Iceland seizes bank, seeks Russia's aid

'National bankruptcy' feared

By Combined dispatches | Wednesday, October 8, 2008

• Print
• [-][+] Font Size
• E-Mail Alerts
• Tell a Friend
• Got a Question?
• You Report
• Click-2-Listen

From combined dispatches

REYKJAVIK, Iceland Iceland took over its second-largest bank and sought a $5.44 billion loan from Russia on Tuesday to help tackle a crisis that threatens to make the small island nation the first "national bankruptcy" of the global financial meltdown.

Russian Finance Minister Alexei Kudrin said Moscow looked positively on the request from Iceland, whose prime minister said it faced the risk of financial collapse.

Prime Minister Geir Haarde said Icelandic officials would travel to Moscow to discuss terms for the loan to bolster the country's foreign reserves.

"With this, like everything else, nothing is certain until it's certain," Mr. Haarde told a news conference.

Even with the ruble near an 18-month low and the stock market suffering its worst rout since the 1998 default, Russia has weathered the global credit crunch with $563 billion in currency reserves, the world's third-largest amount.

That financial muscle is giving Prime Minister Vladimir Putin a weapon to challenge the U.S., which is grappling with its worst financial crisis since the Great Depression.

Iceland's financial woes lapped across the North Atlantic Tuesday all the way to the headquarters of the European Union.

But the 27-nation bloc, based in Brussels, hasn't taken sweeping joint action to deal with the global financial meltdown.

Instead, it's essentially left member countries to go it alone with a patchwork of measures aimed at keeping banks afloat.

Click here for reprint permissions!
Copyright 2009 The Washington Times, LLC

Do you have another point of view, photos, audio, video or more information about a story?