IMF
Claims that Icesave Commitments Were "Not Critical,"
Dismisses Citigroup and Deutsche Bank Role
By
Matthew Russell Lee
UNITED
NATIONS, April 21 -- The $160 million the IMF is disbursing to
Iceland was delayed
for months. In Iceland's Letter
of Intent leading
to the disbursement, the government commits" to ensure that the
United Kingdom and the Netherlands will be reimbursed in respect of
deposits of Landsbanki [Icesave] branches in those two countries."
When
the IMF's IMF
mission chief to Iceland Mark Flanagan held a conference call on
April 21, Inner City Press asked him to discuss the commitment of the
government to pay principal and interest, and "reimburse"
the UK and Netherlands.
Flanagan
argued
that the above quoted Paragraph 20 of the Letter of Intent was "not
from us." He said, "any language was fine with us" and
that the language was "not critical."
Some
may find this
hard to believe, akin to other IMF claims that it does not impose
conditions any more, but simply makes suggestions. Inner City Press
followed up by asking Flanagan to describe the IMF's -- including the
Executive Board's -- communications with the Netherlands and UK.
Flanagan
replied
that IMF staff are "not involved in bilateral disputes."
But what about the Executive Board, which in turn communicates with
the IMF staff?
Iceland protest of IMF, but is the statement true?
Inner
City Press
asked Flanagan for the IMF's thoughts on Iceland Central Bank
governor Mar Gudmundsson April 16 statement to state TV station RUV
that "a bank could collapse without me knowing of it. There
haven’t been any changes, and all the problems that arose in the
run up to the collapse and in the collapse are unsolved."
Flanagan
said he
wouldn't respond to the Central Bank governor's quote, because he
didn't know its context. It seems pretty clear -- "there haven't
been any changes."
The
most recent
report on Iceland identifies Citigroup, Deutsche Bank and Morgan
Stanley among others as having fueled the crisis. Inner City Press
asked Flanagan about these three companies and what is being done to
see it doesn't happen in the future. While not responding directly,
Flanagan said that there is nothing in the new report he wasn't aware
of, and that he is confident that the government is dealing with all
of it. We'll see -- watch this site.
* * *
IMF's
Report Buries Its Icesave Conditionality, Enforcer's Duplicity?
By
Matthew Russell Lee
UNITED
NATIONS, November 3 -- While the IMF has acknowledged that its second
round of disbursements to crisis-hit Iceland was delayed for months
by the country's failure to placate those in the Netherlands and UK
who did business with IceSave, the IMF's just released report on
Iceland buries the issue on page 30 of the 98 page report. The IMF
states that
"[t]he
terms and conditions of Nordic loans, amounting to $2.5 billion, have
been finalized. Their disbursement has been linked to resolution of
the Icesave dispute with the U.K. and Netherlands over deposit
insurance liabilities. After protracted discussions, the three
governments have reached an agreement on this"
Once
that
agreement was reached, on October 18, the IMF then went forward with
a letter of intent and memorandum of understanding for the second
tranche of financing. But, as with the IMF's moves in Latvia for
Swedish banks, some see the Fund operating as an enforcement or
collections agent for creditors who even less would like to show
their hand.
Since
the IMF does
not like to admit or reveal its degree of control over the countries
it lends to, the de facto conditions for loans, such as paying off on
IceSave, are often not explicit in what purport to be full agreements
containing all express and implied terms.
In
fact, the IMF
has claimed that it "no longer" engages in conditionality.
But the Iceland report has an entire chart about conditionalities.
It's just that the most important one was left unsaid. Is this
diplomacy or duplicity?
The
IMF's Iceland
report continues, about other loan requests including from Russia:
"A
loan from the Faroe Islands ($50 million) has already disbursed, and
a loan from Poland has been agreed ($200 million), and will disburse
alongside the next 3 program reviews. A $500 million loan originally
committed by Russia is no longer expected, but the $250 million in
over-financing in the original program, an expected
macro-stabilization loan from the EU ($150 million), and use of an
existing repo facility with the BIS ($700 million, of which $214
million is outstanding) will more than offset this."
Offset may be the right
word. Last year, in the midst of Iceland's abortive run for a seat on
the UN Security Council, the country announced it had to seek a $4
billion loan from Russia. It was after that that the IMF loan
commitment was made -- an "offset," some saw it -- and
after talks in Istanbul, on October 15 the already whittled down loan
request to Russia was formally rejected.
Then the deal
with the UK
and Netherlands, and the IMF's releasing. While the IMF calls these
types of moves only technical, others call them power politics. Watch
this site.
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