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| Iceland scowls at UK after crisis | Iceland scowls at UK after crisis |
| (about 6 hours later) | |
| By Ray Furlong BBC News, Reykjavik It is still idyllic, but security has been stepped up in the wake of the crisis | By Ray Furlong BBC News, Reykjavik It is still idyllic, but security has been stepped up in the wake of the crisis |
| It is a sign of the times that security has been increased at Reykjavik's small Parliament building, from one policeman to three. | It is a sign of the times that security has been increased at Reykjavik's small Parliament building, from one policeman to three. |
| Iceland's Prime Minister Geir Haarde faces almost daily calls for his resignation from small but angry protests - and has even been seen with an armed bodyguard at the gym. | Iceland's Prime Minister Geir Haarde faces almost daily calls for his resignation from small but angry protests - and has even been seen with an armed bodyguard at the gym. |
| The crisis that saw Iceland's three largest banks collapse in October also soured relations with Britain. | The crisis that saw Iceland's three largest banks collapse in October also soured relations with Britain. |
| And while Mr Haarde insists "we need to move on", he also insists his government is considering court action against the UK. | And while Mr Haarde insists "we need to move on", he also insists his government is considering court action against the UK. |
| "I think there's a special case with regard to Kaupthing which needs to be looked into," he says, referring to Iceland's biggest bank which collapsed on 9 October. | "I think there's a special case with regard to Kaupthing which needs to be looked into," he says, referring to Iceland's biggest bank which collapsed on 9 October. |
| A decision on whether to go to court is expected by early January, focusing on action by the British authorities to put the UK operations of the bank's subsidiary, Kaupthing, Singer and Friedlander (KSF), into administration. | A decision on whether to go to court is expected by early January, focusing on action by the British authorities to put the UK operations of the bank's subsidiary, Kaupthing, Singer and Friedlander (KSF), into administration. |
| "We are looking at whether or not the action of the FSA (Financial Services Authority) led to the collapse of Kaupthing, Singer and Friedlander in the UK, which in turn led to the collapse of the mother bank here in Iceland," he says. | "We are looking at whether or not the action of the FSA (Financial Services Authority) led to the collapse of Kaupthing, Singer and Friedlander in the UK, which in turn led to the collapse of the mother bank here in Iceland," he says. |
| Avoidable collapse? | Avoidable collapse? |
| Iceland's financial sector imploded over 11 unprecedented days. | Iceland's financial sector imploded over 11 unprecedented days. |
| First Glitnir, the third-largest bank, was nationalised on 29 September, then Landsbanki, the second-largest, was taken over under emergency legislation on 7 October. | First Glitnir, the third-largest bank, was nationalised on 29 September, then Landsbanki, the second-largest, was taken over under emergency legislation on 7 October. |
| The freezing order is still in effect and has the Icelandic Landsbanki listed along with Al-Qaeda and the Taliban Prime Minister Geir Haarde | The freezing order is still in effect and has the Icelandic Landsbanki listed along with Al-Qaeda and the Taliban Prime Minister Geir Haarde |
| When I first met Mr Haarde, at a Reykjavik theatre on 8 October, I asked him whether Kaupthing was safe. | When I first met Mr Haarde, at a Reykjavik theatre on 8 October, I asked him whether Kaupthing was safe. |
| At the time, he said: "I wish I could give you an affirmative answer. I think they are and I hope they are and it's been our objective to ensure that they are, so I assume so." | At the time, he said: "I wish I could give you an affirmative answer. I think they are and I hope they are and it's been our objective to ensure that they are, so I assume so." |
| His government had singled it out for special measures to save it - including an emergency loan. But the next morning, Kaupthing rolled over. | His government had singled it out for special measures to save it - including an emergency loan. But the next morning, Kaupthing rolled over. |
| Not told | Not told |
| Three months later, he sounds a regretful tone. | Three months later, he sounds a regretful tone. |
| "This was the considered judgement of our central bank: that there was a chance of Kaupthing surviving," he says. | "This was the considered judgement of our central bank: that there was a chance of Kaupthing surviving," he says. |
| "Hence, they were given a lender of last resort loan for a few days. But the UK government pushed through the FSA intervened in the meantime." | "Hence, they were given a lender of last resort loan for a few days. But the UK government pushed through the FSA intervened in the meantime." |
| So has Mr Haarde told the British government about this? | So has Mr Haarde told the British government about this? |
| No, he says, but he is not sure what communication had gone on between the FSA and Iceland's equivalent body. | No, he says, but he is not sure what communication had gone on between the FSA and Iceland's equivalent body. |
| Yet details like this could be crucial in determining why Kaupthing went down and whether it could have survived. | Yet details like this could be crucial in determining why Kaupthing went down and whether it could have survived. |
| And if the UK authorities were found culpable the damages would be counted in billions, according to lawyers in London working on a similar possible legal challenge for Kaupthing itself. | And if the UK authorities were found culpable the damages would be counted in billions, according to lawyers in London working on a similar possible legal challenge for Kaupthing itself. |
| Of course, Mr Haarde's talk of court action may be no more than sabre-rattling, as talks between the two sides continue on unravelling the tangle of assets and liabilities held by Iceland's banks and their subsidiaries. | Of course, Mr Haarde's talk of court action may be no more than sabre-rattling, as talks between the two sides continue on unravelling the tangle of assets and liabilities held by Iceland's banks and their subsidiaries. |
| Help requested | Help requested |
| Local councils in England and Wales, charities, universities, and private depositors at Kaupthing's subsidiaries on the Isle of Man and Channel Islands, still have no idea when or whether they will see any of their money again. | Local councils in England and Wales, charities, universities, and private depositors at Kaupthing's subsidiaries on the Isle of Man and Channel Islands, still have no idea when or whether they will see any of their money again. |
| We've been through many crises before in this country Prime Minister Geir Haarde | We've been through many crises before in this country Prime Minister Geir Haarde |
| Some have levelled more general criticism at the British government, suggesting it had known about the weakness in the Icelandic banking sector and should have warned them earlier. | Some have levelled more general criticism at the British government, suggesting it had known about the weakness in the Icelandic banking sector and should have warned them earlier. |
| Mr Haarde was in 10 Downing Street on 24 April this year - so what did he tell Gordon Brown? | Mr Haarde was in 10 Downing Street on 24 April this year - so what did he tell Gordon Brown? |
| "We didn't specifically discuss the banking community, but we did discuss the economic picture in this country and what the outlook was like and what measures could be taken," he says. | "We didn't specifically discuss the banking community, but we did discuss the economic picture in this country and what the outlook was like and what measures could be taken," he says. |
| "He was very friendly and helpful at that meeting." | "He was very friendly and helpful at that meeting." |
| Mr Haarde denies asking for help at this meeting, though Iceland did ask the UK for financial help at some point this year. | Mr Haarde denies asking for help at this meeting, though Iceland did ask the UK for financial help at some point this year. |
| He says that "around about this time [late April] our central bank was in communication with the Bank of England" about this. | He says that "around about this time [late April] our central bank was in communication with the Bank of England" about this. |
| The UK help did eventually arrive - in the form of a £2bn loan to pay UK depositors with Icesave, Landsbanki's Internet bank. | The UK help did eventually arrive - in the form of a £2bn loan to pay UK depositors with Icesave, Landsbanki's Internet bank. |
| But here, too, Britain's earlier actions - using anti-terror legislation to seize Icesave's assets - still rankle in Reykjavik. | But here, too, Britain's earlier actions - using anti-terror legislation to seize Icesave's assets - still rankle in Reykjavik. |
| "I still don't understand why Britain had to resort to the use of such legislation, out of proportion with the problem at hand," says Mr Haarde. | "I still don't understand why Britain had to resort to the use of such legislation, out of proportion with the problem at hand," says Mr Haarde. |
| "The freezing order is still in effect and has the Icelandic Landsbanki listed along with Al-Qaeda and the Taliban. | "The freezing order is still in effect and has the Icelandic Landsbanki listed along with Al-Qaeda and the Taliban. |
| "That's unacceptable, and we've had no formal explanation as to why it had to be done in this way." | "That's unacceptable, and we've had no formal explanation as to why it had to be done in this way." |
| Bounce back | Bounce back |
| Three months on, Iceland's economy is in freefall. | Three months on, Iceland's economy is in freefall. |
| The International Monetary Fund predicts its gross domestic product, or GDP, will contract by 10% next year. | |
| Companies are laying-off staff. | Companies are laying-off staff. |
| And those who stay in work are taking pay cuts, at a time when inflation is at 17% and interest rates at 18%. | And those who stay in work are taking pay cuts, at a time when inflation is at 17% and interest rates at 18%. |
| Mr Haarde is under immense pressure - but in combative mood. | Mr Haarde is under immense pressure - but in combative mood. |
| "We've been through many crises before in this country," he says. | "We've been through many crises before in this country," he says. |
| "Whether it be natural disasters or economic crisis, we've always bounced back - and that's what we'll do this time." | "Whether it be natural disasters or economic crisis, we've always bounced back - and that's what we'll do this time." |