People in Iceland will take part in a crucial referendum this Saturday.
They will vote on whether to accept the terms of an International Monetary Fund (IMF) loan.
A chunk of this loan is meant to “help” Icelanders repay British and Dutch governments for losses incurred by the collapse of the Icesave internet bank.
The British and Dutch governments are demanding that Iceland pay them £3.9 billion that they lost when Icesave collapsed—plus interest.
This amounts to 50 percent of Iceland’s gross domestic product—or the equivalent for Britain of £700 billion.
The IMF bailout deal includes the impossible condition that Iceland cut its public spending deficit to zero by 2013. This would destroy public services.
Stefán Ragnar Höskuldsson is a seafarer in Iceland. “I don’t think people are happy with how the government has dealt with this,” he said.
“Taxes have gone up at the same time as we have to pay our loans to banks that have gone belly up. Meanwhile the government is prepared to write off horrifyingly large amounts of money for those who own the banks.”
Iceland’s economy is in depression. Since July 2007 its currency, the krona, has lost half of its value against the euro. Domestic consumption has dropped by 25 percent. More cuts would be devastating.
“It’s unjust,” Stefán continued. “It would mean no public services.
“I don’t see why we should have to pay. They should find this money. But of course, that’s never done because the moneymen look after themselves.
“Britain hasn’t gone to court to get the money back because EU law isn’t clear and they’re not sure it would go their way. If the courts ruled in Icelanders’ favour, it would throw the European banking system into chaos.”