Iceland has produced the “first grass-roots anti-bailout revolt” in the credit crisis, said Allister Heath in CityAM. President Olafur Grimsson vetoed a bill pledging to repay €3.8bn to Britain and the Netherlands to reimburse them for stepping in and compensating savers when Icesave, the Iceland-owned savings bank, went bust.
Grimsson plans to put the bill to a referendum amid massive opposition to the terms of repayment. As relations with Britain and the Netherlands iced over, ratings agency Fitch downgraded Iceland to junk status.
What the commentators said
Iceland faces a hellish choice, said The Guardian. It can either pay €12,000 per citizen, around 40% of GDP, or accept pariah status, cutting itself off from outside financial help and “the safe haven of EU membership”.
Iceland mustn’t shirk its responsibilities, said Jeremy Warner on Telegraph.co.uk. National governments are obliged to stand behind their banks’ liabilities, including their international ones, as Britain did with RBS. And we’ve all suffered – “why should Iceland be let off the hook just because it is small?”
Because Iceland could be tipped “into the abyss”, said Jon Danielsson in The Independent. The annual interest bill alone, if you adjust for population size, would be the equivalent of Britain paying half of the cost of the NHS every year. All three governments will have to renegotiate the deal. After all, said Heath, if Iceland is pushed into “total bankruptcy”, nobody will get anything.