For the second time, Icelanders voted down a deal to repay Britain and the Netherlands billions of euros lost in the island nation's 2008 financial collapse—at once a bold popular rejection of the notion that taxpayers must bear the burden for bankers' woes and a risky outcome that will complicate Iceland's efforts to rejoin global markets.
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People celebrate while watching the results in a referendum on whether to approve a renegotiated deal to compensate Britain and The Netherlands over the 2008 collapse of Icesave bank at a bar in Reykjavik on Sunday.
The money in question, about €4 billion ($5.8 billion), was placed by British and Dutch depositors in an Icelandic Internet bank called Icesave, and then lost when Icesave's operator, Landsbanki Islands, collapsed along with the rest of Iceland's big banks in October 2008.
Nearly 60% of 175,000 voters rejected a plan to compensate the British and the Dutch governments, who had stepped in to pay their own Icesave depositors when Iceland's deposit-insurance scheme ran out of money.
The deal was the result of months of negotiation that saw Iceland win far better terms for the repayment. An earlier agreement was demolished—93% of voters said no—in a another referendum, in March 2010.
But Iceland's president, Ólafur Ragnar Grímsson, in February vetoed a Parliamentary bill that would have sealed the new deal. That triggered Saturday's referendum. Mr. Grímsson's role is largely ceremonial and vetoes are extremely rare.
Both Britain and the Netherlands expressed disappointment and indicated they would fight it out with Iceland in court. "The time for negotiations is over," said Jan Kees de Jager, the Dutch finance minister.
Sunday, Mr. Grímsson said Iceland had, again, spoken clearly. "The leaders of other states and international institutions will have to respect this expression of the national will," he said. He pointed out that the U.K. and the Netherlands would, despite the rejection, receive "immense sums" from Iceland because the countries hold claims to Landsbanki's estate.
Iceland is a member of the European Economic Area, which means it has signed up to many of the European Union's financial and trade rules—among them a requirement that countries maintain deposit-insurance systems.
The EFTA Surveillance Authority, a body that polices the EEA agreements in Iceland, Norway and Liechtenstein, has already started legal proceedings against Iceland. The authority says Iceland violated rules by not backing Icesave depositors—and by reimbursing domestic depositors before foreigners.
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