Nov. 27 (Bloomberg) -- Iceland has abandoned plans to start entry talks with the European Union next month after the bloc said a failure to resolve U.K. and Dutch depositor claims would prevent the island from moving forward on its membership bid.
The north Atlantic island now targets March accession talks, Foreign Minister Ossur Skarphedinsson said in a telephone interview today. Iceland, which had originally targeted December talks, has been waiting for a date from the European Commission since applying for EU membership in July.
“Given the circumstances, I think it’s unlikely that Iceland will be admitted as an application country until March,” Skarphedinsson said. “We have to wait until a new commission has been confirmed in order for it formally to send the EU leaders its report.”
The EU’s decision to link Iceland’s accession bid to settling foreign depositor claims has drawn criticism from the island’s government. Prime Minister Johanna Sigurdardottir said yesterday there is “not a single argument” for connecting the two matters. An agreement with the U.K. and Netherlands to take on a loan from the countries to cover the so-called Icesave claims isn’t legally binding, Sigurdardottir told U.K. Prime Minister Gordon Brown in a Nov. 17 letter.
“I think it is advisable that the Icesave debate is behind us before we take the next step,” Skarphedinsson said. “I want to underline the fact that both Carl Bildt,” the Swedish foreign minister, “and Olli Rehn,” the EU’s enlargement commissioner, “have said that the two are not in any way interlinked.”
Meeting Today
Iceland’s parliamentary foreign-relations committee met today to address a European Parliament vote pressing the country to settle the U.K. and Dutch depositor claims.
The European Parliament said the degree of Iceland’s compliance with the European Economic Area agreement should be an “essential element” in an assessment of the country’s membership application. The EEA accord extends EU bank regulations, including deposit-guarantee rules, to Iceland.
The meeting was called after a Bloomberg News report on the European Union parliament’s non-binding resolution that Iceland should ratify an accord with the U.K. and the Netherlands on guaranteeing foreign depositor claims.
Thousands of U.K. and Dutch depositors risked losing their life savings after Landsbanki Islands hf, which offered high- interest Icesave online accounts, collapsed with the rest of Iceland’s debt-laden banking system a year ago.
Not on Table
Iceland reached an amended agreement with the two countries in October on how to repay depositors of the Icesave accounts. That deal still needs to be ratified in parliament.
Iceland Finance Minister Steingrimur Sigfusson said yesterday he is “optimistic” that the Icesave agreement will be passed through parliament within days. “Waiting until the new year isn’t on the table,” Sigfusson said.
Iceland is relying on international loans to stay afloat, including $2.1 billion from the International Monetary Fund and $2.5 billion from the Nordic countries of Denmark, Finland, Norway and Sweden. The U.K. has lent Iceland $3.9 billion and the Netherlands is providing $1.8 billion in loans to cover depositor guarantees. That compares with the island’s gross domestic product of about $11 billion.
Source:bloomberg.com/
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