International   

U.K., Iceland in banking row

LONDON: In a sign that the deepening global economic crisis has started to put strain on diplomatic relations between otherwise friendly countries as they move to protect their own national interests, Britain and Iceland were on Friday engaged in a bitter war of words after Iceland refused to guarantee billions of pounds of British accounts held in failed Icelandic banks.

Britain retaliated by using anti-terror law legislation to freeze the assets of the British arm of Iceland’s Landsbanki and threatened to move against other Icelandic companies if Iceland did not offer the same guarantees to British account-holders in its banks that it is offering to its own citizens.

After a series of sharp exchanges between Prime Minister Gordon Brown and his Icelandic counterpart Geir Haarde, British officials rushed to Iceland to defuse tensions. Besides demanding guarantees for individual bank accounts, Britain said it would also demand return of £1 billion invested in Icelandic banks by Britain’s public bodies.

Mr. Brown said his government would do “everything” in his power to make sure that British money was safe.

In a strongly-worded statement, he said: “What happened in Iceland is completely unacceptable. I’ve spoken to the Icelandic Prime Minister, I have told him this is effectively an illegal action that they have taken. We are freezing the assets of Icelandic companies in the UK where we can…The responsibility for this lies fairly and squarely with the Icelandic authorities, and they cannot simply default….and we are demanding the money is paid back ….and we are prepared to consider all forms of action, including as we did, attempting to freeze assets.”

Mr. Haarde hit back saying that he was shocked that Britain invoked terror laws to freeze Icelandic assets in Britain.

Printer friendly page  
Send this article to Friends by E-Mail

Stories in this Section

U.K., Iceland in banking row
Palin report kept secret
China for fair treatment on dairy products issue
Air Force chief criticised for golf game
Mbeki urged to save Zimbabwe deal
Incredulity gives way to joy
Will EU drop climate pledge?
Rajapaksa asks LTTE cadre to surrender
NATO troops to attack drug barons
China pledges more cooperation
India’s mindset must change, say Singapore leaders
India-China growth paradigm hailed

Copyright © 2008, The Hindu. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu