My contribution to the international media

The constitutional crisis provoked by the Presidential veto to a law in Iceland  is a result from a direct call from the citizens asking for direct democracy and requesting that social justice and human rights are taken into account in the present and future construction of the European internal market.

Did the EU and the EEA fail Iceland?

 

By M. Elvira Mendez-Pinedo, Associate Professor of European Law. University of Iceland

 

There is a present misunderstanding in the foreign media that Icelanders do not want to pay depositors in Europe who lost their savings within the Icelandic banks after their collapse in October 2008. This is not correct as the legal situation stands now. Iceland already passed a law in September 2009 agreeing to pay depositors and honour its international obligations. This law was approved by most political parties but it contained some reservation clauses to protect the economic future, sustainability and even existence of this tiny country composed by rouhgly more than 300.000 inhabitants.

Because the UK and Holland did not agree to Icelandic reservations, new negotiations started and a new law was presented to the Parliament by the Government. This new law was passed on the 30th December 2009 but it deprived Iceland of the previous reservations that guaranteed its economic future and development. Strong fears for a massive exodus out of the country are present in the Icelandic minds. More than 60.000 Icelanders, 25% of the electorate, requested the President to submit this new bill to a national referendum. President of Iceland, Olafur Ragnar Grimsson, announced yesterday his decision not to sign the new Icesave Bill which was passed by Icelandic parliament just before the New Year. It is his intention to send the law to a national referendum as soon as possible.

Under Icelandic law, the President’s decision means that the law approved by the Parliament will go into force; but also that it will be withdrawn again in the event of the Icelandic public voting ‘no’, whenever the referendum goes ahead. If the referendum was to be negative, the previous Icesave-Bill passed by the Icelandic Parliament in September 2009 would then be into force.

At any event, Iceland is assuming its international obligations. What Icelanders are requesting is not to be deprived of the clauses agreed in the summer by their Parliament which guarantee the economic sustainability of one of the smallest countries of Europe.

http://www.icenews.is/index.php/2010/01/05/declaration-by-the-president-of-iceland/

At the same time the Government has announced that Iceland is committted to debt repayment.

http://www.icenews.is/index.php/2010/01/05/government-iceland-still-committed-to-debt-repayment/

Some more political analysis of the context of the „veto“ expressed by the President of the Republic.

http://www.icelandreview.com/icelandreview/daily_news/?cat_id=29314&ew_0_a_id=356127

With reference with these events, I would like to send you some background information regarding the views of Icelandic people and why this subject is so controversial. My main worry today is that the foreign media misunderstands what is happening in this country and this is the reason why I am sending you this letter.

I trust you to take account of this background information as it explains the constitutional difficulties of this country in a dispute that will define history between the EU and Iceland.

Icelanders are fighting for social justice in the construction of the internal market. Icelanders are claiming for a European system of governance that respects fundamental rights of citizens and small nations.

Is that so difficult to understand?

Yours sincerely,

Maria Elvira Méndez Pinedo

Doctor in European Law

Associate Professor of European Law

Faculty of Law. University of Iceland.

Sudurgata s/n. Lögberg 306.

101 Reykjavík. Iceland

Tel: [phone]

 

 

 

 

 

It has been referred in the foreign media that Icelanders do not want to compensate depositors in the UK and Holland who missed their savings in the Ice-save accounts from Landsbankinn. This is not exactly true. The situation is far much more rich and complicated and offers a lesson of democracy for the construction of Europe.

To make it short, I think that Icelanders are not protesting per se the European obligations to compensate Dutch and British citizens for the minimum guarantee deposits they are entitled according to the European law. There seems to be fundamental agreement in the society that we have to comply with our international obligations and that is why a previous Ice-save bill was approved in summer 2009 with most of the political parties participating in that bill.

What Icelanders are requesting is social justice.

In fact, I could have agreed with both yes and no votes in the Parliament. This is because  I think that the methodology to solve this dispute is not appropriate. What is very difficult for citizens is to accept the social injustice of the agreement reached, that the Icelandic public bear the losses and covers the debt of private companies while the profits were private and all the assets seem to be now safely stored in tax heavens.

