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INTERNATIONAL m* . 4 (tribune Hcralb l\^E^ Ufficio Stampa 31-OTT-2008â¨da pag. 2 London, Iceland says, made its crisis worse By Sarah Lvall to falter, Thousands of Britons â indi- having trouble getting paid by their for- LONDON: No one disputes that Ice- viduals, companies, local governments, eign customers, land's economic troubles are largely iits charities â held accounts in the British Many people are also furious about own fault. But there may be more to tlhe branches and subsidiaries of several of the seizure of Kaupthing, Singer and story, at least in the view of Iceland's the banks, having been attracted by Friedlander, the British subsidiary of the government, its citizens and even some their offers of high interest rates. Icelandic bank Kaupthing, which the outsiders. As grave as their situation As the financial crisis picked up mo- government believed would survive, already was, they say, Britain --theii mentum around the world, Iceland's "The Icelandic government believes old friend, NATO ally and trading part- banking system began to crash and the that this was done without cause," ner â made it immeasurably worse. British government grew alarmed Gunnlaugsson said. "If the bank had The troubles between^ them began about its citizens' accounts there. held, we'd be in a far less dire situation three weeks ago when Britain took the On Oct. 8, it used anti-terrorism laws than we are now. But the seizure led to extraordinary step of using its 20I01 to freeze the British assets of a failing the complete collapse of the parent anti-terrorism laws to freeze the British bank, Landsbanki, It also seized the as- bank." Kaupthing did in fact lose credi- assets of a failing Icelandic bank. Th at sets of Kaupthing, Singer and Fried- bility almost instantly. Its board of di- appeared to brand Iceland a terroriist lander, the British subsidiary of another rectors then resigned and the bank Icelandic bank, Kaupthing. went into receivership. "I must admit that I was absolutely "The Icelandic government, believe "Kaupthing was the last, best hope of appalled," the foreign minister of Ice- it or not, told me yesterday that they land, Ingibjorg Solrun Gisladottir, said have no intention of honoring their obli- in an interview, describing her horror at gations here," Alistair Darling, chancel- opening the British treasury depart- lor of the Exchequer, declared the day ment's home page at the time and find- Britain seized the assets. state. London used its 2001â¨anti-terrorism laws toâ¨freeze the British assets ing Iceland featured on a list of terrorist But whether that was true is a matterâ¨entities that included A1 Qaeda, Sudan of some dispute. The Icelandic govern-â¨and North Korea. ment says it said no such thing. In a volatile economic climate, inâ¨which appearance matters almost asâ¨much as reality, being associated withâ¨terrorism is not a good thing. "The immediate effect was to triggerâ¨an almost complete freeze on any bankÂ¬â¨ing transactions between Iceland andâ¨abroad," said Jon Danielsson, an econoÂ¬â¨mist at the London School of EconomÂ¬â¨ics. "When you're labeled a terrorist,â¨nobody does business with you." Prime Minister Geir Haarde accused of a failing Icelandic bank. "Not at all," a top government officialâ¨said, speaking on condition of anonymÂ¬â¨ity, following diplomatic protocol. ReÂ¬â¨ferring to Iceland's finance minister,â¨Ami Mathiesson, who spoke to Darlingâ¨on Oct. 7, he added: "The minister hereâ¨was trying to ask Mr. Darling for moreâ¨time, because the Icelanders certainlyâ¨didn't want to renege on the obligationsâ¨we had undertaken." Whatever the case, reaction was imÂ¬â¨mediate and severe, particularly whenâ¨London of "bullying a small neighbor" Brown said the following day â inac-â¨and said its action was "very out of pro- curatelythat "we are freezing the as-â¨portion." In a recent speech in Hong sets of Icelandic companies in the U.K.â¨Kong, Howard Davies, a former deputy where we can."