Icelanders Reject Landsbanki Repayments

For the second time in as many years, Icelanders have rejected a public financial repayment agreement to cover the losses of a failed private Icelandic bank, Landsbanki Island, that operated an Internet only bank in Britain and the Netherlands under the name Icesave. Landsbanki Island collapsed during the height of the global financial crisis in October 2008 when its highly speculative derivative investments in the US real estate market failed.

The British and Dutch governments, in turn, were forced to reimburse nearly 400,000 people in danger of losing savings held in the Icelandic bank's subsidiary Icesave accounts. Britain and the Netherlands are demanding that the government of Iceland repay some €4 billion, roughly $5.8 billion dollars, in losses. 

“The turnout of the referendum was high and close to 40% voted for and 60% voted against the law,” the Government of Iceland said in a statement. Iceland's Socialist Prime Minister, Johanna Sigurdardottir, said yesterday that Icelanders had chosen "the worst option" in rejecting the repayment plan.

Her statement added that the Icelandic government “will do all in its power to secure that the referendum outcome will not have a major impact on Iceland´s economic program and the fiscal consolidation plan which it has been pursuing.” The government warned that in light of the outcome of the referendum, there will be a “reassessment of macroeconomic assumptions,” adding that current fiscal plans will be reviewed. “A revised prognosis and budget figures will be available no later than in early May,” the government said.

The issue will now be decided by the European Free Trade Association (EFTA) Surveillance Authority court.

The first attempt at a repayment deal – specifying an interest rate of 5.5 per cent to be paid over eight years - was rejected by 93 percent of Icelandic voters in March 2010. Under this second proposal, Iceland was to pay over 30 years from 2016, with a 3.3 percent interest rate to Britain, and a 3 percent rate to the Netherlands. The deal had the backing of the Icelandic parliament, which hoped to draw a line under the dispute. But the President, Olafur Ragnar Grimsson, refused to sign it, triggering a second referendum.

The issue is expected to cloud Iceland's bid to become a full member of the European Union. Still, Icelanders are refusing to be held hostage with the no camp painting the vote as a rejection of the notion that taxpayers of Iceland must assume the liabilities created by financially imprudent private banks.

More from The Independent.

A Narrow Win for the Left in a Divided Czech Republic

Elections were held today in the Czech Republic, perhaps the most stable of the former Soviet bloc nations and one somewhat paradoxically where the Czech Communist Party still holds considerable sway. The left of centre Social Democratic Party narrowly won the most seats but the right of centre parties made significant inroads likely setting the stage for a coalition government led by the centre-right.

With 99.8 percent of the votes counted, the Czech Statistics Office said the Social Democratic Party had won 22.1 percent of the vote, while its main rival, the conservative Civic Democratic Party, received 20.2 percent. In third place came a new conservative party called TOP 09 led by Karel Schwarzenberg, a member of the Bohemian nobility, which won 16.7 percent of the vote. Another new party, the rightist Public Affairs party, won 10.9 per cent. Driving voters rightward were fears of Greek-style debt crisis. Still the Czech Communist party took 12.2 percent of the vote. Even so, it's unlikely that the left can must sufficient votes for a governing coalition. The more likely scenario is a government headed by the Civic Democratic party. As in much of Europe these days, the byword seems to be austerity.

More from EuroNet News.

Socialists Ousted as Hungary Veers Right

Hungarians went to the polls on Sunday to elect a new Parliament in the first of a two round electoral calendar. As widely expected, the Socialist government of Gordon Bajnai in power since April of 2009 was ousted amidst an economic downturn that has rocked most of Central and Eastern Europe. The new Prime Minister is almost certainly to be Victor Orban of the centre-right Fidesz party which last governed between 1998 and 2002. Fidesz had campaigned on cutting taxes, creating jobs and supporting local businesses to boost to Hungary's economy, which contracted by 6.3 percent last year. Unemployment is running at 11.4 percent.

Fidesz secured 206 out of 386 parliamentary seats, the National Election Committee said, based on individual constituencies and party list votes. The Socialists won 28 seats, just ahead of 26 for Jobbik, a far-right Hungarian nationalist party that is both an anti-Roma (gyspy) and anti-Semitic. Jobbik now enters the Hungarian Parliament for the first time having won one in six votes.

The green liberal LMP party also passed the threshold to get into Parliament, securing a modest five seats. A second round of voting will be held on April 25 when the remaining 121 seats will be decided. It is possible if not probable that Fidesz will secure a two-thirds governing majority that will allow it to implementing deep structural reforms demanded by the International Monetary Fund. Already the outgoing Socialist government led by technocrat Gordon Bajnai had made painful budget cuts to rein in the deficit under the deal led by the IMF.

Below the fold more on the disturbing rise of the Jobbik party.

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