Iceland says it was “bullied” over bank debt

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Iceland’s president accused European countries on Sunday of having bullied it into agreeing to guarantee repayment of the debts of a failed bank, reviving a dispute with Britain and the Netherlands whose citizens are owed billions.

When Iceland’s banking sector collapsed in the 2008 global financial crisis, accounts were frozen at the bank Landsbanki, which had accepted deposits from British and Dutch savers through online funds called Icesave.

Iceland says the estate of the failed bank will be enough to repay about $5 billion of debt to the British and the Dutch. The two countries had wanted the government in Reykjavik to give a state guarantee to the repayment.

In a referendum earlier this year, Icelanders rejected for a second time giving a guarantee.

“People (in the government) bowed to the bullying of the Europeans …,” President Olafur Ragnar Grimsson told RUV public radio. He said the British and Dutch demand that the government guarantee the debt had been “absurd.”

“So, what is happening now is proving that if the issue had been handled sensibly here from the beginning, it would have been totally unnecessary to put the people of Iceland and our cooperation with Europe into this straightjacket,” he said.

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