For me the only way to properly solve this dispute which mixes political, economical, legal, ethical and sociological aspects is in a comprehensive way, tackling all issues together and showing Icelandic citizens that justice is also part of the deal. So the current loan agreements are a temporary part of the battle towards final justice.

So, I think everybody agrees that it is fair that Iceland assumes its European obligations towards depositors in the UK and Holland while the legal issues are pending because legal problems take time to be solved. But this is only while the fundamental questions that lie at the core of this issue are tackled. The final goal should be that the responsible individuals and institutions assume responsibility and compensate for the damage caused after the proper criminal/civil research has taken place. The final goal should be that citizens are not directly ordered to pay the bill for the damage caused by private companies.

Any Civil Code in the world states that the one who causes damage to other, by action or inaction, is obliged to pay for the damage caused.

Icelandic citizens are protesting the current Ice-save agreements because they have been sent the final bill of the Ice-save debt without any other alternative being properly explained nor implemented. This is a strong criticism against their own governent. There is also strong criticism against the UK and Holland becuase of their hard stand against Icelandic citizens.

The solution of the Ice-save dispute from a social justice perspective would mean adopting a comprehensive strategy that must include simultaneously all the following elements:

1. Agreement to reimburse the UK and Holland to the equivalent of the deposits plus a reasonable interests. Is 5.5.% a reasonable interest when a European country and its citizens have to pay for it and not commercial banks?

2. Agreement that contracts should be based on the principles of European law and that includes fundamental rights both of States and individuals. It is essential not to deprive Iceland the access to justice before the proper European courts who are the only competent to interpret European law in the last instance, let it be the European Court of Justice or the EFTA Court. Is it fair that Iceland has no access to the European Courts in this dispute?

3. Agreement that the EU should exercise a proper mediation role in this dispute, based on the principles of solidarity between European nations, without deriving the issue to the IMF and therefore depriving Iceland of procedural rights under the EEA Agreement. As Eva Joly has pointed out, is it fair that Iceland pays alone for a defective European legislation that lacked proper guarantees and cross-border supervision in the internal market of financial services?

4. Agreement that the Icelandic Government and the EU should properly explain to Icelandic, British and Dutch citizens why the EU is not present at the resolution while this dispute is so closely related to the internal market and the lack of proper European rules on the functioning of the financial markets. Is it fair that Iceland pays alone when the European legislator created a weak system of national guarantees for depositors without the back up of the European Central Banck that could not cope with a systemic bank collapse?

5. Agreement that the EU and the Icelandic Government explain why there is not any macroeconomic assistance to Iceland from the EU such as for other countries (ie: Ukraine 2009) in spite of former Commissioner Joaquín Almunia proposing this in the autumn 2008. Is it fair that Iceland gets worse treatment than other countries in the continent?

6. Agreement that any loan contracts to Iceland should take into account its financial difficulties and should not oblige it to waive its sovereign immunity. Is it fair to that creditors can seize inmediately hospitals, schools, all assets necessary for the normal functioning of the country?

7. Agreement not to waive the right to exercise legal claims for the use of UK anti-terrorist legislation against Iceland. Is it fair that Iceland forgets about this act of legal violence while the British politicians talk about justice?

8. Agreement that the Government and the Althingi and the judicial power in Iceland will aim to transfer the responsibility and the final debt to all those responsible for the bank collapse and the Ice-save debt. This includes freezing as a preventive measure all the assets of people (individuals owners of banks, members of board administrators, people holding public office) who in principle are responsible (active or passively, by fault or negligence) and should be under investigation.

9. Agreement that the Truth Committee Report to be published in 2010 in Iceland will be properly followed by the correspondent criminal or civil claims before the courts so that all assets relating to the Ice-save dispute are recovered.

Furthermore, I suggest that we should consult Mr Jacques Delors who is still today one of the most respected leaders of opinion in Europe. He has the knowledge of the internal market and of the European integration and all the skills needed to give good advice on this dispute. He has published several articles recently criticizing the EU for lacking courage and leadership and missing this historic opportunity to prove that there is a better future for all European citizens. Social justice is needed in the aftermath of the financial crisis and Mr. Delors not only defends social justice but he also knows what is needed to save the future of European integration.

