Icelandic lawmakers voted today in favour of a bill to repay Britain and the Netherlands more than $5 billion lost in Icelandic deposit accounts last year, a move seen paving the way for further international aid needed to repair the island's hard-hit economy.
An official tally of the vote showed 34 lawmakers voting in favour of the bill in the 63-seat parliament, with 15 against and 14 abstentions. The government-sponsored bill authorises repayment to the two countries over 15 years.
The government had agreed a deal with Britain and the Netherlands in early June. But Icelanders became enraged by the so-called Icesave bill, fearful it could bankrupt the nation and angry at having to pay the debts in the first place.
After weeks of political jockeying, amendments were added to the bill setting a ceiling on the repayment based on the country's gross domestic product.
But anger over the issue is unlikely to end with the bill's passage and those arguing that Iceland should stay outside of the European Union are expected to use the deal to stoke anti-Brussels sentiment.
Icelanders, already reeling from a crisis that has left many destitute, are furious over the idea of paying for mistakes made by private banks under the watch of other governments.
Their anger in particular is directed at Britain, which used an anti-terror act to seize Icelandic assets during the crisis last year, a move which residents said added insult to injury.
The Icelandic government had argued it had little choice but to make good on the debts if it wanted to ensure financial aid continued to flow.
The debts stemmed from billions of pounds and euros lost by some 400,000 savers who had placed money in high-interest online "Icesave" accounts run by Landsbanki, one of Iceland's top commercial banks which collapsed last year.
The British and Dutch governments eventually covered money lost in the accounts but have demanded repayment.
Up to 4 per cent of Iceland's gross domestic product could be paid to Britain in sterling terms from 2017 to 2023 and up to 2 per cent in euro terms to the Netherlands, according to a draft document of the bill.
Reuters