Britain to wait 'years' for Iceland's £2.3bn payment
Published 08/03/2010 | 05:00
BRITISH Chancellor of the Exchequer Alistair Darling has said it is likely to be "many, many years" before Britain is repaid the £2.3bn (€2.55bn) it is owed by Iceland after the collapse of Icesave.
He said: "You couldn't just go to a small country like Iceland with a population the size of Wolverhampton and say, 'look, repay all that money immediately'. Mr Darling added: "So we've tried to be reasonable. The fundamental point for us is that we get our money back -- but on the terms and conditions and so on, we're prepared to be flexible." Mr Darling's comments were made as a team of officials from Reykjavik prepared to fly to London today to continue talks with the Treasury over repayment terms.
The Treasury has offered to halve the interest rate on the loan but a repayment schedule has yet to be agreed.
Reykjavik indicated yesterday that it was anxious for a quick deal. Iceland's Finance Minister, Steingrimur J Sigfusson, said that his country wanted to reach agreement before the British and Dutch held elections. The Netherlands goes to the polls on June 9.
On Saturday, Icelanders delivered a 'No' vote in a referendum on repaying money provided by Britain and the Netherlands to compensate depositors in Icesave.
Some 93pc backed the government's hard line in a vote that attracted a near 60pc turnout. Icelanders set off fireworks over Reykjavik harbour to celebrate the result. It was, said one, "a vote against debt slavery".
However, the rejection in Iceland's first referendum since 1944 sends disturbing signals across the world, where many states, from Greece in the south to Latvia in the north, are crippled by debt.
At stake was £3.48bn (€3.86bn) owed to the British and Dutch governments. When Iceland was unable to cover the deposits of foreign Icesave depositors after the meltdown of October 2008, London and The Hague stepped in.
Iceland has said all along that it will meet its obligations -- but has baulked at paying what it says are punitive interest rates.
Yesterday the Icelandic government indicated that it would press on with talks with London and The Hague as if the referendum had not happened.
Iceland is dependent on receiving the next tranche of an IMF loan and an Icesave settlement is crucial in establishing Reykjavik's credibility. The country is also on the brink of beginning EU membership talks. (© The Times, London)