LATE NEWS They've done it! The Guardian reports, "EU says to relax mark-to-market accounting rules."
Maybe it is the Russians that win the cold war after all.
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SPECTATOR Coffee House Blog 7.10.08
Tuesday, 7th October 2008
Coffee House exclusive:
What the Russians want in return for bailing out Iceland
ANDREW NEIL 1:52pm
Near-bankrupt Iceland's €4bn ($5.43bn) loan from Russia is still not a done deal. Iceland's central bank Governor David Oddsson says that talks are still "ongoing" but that any aid from Russia would be "very much welcomed."
You can understand why Iceland is desperate for a massive euro-injection in the current bank crisis: the Sedlabanki, the central bank in Reykjavik, urgently needs euros because it has only €4.5bn in its current reserves and the country’s banking system needs to refinance about €10bn before year end -- not easy when the Icelandic krona has fallen 40 per cent against the Euro currency so far this year.
But what price will the Russians demand for their bailout? A highly-placed source in Reykjavik tells Coffee House that Iceland might look kindly on requests from Russia's military to use America's former military base in Iceland. America closed its Naval Air Station at Keflavik Airport two years ago, handing back the Nato facility to the Icelandic government.
Now the word in Reykjavik is that the Russians could have use of it in return for the loan. Not that Keflavik would become a Russian air base -- Iceland is a member of Nato, so that is out of the question -- but it would suit the Kremlin to be able to use it for, say, refuelling and maintenance. Having use of such a facility only a few hours flying time from North America would be a major Russian propaganda coup and cause consternation in Washington.
Iceland is in two minds. It wants to remain a loyal Nato member. But it is also in financially desperate straits and there is some resentment about the abrupt manner in which the Americans left, leaving the massive facility to deteriorate. So Iceland might look more kindly on any Russian request than the rest of Nato thinks.
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UPDATE: Sources in Reykjavik, who've now read our story, tell Coffee House that Iceland turned to Russia for a loan after the EU, the Scandinavian countries and the US Federal Reserve turned it down.
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