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Iceland was right to vote no on foreign bank compensation

Why should Iceland compensate unwise UK savers or stump up the money that UK politicians spent trying to buy votes?

By Dr Eamonn ButlerGuest blogger / March 10, 2010

Icelanders protested March 6 in Reykjavik on the eve of a referendum over whether to repay $5 billion in Anglo-Dutch loans. The proposal was overwhelmingly defeated.

Bob Strong/Reuters

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I applaud Iceland's overwhelming referendum NO vote to the bank compensation deal. Why should ordinary Icelandic citizens have to pay up for the misdeeds of a few Icelandic bankers, the greed of UK investors, and the spend-it-like-water attitude of the Brown government?

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It was pretty shocking when, in response to the collapse of Icesave, Brown froze Icelandic assets under – yes – terrorism law. Dubbing the best ally we have in the whole European economic area a bunch of terrorists wasn't exactly a graceful move. Moreover, with their assets in London frozen, Brown's move made sure that other Icelandic banks went bust too. Thanks but no thanks, Gordon.

Brits who put their cash into Icesave – and I was one – knew they were taking a risk. It was paying interest well above the market rate. Sure, it was registered in the UK as a UK bank, so the most you could lose would be £30,000 – which the UK government's compensation scheme protected – but many of us were greedy enough to put in more. Alastair Darling did not need to compensate us for anything more, but he did – paying us everything we lost, plus interest. It would be absolutely staggering, if you didn't know there was an election in the air.

Why should the general public of Iceland, entirely unconnected to the banking sector, be expected to compensate unwise UK savers or stump up the money that UK politicians spent trying to buy votes? If the Tories win the election, I hope they will accept the reality. This was a Brown crisis which Darling tried to buy their way out of with no idea of where the money might come from. That has been the pattern of the last couple of years. It's our problem, not one made by the Icelandic people.

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