Lost Savings Warning
Netherlands Threatens Iceland's EU Bid
Dutch Foreign Minister Maxime Verhagen has threatened to block Iceland's bid to join the European Union. He is hoping to put pressure on Reykjavik to meet agreements about compensation for Dutch savers who lost money in the Icesave bankruptcy.
Dutch Foreign Minister Maxime Verhagen has threatened to block Iceland's bid to join the European Union if Iceland does not honor agreements about compensation for Dutch savers who lost money in the Icesave bankruptcy.
Verhagen called his Icelandic counterpart Ossur Skarphédisson on Tuesday evening to talk about the stalemate in the Icesave repayment. The Icelandic parliament, the Althing, has postponed a decision on the reimbursement agreement made by the government for Dutch and British victims of the Icesave debacle.
A total of 128,000 Dutch savers had some €1.7 billion ($2.4 billion in accounts with the Web-based subsidiary of the Landsbanki bank, which was nationalized by the Icelandic government in October 2008.
According to the agreement Iceland has to repay €1.3 billion to the Netherlands and €2.3 billion to the UK. The British and Dutch governments spent that money to compensate savers for the €20,000 the Icelandic government had guaranteed for those saving with Icelandic banks.
The Icelandic government agreed to repay those damages in the form of a loan, but parliament could block that deal, as some members of the Althing have threatened to do.
"A solution to the problems surrounding Icesave could speed up the handling of the Icelandic application for EU membership," Verhagen said. He added it is "absolutely necessary" that Iceland approves the agreement to "show that Iceland takes EU guidelines seriously."
Iceland has been hit especially hard by the credit crisis. Last week, it formally announced it is eager to join the European Union. The 27 foreign ministers of the EU member states said they will discuss the request at a meeting in Brussels on Monday.
In a reaction, Skarphédisson called Verhagen's remarks "an internal Dutch political issue." Iceland's Finance Minister Steingrímur Sigfússon said there can be no connection between the Icesave agreement and admission to the European Union.