Iceland calls a referendum over UK debts

Steve Dinneen
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ICELAND yesterday threw into doubt the repayment of billions of pounds to the UK and the Netherlands after its President called a referendum on the issue.

It is the second time President Olafur Grimsson has vetoed a repayment bill proposed by the country’s parliament. In the last referendum, a large majority of the country’s 200,000 voters threw out an earlier payment plan, sending negotiations between the three countries back to square one.

Iceland’s Parliament proposed a deal to return about $5bn (£3bn) of bailout money for failed bank Icesave, which represents about 86 per cent of the amount the government had to pay depositors.

Grimsson said that the current parliament was the same as that which had approved the original Icesave deal and that, since then, it had not received a new mandate from the people to decide the issue alone.

He acknowledged that the new repayment terms thrashed out between Iceland, the UK and the Netherlands over months of negotiation were better than the first deal.

However, he said it was fundamental that “the people exercised legislative power in the Icesave dispute.”