ESB metur Icesave-málið

Athugasemdir

[Sæmundur (IP-tala skráð) 6.1.2010 kl. 13:38]

A very good and complete view of the many facets of the IceSave situation, I couldn´t have done it better myself.

 Hope this goes out to the many newsagencies around the world that untill now have been publishing untrue half truths and blatant lies.

[Sigurður Þórðarson, 6.1.2010 kl. 13:48]

Takk kærlega fyrir Elvíra

[Hjörtur Hjartarson (IP-tala skráð) 6.1.2010 kl. 14:46]

Takk

[Kristín Martino (IP-tala skráð) 6.1.2010 kl. 15:02]

Takk fyrir Elvíra, þetta er rétt hjá þér.

Erlendir fjölmiðlar gera sér ekki grein fyrir stöðu mála og lítið virðist hafa verið gert til að kynna málstað íslensku þjóðarinnar.

Hvorki af ríkisstjórn okkar né Hollands og Bretlands og fjölmiðlar halda áfram að miðla fréttum  með vankunnáttu sinni á málinu.

Hvernig væri ef þeir byrjuðu frétt um þetta efni með myndum og nöfnum þessara útrásarvíkinga okkar í heimsfréttum í staðinn fyrir að rægja niður almenning í landinu.

Það er aldrei talað um þá einkaaðila sem komu þessu öllu af stað, né breta og hollendinga sem gáfu þeim aðilum rétt að hefja peningastarfsemi í löndum þeirra án þess að fara fram á að til þess yrðu þeir að hafa tryggingarsjóði fyrir innistæðum viðskiptavina.

Svo eftir að bretar koma öllu um koll með að setja hryðjuverkalöginn í gang á bankana þá á að ganga á íslensku þjóðina sem í raun á ekki að bera neina ábyrgð á einkareknum bankastofnunum í öðrum löndum.

Auðvitað gerði forseti okar það sem honum bar , það er að neita að skrifa undir samninginn við Icesave eins og hann var.

Tíma Jóhönnu og Steingríms hefði verið betur varið að bíða með Icesave í staðinn fyrir að reina að ýta þessum samningi áfram eins og þau hafa gert og kynna málefni okkar betur á heimsmælihvarða í staðinn fyrir að láta fréttir um þessi mál hafa verið svo oft rangtúlkuð .

[Jóhanna Kristjánsdóttir (IP-tala skráð) 6.1.2010 kl. 15:15]

Kærar þakkir fyrir þetta og annað sem frá þér hefur komið. Þakka líka mjög áhugavert og fróðlegt námskeið um Evrópusambandið á mannamáli sl. vetur.

Jóhanna Kristjánsdóttir

[Kristinn Johnsen (IP-tala skráð) 6.1.2010 kl. 15:26]

Orð fá því ekki lýst hversu mikið hefur vantað viðbrögð á við þessi. Takk kærlega.

Er forvitinn að vita hvort þetta efni hafi verið/eða muni verða komið til aðila sem hafa fjallað um málið í erlendum fjölmiðlum, og þá sér í lagi þá sem ekki hafa haft fyrir því að kynna sér málið...

Ef ekki, er í lagi að nota efni þitt, með viðeigandi tilvísunum?

Aftur takk, Kristinn Johnsen

[Elvira Mendez (IP-tala skráð) 6.1.2010 kl. 15:48]

Sæl öll,

 Takk fyrir þetta. Ég er búin að senda bréf til 30 aðilar (ESB, UK fjölmiðlun, Spánn...) en ekkert mál til að senda þetta áfram til að kynna íslenskusjónarmiði.

Bestu kveðjur

 Elvira

[Margrét Elín Arnarsdóttir, 6.1.2010 kl. 15:52]

Takk kærlega fyrir, vonandi lesa þetta sem flestir!

[Karl Johannson (IP-tala skráð) 6.1.2010 kl. 15:59]

Muy estimada Elvira.

