The so-called Icesave bill has divided Iceland and is fuelling anti-European Union sentiment just weeks after Iceland began EU membership talks. But a deal on repaying the two countries is considered a prerequisite for further aid, which the island desperately needs to repair its economy.
"A vote on the bill is expected later this week," said the official, who declined to be named. The parliament speaker said on Monday debate was expected to start on Wednesday.
Icelanders are worried at having to pay the bill for mistakes made by privately held firms. In particular, they are scornful of Britain after it used anti-terror legislation to seize Icelandic assets last year. A July poll found that almost 7 out of 10 Icelanders opposed the agreement.
Four out of five parties in the parliament's budget committee agreed on Saturday on a revised version of the so-called Icesave bill that includes limits to the state guarantee.
A British Treasury spokesman declined to comment on the question of amendments but said Britain welcomed Iceland's commitment to meeting its obligations.
The plan calls for Iceland to make payments over 15 years, with an initial 7-year grace period. Some 2.3 billion pounds ($3.8 billion) paid out by Britain and 1.2 billion euros ($1.7 billion) by the Netherlands are to be treated as loans. The revision calls for a ceiling on the sum Iceland will pay beyond the money raised by the sale of Landsbanki assets.
Up to 4 percent of Iceland's gross domestic product could be paid to Britain in sterling terms from 2017 to 2023 and up to 2 percent in euro terms to the Netherlands, according to a draft document on the bill obtained by Reuters.
Arni Sigurdsson, a Left-Green Party member of the budget committee, said parliament was likely to pass the bill.
"I think it is very likely because four of five parties in the parliament are backing up these amendments in the budget committee," he said, adding that the parties in favour of the revised bill represented 54 members of the 63-seat parliament.
But Ragnheidur Elin Arnadottir of the Independence Party said it was too soon to say how her party would vote. "This is such a huge issue, and we'll have to allow ourselves plenty of time to do our work," she said.
A representative for the Civic Movement said his party supported the revised version but did not rule out changes. Prime Minister Johanna Sigurdardottir, leader of the Social Democrats, has said a deal is the only way forward. Iceland's Progressive Party is firmly against the bill.
Brain Drain
Meanwhile, Deutsche Welle World reports that recession-ridden Iceland is experiencing a worrying “brain drain” with thousands of young workers leaving for mainland Europe to seek employment.
According to the report, the brain drain is characterised by two phenomena: skilled workers finding jobs abroad (most of the emigrants, it seems, are making for Norway) and young professionals returning to university studies, mainly in England and the US.
Iceland’s Business Minister Gylfi Magnusson acknowledged the grim possibilities of these patterns, arguing that “it would be pretty devastating if one result of all of this was that Iceland’s best and brightest would leave or that Icelanders that are now studying abroad would not return.”
The Icesave compensation could, indeed, be a contributing factor to the brain drain, with anger widespread among young Icelanders that their taxes are being used to pay for the mistakes of their ruling and banking elite.
One emigrating Icelander told Deutsche Welle World that he refuses to stay in Iceland to help pay off the huge international debts with his tax money, arguing that the current difficult situation is not his fault "but that of the bankers and politicians."
(EurActiv with Reuters)
