Brussels, 06/01/2010 (Agence Europe) - The refusal by the Icelandic president, Olafur Ragnar Grimsson, to promulgate a law that had already been voted on by the Icelandic parliament on repaying almost €4bn to the United Kingdom and the Netherlands, following the bankruptcy of the Icesave bank, and to organise a referendum on the question (very likely on 20 February) risks blocking Iceland's EU accession process. It appears out of the question that London or The Hague will agree to allow the country's accession candidacy to move forward as long as the Icesave affair remains unresolved. An agreement was reached to compensate Dutch and British savers, which was concluded with Iceland's government in October. The country's parliament approved the agreement at the end of December. Any decision by the Council on the question of enlargement must be taken at unanimity and every country has the right of veto.
Instead of signing and implementing the “Icesave law”, Iceland's president is calling for a referendum and will allow the Icelandic people to decide itself on the payment of compensation to Dutch and British customers (unless the government withdraws the law, which appears very unlikely). The result of the referendum could prove very close, as around 60,000 people in the country (almost a quarter of Iceland's electorate) have already signed a petition calling on the president not to implement the law. Iceland's prime minister, Johanna Sigurdardottir, sought to provide some reassurance on the matter and affirmed on Tuesday 5 January that “despite the president's decision, the Icelandic government is still fully behind the bilateral loan agreements”. This decision, however, has not satisfied the United Kingdom or the Netherlands, which are only expected to give their support to launching Iceland's accession procedure if the compensation agreed in October is formally approved by Reykjavik. The first declarations from London and The Hague confirm this view. Paul Myners, the British minister for financial services, affirmed that if Iceland refused to honour the compensation agreement made with the United Kingdom, “Iceland would effectively be saying that it did not want to be part of the international political system”. Walter Bos, the Dutch minister of finance, also said that he was “very disappointed” by the decision made by the Icelandic president and warned the country against “total international isolation” if the compensation obligation was not respected.
Commission opinion on “candidate status” and opening negotiations. Iceland requested its accession in July 2009. Very shortly afterwards, the Council requested that the Commission prepare its “opinion” on the candidacy, in compliance with Article 49 of the Treaty. This opinion could be taken in March this year (according to a Commission source) and would “take into account all pertinent considerations for evaluating” Iceland's ability to fulfil all accession criteria. On Wednesday 6 January, the spokesperson for Commissioner Olli Rehn (Enlargement) explained that this would include “economic criteria”, adding “in this context, questions such as the Icesave affair will be analysed very closely”. Once the Commission's opinion is made known, the Council will have to reach a decision by unanimity on whether it will grant Iceland candidate country status, and this will be the first opportunity for the Netherlands and/or the United Kingdom to block the process. Once the country is recognised as a “candidate”, another unanimous decision will be required to begin official accession negotiations, which will provide another opportunity for blocking procedures.
During the high point of the financial debacle, which hit Iceland's banks in autumn 2008, the United Kingdom and the Netherlands lent almost €4bn to protect more than 300,000 of their own citizens affected by the bankruptcy of the Icesave bank. The latter had put an enormous amount of their savings in this bank but as opposed to Iceland's citizens, they were not protected by national level cover of their deposits. After much hard bargaining, the law organising the repayment by 2024 of these sums to the British and Dutch treasuries had been amended and finally adopted by Iceland's MPs right at the end of the year, in keeping with the agreement reached by the Icelandic, British and Dutch governments in October. By blocking the enforcement of this text, the president has plunged Iceland's government into an awkward situation. The latter, however, has provided assurances that repayments will take place according to the conditions set out in the initial version of the law, approved in summer 2009, which included the stipulation that this guarantee by the Icelandic state would disappear in 2024, whether the payment had been completed or not. It is this point which is at the source of the British and Dutch disagreement. At an economic level, the decision by the president has already prompted concerns on the markets and the Fitch rating agency has lowered its rating for the county's long term debt. (H.B./A.B./transl.fl)