Iceland/UK/The Netherlands

Iceland votes in "pointless" Icesave referendum

Polling stations in Iceland opened Saturday morning for a referendum which the prime minister has described as pointless. The government says that a no vote is inevitable. Voters are to decide whether to compensate the British and Dutch governments for money paid to victims of the collapse of the Icesave online bank in 2008.

Iceland's PM Johanna Sigurdardottir at a pre-referendum press conference Friday
Iceland's PM Johanna Sigurdardottir at a pre-referendum press conference Friday Reuters

Results are expected late Saturday but few doubt the outcome. Three-quarters of voters are against the proposal, according to opinion polls, and the government says that it has received a better offer from the UK and the Netherlands than the one being voted on.

“I see no point in participating in this vote,” Prime Minister Johanna Sigurdardottir told the Frettabladid newspaper. Although her government is losing support, she says she will not resign if the no vote wins the referendum.

Q+A: Correspondent Bjorn Malmquist in Reykjavik

Negotiations with the British and Dutch have broken down, but Finance Minister Steingrimur Sigfusson says that he hopes they will resume after the referendum. The government says that it has already received, and rejected, an offer that would mean lower payments by Iceland than those that figure on the ballot paper.

The origin of the dispute lies in the collapse of Iceland’s three largest banks during the world financial crisis in October 2008. The country, which had been enjoying an economic boom, was forced to renationalise them and appeal to the International Monetary Fund (IMF) for help.

At the same time 320,000 British and Dutch savers lost 3.8 billion euros when Icesave went down.

The British and Dutch governments unilaterally decided to compensate the victims but demanded that Iceland pay them the money. That is 40 per cent of the country’s Gross Domestic Product, 15,000 euros per head of its 225,000 population, who had also suffered badly because of the crisis.

Under international pressure, Iceland’s parliament passed the law but President Olafur Ragnar Grimsson refused to sign it into law, forcing the issue to a referendum. The IMF loan is now on hold.

An inquiry into political leaders’ role in the economic collapse is due to appear on 11 March. The head of the inquiry say that it will be devastating and have asked for three days’ holiday to allow Icelanders’ to read it and come to terms with its findings.

And, as if the island has not got enough worries, the first volcanic explosion for 180 years is expected next week.

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