Icelandic, British and Dutch officials discuss Icesave deposit dispute, can’t find solution

No solution in dispute over Iceland deposits

LONDON — Talks between Icelandic, British and Dutch officials ended Friday with no immediate solution to a dispute over compensation for funds lost when Iceland’s banking system collapsed.

Iceland is seeking a way to avoid a potentially damaging referendum over repaying the $5.7 billion that Britain and the Netherlands spent to compensate their citizens’ depositors in Icesave, an internet bank that collapsed with its parent Landsbanki in October 2008.

In a joint statement, the trio of nations said their ministers “exchanged views,” but declined to elaborate further on Friday’s discussions in The Hague, Netherlands. It was the first face-to-face talks with senior officials from all three countries since Iceland’s president caused a political uproar by refusing to sign the so-called Icesave bill earlier this month.

“The sides will now consider the situation after this meeting, but at this stage no further discussions are scheduled,” they added.

Iceland’s parliament agreed late last year to set terms for repaying the money, but President Olafur R. Grimsson earlier this month invoked rarely used powers to refuse to sign the legislation. His action triggered the national poll, which is scheduled for March 6.

Opinion polls suggest Icelanders will vote against the bill, angry that Britain and the Netherlands have succeeded in imposing tougher terms on repayment.

If the referendum votes down the Icesave bill, the Icelandic parliament will revert to an earlier version of the law, which was rejected by the British and Dutch governments because of the limits it places on repayment.

That could delay a solution to the dispute, endangering vital funding promised to Iceland by the International Monetary Fund and Nordic countries, and threatening support for its bid to join the European Union.

The tiny island nation is relying on EU membership and the IMF funds to help it get back on its feet after the global credit crisis crippled its over-expanded banking system, damaging the rest of the nation’s economy, in late 2008.

Friday’s meeting was attended by Iceland’s Minister of Finance Steingrimur J. Sigfusson, Dutch Finance Minister Wouter Bos and British Financial Services Minister Paul Myners. Iceland’s delegation also included members from the country’s two main opposition parties.

A spokesman for the British Treasury, speaking on customary condition of anonymity, said Britain continued to expect Iceland “to live up to their obligations.”

Associated Press Writer Mike Corder in The Hague, Netherlands, contributed to this report.