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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.

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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.

 Click here for an Inner City Press YouTube channel video, mostly UN Headquarters footage, about civilian deaths in Sri Lanka.

Click here for Inner City Press' March 27 UN debate

Click here for Inner City Press March 12 UN (and AIG bailout) debate

Click here for Inner City Press' Feb 26 UN debate

Click here for Feb. 12 debate on Sri Lanka

Click here for Inner City Press' Jan. 16, 2009 debate about Gaza

Click here for Inner City Press' review-of-2008 UN Top Ten debate

Click here for Inner City Press' December 24 debate on UN budget, Niger

Click here from Inner City Press' December 12 debate on UN double standards

Click here for Inner City Press' November 25 debate on Somalia, politics

and this October 17 debate, on Security Council and Obama and the UN.

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These reports are usually also available through Google News and on Lexis-Nexis.

Click here for a Reuters AlertNet piece by this correspondent about Uganda's Lord's Resistance Army. Click here for an earlier Reuters AlertNet piece about the Somali National Reconciliation Congress, and the UN's $200,000 contribution from an undefined trust fund.  Video Analysis here

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