Voters in Iceland have overwhelmingly voted against the government plan to repay the United Kingdom and the Netherlands 3.9 billion euros ($5.6 billion) in compensation for the lost deposits in Icelandic bank Icesave. The issue goes back to 2008 when Icesave, an online subsidiary of Landesbanki, collapsed in the wake of the financial crisis. The British and Dutch governments compensated residents who had deposited money in the online bank and then asked for the government of Iceland to repay them. The agreement to repay London and Amsterdam was widely considered a condition of Iceland's EU bid as well as of its International Monetary Fund (IMF)-led $4.6 billion bailout. The bailout is almost equally split between the IMF and Iceland's Nordic neighbors. The disbursement of the loan is ongoing, with half of the IMF's total $2.2 billion still outstanding, according to the latest IMF data (the standby loan expires Aug. 31). It is not clear if the referendum will negatively affect the disbursement as it did in the past, but the United Kingdom and the Netherlands have thus far indicated that they will only take Iceland to international court. EU Enlargement Commissioner Stefan Fule and EU Internal Market Commissioner Michel Barnier were quick to state after the referendum that the result will have no affect on Iceland's bid. However, it is ultimately up to the member states to allow progress in EU enlargement negotiations, so the Icelandic EU bid is almost certainly stalled, at least until a resolution is reached, which may take years. The Icelandic voters certainly knew this, and the vote is yet another sign of growing discontent across Europe toward the eurozone and European Union.
