Iceland government reaches deal with UK, Holland

After the collapse of the Iceland economy, the Icelandic government has reached a comprehensive deal that would reimburse Great Britain and Netherlands more than $5 billion.

Iceland was dubbed the financial powerhouse between 2003 and 2007 until the worldwide economic disaster occurred. Iceland, with a population of just over 300,000, went from a small fishing industry to a nation consumed with external debt of 9.55 trillion Icelandic Kronur ($77 billion). A large majority of the debt was owned by the banking sector, which now suffers the worst collapse in economic history, as stated by The Economist. Then-Prime Minister Geir Haarde said this month, “There [was] a very real danger … that the Icelandic economy, in the worst case, could be sucked with the banks into the whirlpool and the result could have been national bankruptcy.” Max Keiser, an independent financial analyst and founder of Karma-Banque, dubbed the Icelandic Kronur as a “flavor of the month currency.” Keiser foresaw this collapse happen one year prior to the events and blamed it on carry-trade and debt. Most of the large banks, such as Glitnir bank, have been nationalized. On Sunday, Iceland’s government stated it had reached a new deal with Britain and the Netherlands worth more than $5 billion in deposits that were lost when the nation’s banks collapsed, reports Reuters. “An understanding has been reached with the UK and the Netherlands,” the government stated on its state website. In August, Iceland passed a bill in Parliament to pay back the money, $5.4 billion, which was lost in high-interest savings accounts, called “Icesave” accounts, however, the two nations declined any such bill because they were given aid from the International Monetary Fund and also because of one of the provisions in the bill. Now the government will put forth a new bill on Monday in Parliament. Current Prime Minister Johanna Sigurdardottir's said, according to AFP, “The government has accepted that the minister of finance will tomorrow (Monday) sign this agreement between the nations and that a bill on a state guarantee will be put before parliament as a governmental bill.” According to the Press Association, this new negotiation between Iceland and other nations will help ease entry into the European Union. Presently, Iceland faces 8 per cent unemployment, as reported by Trading Economics, and $1USD = 124ISK.