As easy as it is to sympathize with the voters there who believe the problems from the banks are the problems with the banks, rejecting the payments will create another set of problems that may even be worse. Who would really think that the reckless behavior of bankers would mean paying out 40% of the GDP? Besides economic retribution, Iceland could easily face rejection by the EU and penalties from the IMF. Prosecuting the bankers would be a better option though even in countries where trillions have been lost, how many bankers have been prosecuted?
Iceland's president stunned his nation yesterday by refusing to sign off on a plan to repay £2.3bn owed to the British taxpayer, reigniting a major diplomatic row with London and leaving Gordon Brown and Alistair Darling mortally embarrassed at the latest twist in the saga of Reykjavik's banking meltdown.
A repayment plan for the debt, owed after the British Government paid compensation to UK savers who lost money in the collapse of the Icelandic internet bank Icesave, had been approved by Iceland's parliament despite huge opposition. But yesterday, in a move that horrified the rhttp://www.blogger.com/img/blank.gifuling coalition, President Olafur Ragnar Grimsson declared that MPs had failed to take public opinion into account, and called a referendum. It was an extraordinary step for a ceremonial President, and only the second presidential veto in the republic's 66-year history.
