Who should pay for Iceland's debt?
A new briefing, jointly released by Both Ends, Erlassjahr, the Jubilee Debt Campaign, Jubilee Nederland and Eurodad, looks in detail at the Icesave case to argue the need for the creation of an independent debt arbitration system to deal with such disputes.
Who should pay for Iceland’s debt? How a fair and transparent debt work-out mechanism could help settle the Icelandic case tackles key questions that anti-poverty activists have been raising for more than a decade. For instance,
- Who should be responsible for sovereign debts and how can they be held accountable? Is it only the borrower? Or does the creditor bear some sort of responsibility? How does this relate to Iceland’s ‘debt’?
- How should a country’s financial situation affect the terms of repayment of a debt? Should the lender’s claims take priority over the borrower’s chances to rebuild their economy? What power should the holding of debt assign to creditor over debtor?
- Who should decide on disputed debt claims and terms of repayment? Is there a fair, independent and transparent institutional mechanism which all parties involved regard as legitimate enough to be able to arbitrate?
The circumstances under which the loan was provided cannot be regarded as truly responsible. Though there was no obligation for Iceland to accept a loan, pressure was put upon Iceland by the Netherlands and the UK to do so. This pressure continues. But now the people of Iceland have rejected repayment terms, submitting the case to a Court of Arbitration would seem an obvious way of overcoming the impasse and determining whether the loan was contracted legally and what the repayment terms should be taking into account Iceland’s current economic situation.
Using the Civil Society Principles on a Sovereign Debt Work-Out Procedure we will outline some policy implications for Iceland’s overall debt problem, including the Icesave case.
Download the full briefing and the details of Eurodad's debt workout principles.