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The Icesave conflict: Iceland did not break the rules

| Text: Guðrún Helga Sigurðardóttir

Icelanders rejoice. The Efta court says Iceland did not break EEA rules when refusing to pay compensation to customers of the Icelandic online bank Icesave. Prime Minister Jóhanna Sigurðardóttir is critical of the other Nordic countries for not supporting Iceland during the dispute.

Iceland has been waiting with bated breath for the Efta court’s ruling, which has now come: Iceland was right to refuse British and Dutch Icesave customers compensation after the online bank’s collapse in 2008. 

Prime Minister Jóhanna Sigurðardóttir says Iceland has won the dispute. She thinks the victory will have a positive effect on Iceland’s economy.

The Prime Minister hopes the court’s decision will help Iceland regain its economic credibility internationally. She also thinks it will now be easier for Iceland to lift restrictions on the purchase of foreign currency which have been in place since the crash. 

Needed support

But Jóhanna Sigurðardóttir is disappointed with the way other Nordic countries reacted at the beginning of the crash, and feels they failed to provide support when Iceland needed it.

“The world was against Icelanders and we only had a few allies,” remembers Prime Minister Jóhanna Sigurðardóttir.

The country faced national bankruptcy. The Prime Minister underlines that Iceland struggled to borrow money, even from other Nordic countries.

“We would have been grateful for any support we so desperately needed from our closest friends. We had support from the Faroe Islands, but I had expected a greater amount of understanding and more support from our Nordic brothers,” says Prime Minister Jóhanna Sigurðardóttir. 

Could help lift restrictions

The Governor of the Central Bank Of Iceland, Már Guðmundsson, thinks Efta’s decision is good news for Iceland. He believes Iceland’s credit ratings will improve and that investors will show renewed interest in the country. He also believes Efta’s decision can help lift restrictions on the purchase of foreign currency. 

“How the national and international economies develop and how the 2014 budget will look is also important,” says Governor Már Guðmundsson.

The precise consequences of the court’s decision on an international scale are still not clear. Governor Már Guðmundsson believes Efta’s decision can lead to a review of EU banking directives, especially those covering banking guarantees and international banking.

Professor Eiríkur Bergmann Einarsson at the Centre for European Studies in Iceland wonders whether Efta’s decision can influence the political debate in Europe’s crisis-hit countries. 

“The Efta court’s decision is the first step in the direction of making bank owners, private financiers, pay their debts rather than tax payers,” says Professor Einarsson.

Carefully studying the decision

As Icesave collapsed, British and Dutch authorities guaranteed their citizens’ savings. Iceland has paid most of the minimum amount of money it had agreed to pay. But British tax payers will now loose 115 million euro as a result of the Efta court’s decision. 

The UK says it will study the Efta court’s decision carefully.

The court’s decision

Read the entire ruling here:


The online bank Icesave collapsed during Iceland’s banking crisis in the autumn of 2008.

Over 300,000 Dutch and British customers were left without compensation from Iceland. Instead Dutch and British authorities paid the customers and then asked for compensation from Iceland.

Iceland agreed to pay Britain and Holland four million euro, but the Icelandic public voted against another agreement with Holland and Britain in the spring of 2011. 

Efta’s surveillance authority ESA found Iceland to be in breach of the EEA agreement by not respecting a directive obliging Iceland to compensate for all lost savings. 

Iceland has so far paid 90 percent of the minimum amount payable to Britain and Holland.


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