Sunday, April 10, 2011
REYKJAVIK (AFP) – Voters in Iceland gave a resounding "no" in a referendum on whether to approve a renegotiated deal to compensate Britain and The Netherlands over the 2008 collapse of Icesave bank, according to near-complete results quoted Sunday by RUV public radio.
With 70 percent of the vote counted, the "no" vote was 57.7 percent against 42.3 percent "yes", a result that will embarrass the Reykjavik government.
Around 230,000 voters were asked to decide on the proposal to pay back Britain and the Netherlands 3.9 billion euros ($5.6 billion) they had spent on compensating 340,000 of their citizens who lost money when Icesave, an online bank, went under at the height of the global financial crisis.
Prime Minister Johanna Sigurdardottir, who heads a centre-left coalition and considered the deal of key importance for Iceland, showed her disappointment.
She said the result came as "a shock" for the government but also for parliament, 70 percent of whose members had approved the accord before the head of state refused to ratify it and called a referendum.
The latest deal, laboriously negotiated among the three nations over more than two years, was considered more favourable to Iceland than a previous accord rejected in a January 2010 referendum by 93 percent of Icelanders.
It would allow Iceland to repay the debt gradually until 2046, at a 3.0 percent interest rate for the 1.3 billion euros it owes The Netherlands and at a 3.3 percent rate for the remainder owed to Britain.
The amount works out to some 12,000 euros per citizen of the 320,000-strong island nation, before interest.
After the "no" bloc win, Iceland could face up to two years of litigation before the European Free Trade Association (EFTA) court, which plays the role of the European Court of Justice for European Economic Area members Iceland, Liechtenstein and Norway.
A negative ruling by the court "will bring about significant consequences for Icelanders," Gudmundur Olafsson, an economist and professor at the University of Iceland, has warned.
Iceland's negotiator, US lawyer Lee Buchheit, said the new accord "was the best agreement that could be negotiated at the time and under the circumstances."
Prime Minister Sigurdardottir had said a "yes" vote was of key importance.
"The longer (the matter concerning) Icesave remains unresolved, the more serious the consequences will be for the Icelandic nation," she said last week.
Both sides campaigned intensely ahead of the vote, trying to convince undecided voters through the Internet.
The "no" side warned that the agreement would put "an incredible financial burden on Icelanders", insisting "there never was any legal obligation for Icelandic citizens to shoulder the losses of a private bank."
"Yes" advocates, backed by the government and by the main conservative opposition party, said the deal was the only way to end the dispute "through an agreement that minimises the costs and risks for Iceland."
Europe’s wealthy countries looked to Portugal to resolve the year-old euro debt crisis by coming up with “sustainable” deficit cuts to pave the way to an 80 billion-euro ($116 billion) bailout.
Confident that Portugal will be the last aid seeker, German Finance Minister Wolfgang Schaeuble pushed the feuding political parties in Lisbon to unite behind an austerity package in the thick of an election campaign.
“It’s up to Portugal to decide,” Schaeuble told reporters today at a meeting of European finance officials in Godollo, Hungary. Portugal “has to deliver sustainable measures for reducing the deficit.”.....read on
The Australian dollar is one of the strongest currencies in the world because it is a commodity-backed currency. That’s why it hit a 29-year high against the US dollar today – and it’s all related to the gold price.
The gold price is hitting new all-time highs on a daily basis because many investors have lost faith in paper money. They believe that central bank printing presses are devaluing currencies on a daily basis.
It is the same lack of belief in paper money that has been boosting the Aussie dollar. Paper money used to be backed by gold held in a central bank, but this was abandoned all over the world, allowing central banks to print money via processes such as quantitative easing.
Today, no currency in the world is on the gold standard – all money is “fiat” money.
However, Australia has significant resources of gold, uranium, iron ore, coal and many other important and valuable commodities. They are in the ground, not in a central bank, but this is the nearest thing the world has to the old gold standard. That’s why the Australian currency is so strong.
The same is also true of currencies in Canada, South Africa and Russia. They are effectively backed by commodities in the ground........read on