 Tienes razón.  You are totally right about what foreigners believe; that Icelanders are refusing to pay. What people are protesting against is being unfairly treated, demand of high interest rates, threats, etc. But, the Icelandic government is to blame for the misunderstanding. I have been living in Sweden for 20 years and seen a lot of incorrect news about Iceland, distorted “facts”. My guess is that about 80% of all news arriving to Sweden from Iceland is more or less “fantasies”.These are published in SVT (Swedish State TV), newspapers and distributed by the medias common “newsbeurau” called TT. Iceland has of course ambassadors all over Europe as well as in Sweden. Regardless of what nonsense is published, I HAVE NOTE ONCE WITNESSED A PROTEST FROM OUR AMBASSADORS HERE IN SWEDEN! Why and what are the ambassadors for? Ar’t they supposed to keep an eye on the Iceland’s interests and reputation? The same is valid for the Icelandic Foreign Ministry, they have totally ignored to explain and declare the position and opinion of Icelanders, their government and what the parliament is doing. So, we can only blame ourselves for lack of communicating with foreign media. Mis mejores saludos, Karl JohannssonSuecia

[Benni, 6.1.2010 kl. 16:08]

Muchos gracias!

[Jón Jónsson (IP-tala skráð) 6.1.2010 kl. 17:17]

Er það nokkur misskilningur að Íslendingar vilja ekki borga? - Það eru megin rök allra helstu andstæðinga ICESAVE að það sé ekkert sem skyldi okkur til að borga, - að við eigum ekki að borga skuldir einkabanka, ekkert í EES-reglunum skyldi ríkið til að borga (ef þeir setji kommur á "réttan" stað í textanum), engin ríkisábyrgð sé á skuldinni, breska fjármálaeftirlitið hafi burgðist, bretar séu miklu felir en við og geti miklu fremur tekið þetta á sig, Bretar geti bar hrit þrotabú Landsbankans og svo látið okkur í friði, við eigum ekki að boga vexti af láninu og hitt eigi þrotabúið að borga, Of mikið að borga, við förum á hausinn, bara að borga 1-4% brot af hagvexti okkar þ.e. af tekjuvexti og bara í nokkur ár og svo falli rsetin niður og borgum ekkert ef ekki verður hagvöxtur, ... - hvað er þetta annað en að vilaj ekki borga?

- Það er bara komið í ljós að Alestair Darling hefði fullkomlega rétt fyrir sér þegar hann setti á okkur neyðarlögin, - „believe me or not they are not going to pay".

[Margrét Tryggvadóttir, 6.1.2010 kl. 17:28]

Takk Elvira fyrir frábært bréf.

[José Antonio Rodriguez (IP-tala skráð) 6.1.2010 kl. 18:13]

Gracias Elvira por el articulo, aunque creo que servirá de poco, ya que como sabes es muy dificil cambiar la opinión de las personas que no están bien informadas asi como los articulos en la prensa Europea, en la que se asegura que Islandia no quiere pagar esta deuda, ojalá me equivoque y otra vez te doy las gracias y espero que los Reyes Magos hayan sido buenos contigo.     Saludos.

[Jakob Þór Haraldsson, 6.1.2010 kl. 18:13]

"Tær snild hjá þér - tusen takk...takk...takk...takk....996 takk...lol..!"  Sorglegt að núverandi stjórnvöld skuli ekki fyrir löngu vera búinn að draga EB inn í þessa deilu, í ljósi þess hversu illa samið regluverk EB er þegar kemur að bönkunum...!  Þegar sá dagur kemur að Jóhanna & SteinFREÐUR fara að tala OKKAR MÁLSTAÐ, í stað UK & Hollands, þá mun komast betri skriður á málið.  Kærar þakkir fyrir að standa vaktina og koma OKKAR sjónarmiðum á framfæri.

kv. Heilbrigð skynsemi (fun.blog.is)

[Arnór Valdimarsson (IP-tala skráð) 6.1.2010 kl. 23:32]

Takk kærlega fyrir.

Þú hefur með þessu, gert meira fyrir okkar málstað en Ríkisstjórnin öll.