â¨director of the Bank of England and Iceland's ambassador to Britain,â¨now the director of the London School Sverrir Gunnlaugsson, said in an inter-â¨of Economics, said that Britain had used view that that statement was particu-â¨a "beggar thy neighbor" approach itc larly damaging. Iceland. , ... "There was a perception in the U.K. And an online petition signed so far press and among suppliers that every-â¨by more than 20 percent of the Iceland- thing Icelandic had been frozen," heâ¨ic population says that the British prime said. "The word was put out belatedlyâ¨minister, Gordon Brown, had sacrificed that this was not the case." Iceland "for his own short-term politic- Icelanders say that it is now nearlyâ¨al gain," thereby turning "a grave sitiu- impossible to get foreign currency in orâ¨ation into a national disaster." - Iceland's financial problems had out of the country. Many banks have re-â¨been brewing for some time. This past fused even to transfer money to Iceland,â¨spring, the country's banks, bloated Importers are haying difficulty payingâ¨with foreign deposits and debts, began their foreign bills and exporters are the Icelandic banking system and it wasâ¨killed there and then," Andres Magnus-â¨son, an editorial writer for Icelandicâ¨Business News, said in an interview.â¨"This really was the last straw. A lot ofâ¨Icelanders are asking, Excuse me: who'sâ¨the terrorist here?" The bank's collapse had repercussionsâ¨both inside and outside of Iceland. Moreâ¨than 8,000 depositors, individuals andâ¨businesses, hold Kaupthing, Singer andâ¨Friedlander accounts worth about $1.34â¨billion on the Isle of Man, money thatâ¨they now cannot get their hands on ââ¨and may never. They are eligible forâ¨compensation neither from Britain norâ¨from Iceland and they â along with theâ¨Isle of Man government â blame Britainâ¨for what happened to Kaupthing. Iceland is in line to receive a $2 bilÂ¬â¨lion loan from the International MoneÂ¬â¨tary Fund and is talking to other ScanÂ¬â¨dinavian countries. It is not entirely friendless: It was recently offered a loanâ¨of $52 million from the tiny Faroe IsÂ¬â¨lands, for which it is very grateful,â¨Gunnlaugsson said. The government has pledged to makeâ¨good on domestic bank accounts. But it IS k w 18 MX: i , litisâ¨istssi ' ] iÂ« liiiiiBiisii mmmmmirnsMS sisSii mi L'Islanda afferma che Londra ha aggravato la sua crisi (ca) INTERNATIONAL m* . 4 (tribune Hcralb l\^E^ Ufficio Stampa 31-OTT-2008â¨da pag. 2 is still fighting with London over howâ¨much it is obliged to pay â and howâ¨much it can afford to pay â to comÂ¬â¨pensate people with accounts inâ¨Icesave, Landsbanki's British branch. Estimates of the amount in questionâ¨are staggeringly high. Under Europeanâ¨regulations, Iceland is obliged to payâ¨â¬20,000, or about $25,000, to each indiÂ¬â¨vidual account holder in Icesave. But theâ¨total, Gisladottir said, would amount toâ¨about 600 billion Icelandic krona ââ¨only about $5 billion at today's collapsedâ¨exchange rate but fully 60 percent ofâ¨Iceland's gross domestic product. "The compensation that we wouldâ¨give would be twice as much per head asâ¨the reparations Germany faced in theâ¨Treaty of Versailles after the Firstâ¨World War," she said. "That is someÂ¬â¨thing we cannot afford." The British government has guaranÂ¬â¨teed that individual British accountâ¨holders will be compensated fully,â¨which is why it is seeking to wrest asâ¨much money as possible from Iceland.â¨But no such guarantees have been madeâ¨to the British companies, local governÂ¬â¨ments, charities and universities thatâ¨had Icesave accounts. That figure aloneâ¨is well over a billion dollars. Iceland's key interest rate now standsâ¨at 18 percent. The krona has declined 44â¨percent in the last year, Danielsson visited the country reÂ¬â¨cently and found the situation grave. Heavily dependent on imports, IceÂ¬â¨land is starting to experience shortagesâ¨of nonessential items, he said. Peopleâ¨are trading the krona for foreign cashâ¨on the black market. Consumers whoâ¨took out loans for cars and homes inâ¨foreign currencies are seeing theirâ¨monthly payments go through the roof. "Salaries are frozen, food prices areâ¨shooting up and they are laying offâ¨people left, right and center," Daniels-â¨son said. "Companies are going bankÂ¬â¨rupt all over the place. It's unimaginÂ¬â¨able how bad it is."
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