x Abu Dhabi, UAETuesday 25 July 2017

Counting the costs of rejection

Comment Sneer as much as you like at the EU, but the Greeks would probably be in much worse shape if they had not enjoyed at least some kind of support from other European governments.

Just say no. The Icelanders did in their first referendum since 1944, and who can blame them? Asked their opinion on whether to bail out taxpayers in Great Britain and the Netherlands, who themselves had reimbursed savers when the Icelandic online bank Icesave went into meltdown, they decided against it. I am sure that in similar circumstances citizens of most countries would vote in similar fashion.

The only problem for the plucky Icelanders is that not paying US$5.3 billion (Dh19.44bn) now may well cost them dear in the long run. For a start, it could hold up the disbursement of the second half of a $2.1bn (Dh7.71bn) rescue package from the IMF. It could also derail the country's bid to join the EU. Sneer as much as you like at the EU, but the Greeks would probably be in much worse shape if they had not enjoyed at least some kind of support from other European governments. There are also useful European institutions to tap into, such as the European Investment Bank, by far the largest multilateral lending agency.

The prime minister Johanna Sigurdardottir's left-wing government has launched talks with the two governments to resolve the situation. It is in everybody's interest to come to a deal, and one that is not too onerous on the Icelanders. The Brits and the Dutch could also learn a lesson or two from this. At some point those in search of greater reward need to accept that it comes at a price - one that should not be borne by the governments.

rwright@thenational.ae