the Icelandic goverment made it known they would protect their domestic depositors, but not UK ones. They breached the international agreements that allow banking to happen across borders inside Europe.
Although the headline is that anti terror legislation was used, in fact legislation from the crime part of the crime bill. The UK government seized the assets after the Icelandic government itself had nationalized two banks, and essentially declared Icesave and Landisbank bankrupt, and said no compensation would be paid to UK savers.
Many UK institutions such as town councils and public organisations have lost billions of pounds through the default of the banks, and many billions of pounds of deposits from UK individuals have essentially been seized by Iceland.
I love Iceland, and look forward to my next trip there, but the NY times article seems to have been written by the Icelandic tourist board. The UK government is loaning Iceland 4 billions pounds to enable them to repay the UK savers.
Sadly, Iceland got themselves into this mess by bingeing on the cheap credit available for the last 10 years, the same as the sub-prime mortgagees in the USA.
I read about this a couple of weeks ago and not that I am defending this at all – but I dont think the UK is labeling Iceland as a terrorist state, but rather using anti-terrorism laws to seize the assets. Not quite the same thing at all. Iceland is in a pretty bad way, but blaming the UK government for it is a little bit strong. The banks were failing before the UK stepped in and the government seized the assets of the UK branches of the Icelandic banks.
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