[Gunnar Skúli Ármannsson, 7.1.2010 kl. 00:15]

Takk, þú ert virkileg búbót fyrir Íslenskt samfélag-bið að heilsa Hrelli.

[Alda Ólafsson (IP-tala skráð) 7.1.2010 kl. 04:26]

Gracias Elvira por este 'post'. Me gustaría contactar contigo: ¿cuál es tu correo electrónico?

[Dagga (IP-tala skráð) 7.1.2010 kl. 09:43]

Takk fyrir þetta. Ef breskir fjölmiðlar birta ekki greinina þá væri ráð að nota íslenska blaða/fréttamenn með góð tengsl inní fjölmiðlaheiminn þar úti að reyna að koma henni að. Það er mikilvægt að þetta verði birt í blöðunum þarlendis.

Frábær færsla.

[Hjörtur Hjartarson (IP-tala skráð) 7.1.2010 kl. 10:25]

Þjóðþrifaverk, Elvira.

[Jon (IP-tala skráð) 7.1.2010 kl. 11:01]

Takk mjög góð grein!

For the English readers who want to post a comment.You need to put your name and your e-mail then you see Ruslpóstvörn and then comes a blank box. Next to it says what is the sum of ? you can use google translate http://translate.google.com from Icelandic to English to see what numbers you need to sum up to put in the box.

Nafn is Name

netfang is e-mail

netfang aftur is e-mail again

vefslóð is website (optional)

Ruslpóstvörn is spam guard

Thank you!

Jón

[M. Elvira Mendez Pinedo (IP-tala skráð) 7.1.2010 kl. 11:27]

Thank you all for your positive comments. I sent this letter to at least 40 foreign newspapers and to some leaders of the EU: President Zapatero and Commissioner Joaquín Almunia.

I got a mail yestarday from Commissioner Almunia. He would like to clarify the following:

The EU cannot help Iceland with a package of macro-economic assistance until there is a legal agreement between Iceland and the IMF. He wrote to me this is not a forgotten promise from him as a Commissioner but a necessary legal precondition for the EU.

 

I prefer to keep his mail confidential because that was the nature of our private communication.

[Jose Carlos Martin (IP-tala skráð) 7.1.2010 kl. 16:30]

Thanks "compatriota" for your precise point of view.

Here in Spain nobody knows or comments a word of what's happening in your country, and the international media are biased by the british point of view, so people like me who are interested in your situation welcome any independent opinion about what is really happening.

The Icelanders are giving the world a lesson of democracy and justice; please do what is best for your people and find, and punish, the individuals who got you into this mess.

Good luck and regards from Madrid, in a day that is purely Iceland wheater: today someone has kidnnapped our sun.

[Ísleifur Gíslason, 8.1.2010 kl. 15:20]

Thank you for this article Elvira. I'm going to link it to FaceBook.

ÁFRAM ÍSLAND, EKKERT Icesave, Við segjum NEI !

[Birgir Rúnar Sæmundsson, 8.1.2010 kl. 17:41]

Muchos gracias!

[Giova Bocca (IP-tala skráð) 9.1.2010 kl. 01:17]

Mme Mendez-Pinedo,

I suggest a modification for your points 9 and 8.:  That the assets of the British and Dutch branches of the Icelandic banks thrown into receivership by the financial authorities of those nations be included as property of the bankers.  In connection to this any agreement with Britain and Holland will need to include requirement for return of those assets, at full current values, with all collectibles and receivables included and intact, and, since interest is of concern to those nations' negotiating sectors, with interest on held monies (not reinvested) paid at the 5.5%, a rate those nations deem reasonable, so that Iceland may use those assets and their earning capabilities in paying off the debts that the Icelandic nation agreed, in August, to accept responsibility to see paid off.

Bankers being bankers, they, at least ones not corrupt, do not stuff their depositors' deposit moneys into secret bank accounts, but, instead, for the weakness bankers have that makes them bankers, loan the stuff at interest to earn more.  They usually then loan the more at interest to earrn yet more.  For this, to find the money the Icelandic bankers "lost" one need only look where they were last known to be loaning them.  Sure enough, one may find most of the British and Dutch depositors' "lost" pounds and Euros still in their respective countries, still in theeir respective currencies, still out at interest, still in the forms of loans, which loans are, most of them, still being repaid.

