Interview With Iceland's President Olafur Grimsson
FOSTER: Welcome back. I'm Max Foster in for Richard Quest. And this is QUEST MEANS BUSINESS here on CNN. We are going to have a look at the Big Board right now, we are going to see what Wall Street is doing. Because there was actually a pretty positive reaction to some pretty gloomy employment figures, but the employment figures weren't as bad as expected. And actually you could attribute some of the negatively to just wintry weather, in large parts of the United States, which had a large impact on the way people could get to work, or otherwise, in the United States. As you can see the Dow is up 0.8 percent and that follows a very strong end to the week, in Europe. Now, Icelandic negotiators in Europe are due back home tonight, after- it is after they failed to reach an agreement with the U.K. and with the Netherlands over compensation for saving lost in the banking crisis. Icelanders are about to vote on a contentious law aimed at resolving the dispute. So, Jim Boulden has more on the story.</s>JIM BOULDEN, CNN CORRESPONDENT: On Saturday, Iceland will go to the polls to vote on a bill passed by parliament to pay back $5 billion to Britain and the Netherlands. You may recall the two countries had to step in and guarantee the money of 400,000 of their citizens deposited in Icesave. That's an Internet bank that collapsed, along with Iceland's three main banks, in October of 2008. There was a rear -- real fear back then that if depositors lost their money, the global banking system could have suffered even more than it did. Now, since then, the Netherlands and Britain have been negotiating with Iceland for it to pay the money back. In December, Iceland's parliament narrowly agree to a 15 year repayment plan, with an interest rate of 5.5 percent. But there was a severe backlash within Iceland's 300,000 population, who say taxpayers should not have to pay for the actions of the country's private banks. They were also shocked by what they say was harsh steps taken by Britain to get its money back. So nearly a quarter of Iceland's electrics signed a petition to block this bill and the president vetoed the agreement in January. That veto sparked Saturday's referendum. So what are the possible outcomes? Well, the voters could back this bill, though the polls show that is highly unlikely. And a no vote could lead to the government falling and new elections being called, since it had actually backed the bill. And Britain and the Netherlands could raise the temperature on Iceland to pay this money back and that could hamper Iceland's need for IMF funding and, some say, its desire for fast track entry into the European Union. Jim Boulden, CNN, London.</s>FOSTER: Well, the president of Iceland, Olafur Grimsson, joins us now from Reykjavik with his view of tomorrow's scheduled vote and what may happen after the referendum. And we ask that question -- Mr. President, thank you for joining us -- because it's almost certainly going to be a no, isn't it?</s>OLAFUR GRIMSSON, PRESIDENT, ICELAND: I can't hear you now.</s>FOSTER: Just -- the result of this referendum is almost certain to be no, isn't it?</s>GRIMSSON: Yes, I think so. The public opinion polls indicate a very strong no vote.</s>FOSTER: What happens then?</s>GRIMSSON: Well, what will happen, hopefully, is that the negotiations will continue with Britain and the Netherlands, because what has happened since I took the decision of the referendum in the beginning of the year, is that Britain and the Netherlands have moved -- moved toward the Icelandic position. And, in fact, the deal which we will be voting on tomorrow is now recognized by everybody, including the British and the Dutch, not to be a fair deal.</s>FOSTER: OK. But when you go into these negotiations, they're going to be extremely difficult, aren't they? Here in the U.K., for example, we're gearing up for a general election. There's going to be a sense that no one wants to be soft on Iceland at this time, when we've had this fierce financial crisis. So those negotiations are going to be even harder than the last set of negotiations, aren't they?</s>GRIMSSON: No, I don't think so, because what the referendum has done is to wake people up to the essential elements of this case. And in the last two or three weeks, the negotiating teams have moved a long way. And I believe that if, following the referendum, both the British and the Dutch governments and our leaders show statesmanship in finalizing the deal, it's possible to do it within one or two weeks.</s>FOSTER: That's very unlikely, though, isn't it? I mean what -- what happens if the Netherlands and the U.K. decide to play hardball and -- and refuse to support your accession into the European Union unless you reach a deal that they like? And then that has huge repercussions for you politically back home. This coalition, effectively, you got together, isn't going to last, is it?</s>GRIMSSON: No, of course not. That's a completely false picture because the negotiations with the European Union will take two or three years. And this issue will be solved long before that. And I don't think they will play hardball because if you look at what the Dutch and the British have been doing in the last three or four weeks, is that they have been moving a long way toward the Icelandic positions. They put on the table a week ago a new offer, which is much better than the deal which we will vote on tomorrow. The only problem with that offer was that in addition to Iceland paying over 20,000 euros for its depositors at a reasonable rate of interest, they were asking Iceland to pay a profit to the British and the Dutch, which, if you put it within the size of the British economy, would be equal to over 90 billion pounds in sheer profit. And we are simply saying, that's not fair. Let us reimburse the British and the Dutch for over 20,000 euros for each depositor, a reasonable rate of interest and -- and get a deal on that basis. And I hope, following the referendum, the prime minister of Britain, Gordon Brown, will show a similar type of statesmanship on this issue as he did a year ago on the international scene with respect to the global financial system.</s>FOSTER: But he's not going to budge. He's got an election coming up. And, at the same time, Icelanders aren't going to budge because they're absolutely furious with the situation, aren't they? They don't -- they -- they're probably at the point now where they don't want to give anything away to the U.K. and to the Netherlands.</s>GRIMSSON: Well, I don't think it is very wise for the British or the Dutch to have this issue still on the table coming up to the election, because, in essence, what this is, is Britain and the Netherlands using their strength to pressure a small country and ask the people of Iceland -- farmers, fishermen, nurses, teachers and everybody -- to pay enormous taxes for the coming years in order to compensate for the greed of bankers and their operations in other countries. Because, in essence, this is a question of how far can you press the taxpayers of a country to shoulder the burden of the actions of irresponsible bankers. And -- and what I say is that it is, in fact, quite remarkable how willing the ordinary people of Iceland are to come forward and share in this burden with the British. But you can't press the people of Iceland too far.</s>FOSTER: OK. And, finally, I just want to ask you about the -- the money, the loan you're expecting from the International Monetary Fund, which is absolutely crucial, isn't it, for your economy? You need that to survive. But that -- and that's being linked to your ability to repay international debts, of which the U.K. and Netherlands is part. And what did he say about the feelings around this? If you don't get a deal very quickly with the U.K. and the Netherlands, you're not going to get the IMF money and you're going to be extremely vulnerable.</s>GRIMSSON: Well, this is a very interesting aspect of this issue, because when Iceland made the agreement with the IMF, there was a certain program -- a certain criteria that Iceland had to measure up to. And, in fact, today, Iceland has outperformed on every aspect of the IMF program. But the Britain and the Netherlands are using their position -- their -- their strength within the IMF to block the further loans to Iceland unless Iceland accepts the deal that Britain and the Netherlands want to adopt. And I don't think the IMF can, in a legitimate way, be utilized in this way. And I know for a fact that the professional staff within the IMF, including the leadership of the IMF, is extremely unhappy with the bullying tactics of Britain and the Netherlands within the IMF board.</s>FOSTER: OK, President Grimsson of Iceland. Thank you very much, indeed, for joining us on the program today.</s>GRIMSSON: Thank you very much.</s>FOSTER: We'll be back in just a moment.