by MONITOR

IN the 1970s there was a Cold War and a Cod War. Distant memories of the latter, between Britain and Iceland, will have been revived by the current controversy over the repayment by Iceland of a loan of 3.6bn pounds made to its government by Britain and the Netherlands during the crisis in Icelandic banking last year which threatened the savings of some 300'000 Dutch and British investors. The parliament in Reykjavik has voted that the loan should be repaid but the President, exercising his right, ruled that the decision should be determined by a national referendum. It has been estimated that to repay the loan in full would cost each Icelandic citizen the equivalent of twelve thousand pounds; on the other hand to delay or refuse payment would probably cost Iceland support for the fast-track membership of the European Union which it is seeking.

The British government has been accused of bullying its Icelandic counterparts to pay up. Iceland's Foreign Minister, Ossur Skarpheoinsson, is confident that the vote can be won but has warned that international television reporting means that comments made in London are quickly heard in Reykjavik and could easily influence voters in the referendum which is due to take place next month. Between 1972 and 1976 Icelandic gunboats fired warning shots on Royal Navy-protected British trawlers in Iceland's unilaterally extended coastal fishing zone. Was there a referendum on that?

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