In Britain the repayments are stacking up in special "holding" accounts at the exchequer, because the banks, having been closed by the British FISA (for insufficient reserves, not corruption or any such), are not permitted to re-loan their repayment incomes, to earn more income from them, because that would be carrying on banking, with insufficient reserves, which they were doing before.  The holding accounts, being holding accounts only hold.  They do not pay interest.  The result is the British Exchequer presently enjoying interest-free use of the Icelandic banks' moneys, which moneys they are demanding the Icelandic people borrow at 5.5% to repay to them.  In fact, Britain could conceivably loan the Icelandic people their banks' moneys, at 5.5% interest, to repay to Britain the Icelanders' Icelandic banks' moneys that Britain is demanding those people repay.  Those icelandic bank assets, loans the bankers made and the holding account the repayments are being deposited in are where most of the "disappeared" moneys are "hidden away".

According to a recent article in the Guardian newspaper the assets of Landsbanki's IceSave, in receivership, are valued at 90 pence on the pound.  This is an astounding figure for assets of an institution in receivership.  It is more amazing in a banking market like that of present day Britain, where functioning banks are requiring exchequer loans to prop them.  The value reflects the values of the bank's loan assets.  It suggests that the banking that was being done by the Landsbanki bankers was conservative banking, that those bankers were investing solidly, not wildely, as too many Brit bankers were, and that for that few of the loans they had made have since defaulted, and that most of those loans still are perceived to have good prospect into future.  Oddly enough, the British and Dutch negotiators in the recent negotiatings, appear to have somehow overlooked those assets and their qualities and seemed to have forgotten to include them in their negotiation computations.

With circumstances indicating the bankers were at least apparently capable, and most of the assets that seemed in the panic of the moment to have disappeared to be, in fact still alive and thriving, in pounds and Euros, no less, if Iceland is able to recover the banks and assets Icelanders have accepted responsibility to settle the depositorrs' debts of, and can, perhaps using those for baits, lure in and capture the bankers, who it appears simply grabbed what they could and jumped for lifeboats when Oddsson, Britain and Holland scuttled their bank-ships, and can then chain those bankers to the oars of those banks, that they apparrently rowed responsibly before, to force them to row on now, under the lash and drum of the Icelandic people, now made the captains of those bank-ships, Iceland should be able to fairly easily, and painlessly, see repaid the full amounts they have agreed to see repaid.  In fact, after their servitudes slaving to the nation's repayment obligation, the offending bankers, being, one would hope, reformed and wiser, might be kept to pull on at the oars of Iceland's recovered banks, under better supervision, of course, to pull for the good of Iceland, to add value to the nation above and beyond the amount of the repayment obligations.

I submit that this suggestion is far more sensible than letting Britain and Holland keep the assets the bankers left after the collapse and then letting them, on top of keeping all that booty, collect the values of the booty again, with interest, from the next ten or twenty generations of Icelanders.  Please consider incorporating these amendments in your list.  Perhaps reading them there the government may be moved to recover from its hyperventilatons and to begin negotiating with Britain and Holland as economic adversaries, in a businesslike way.

Yours optimistically,

Giova

[Maria Elvira Méndez Pinedo, 14.1.2010 kl. 12:43]

Dear all,

 Thank you very much for your positive comments on the blog and for the encouragement I got from you to continue.

As for the suggestion of Giova, it is really that one that would make all sense in the first place but the UK and Holland refuse to accept it on the basis of the nationalised factor. We do not even know which are the present assets of Landsbanki, it is all secret information for us in Iceland (some say it would cover 90% of the debt, some question whether it will cover 30%).

Too many economic uncertainties sorrounding this dispute in my view to sign a check blank now. In my view, we need to apply the principle of precaution to say the list.

As some critical voices point out, UK and Holland prefer to go after Icelanders instead.