Iceland votes out Icesave Depositors Bill

As per the preliminary results on national broadcaster, RUV, more than 90 percent of the 320,000 citizens voted against the referendum.

The bill proposed paying UK and the Netherlands more than 3.8 billion euros following losses triggered by the collapse of Icesave bank. This amount had been spent by the governments of both the countries to protect the savings of U.K. and Dutch depositors in Icesave bank.

As per the deal, the money would have been paid at an interest rate of 5.5 over the period of 15 years.

Why should citizens suffer?
Though both Britain and Netherlands argue that the money is due since the financial meltdown that started in 2008, the Icelanders have rejected the bill saying that the terms of payment are too burdensome.

Majority of the citizens believe that they should not be penalized for the faults of the government.

If the bill was approved, it would have saddled each citizen with $16,400 of debt.

“We want to be perfectly clear that a ‘no’ vote does not mean we are refusing to pay. We will honor our obligations. To maintain anything else is highly dangerous for the economy of this country.” -- Iceland’s Finance Minister Steingrimur Sigfusson

Country committed to protect its economic credibility
The rejection of the bill has come as a blow to the country’s Social Democrat-Left Green coalition, which had earlier approved the proposal.

Since the bill have been voted out by majority of the citizens, the political leaders said that they are already discussing how to reach a compensation deal.

Iceland’s Finance Minister Steingrimur Sigfusson said: “We want to be perfectly clear that a ‘no’ vote does not mean we are refusing to pay. We will honor our obligations. To maintain anything else is highly dangerous for the economy of this country.”

It is important for the country to reach an agreement in order to restore its economic credibility.

Dragana Ignjatovic, analyst at IHS Global Insight, told BBC News, “In order for Iceland to even hope to rebuild its battered reputation, a compensation deal needs to be reached."

UK, Netherlands willing to negotiate
Like the Iceland government, governments of both UK and Netherlands are committed to reach an agreement, despite majority of the citizens voting out the proposal.

Dutch Finance Minister Jan Kees de Jager expressed his disappointment saying that it is sad that the agreement has not come into effect.

“The British and Dutch Governments have indicated a willingness to accept a solution that will entail a significantly lower cost for Iceland than that envisaged in the prior agreement,” he added.