Foreign Minister Gunnar Bragi Sveinsson said he had informed the current EU president Latvia as well as the European Commission about the move. (Euronews)
Iceland's 38-year-old prime minister, Sigmundur Davíd Gunnlaugsson, elected in April on populist promises of mortgage relief for every homeowner. Syriza did exactly the same, yet it is being scorned and scolded by its European "partners".
Gunnlaugsson earned his spurs in years of outspoken campaigning against the foreign creditors, particularly the British and the Dutch governments, which intervened after the collapse of Landsbanki, the bank behind Icesave, on 7 October 2008.
A poisonous diplomatic row was sparked between Iceland, the Netherlands and Great Britain, that against the odds, Iceland won. While many other politicians in Iceland had urged a policy of appeasing the enraged British and Dutch governments, Gunnlaugsson had insisted they should go hang.
His attitude personally reminds me of the attitude or the Greek Minister of Finance, Yanis Varoufakis. Yet, since outside the EU, the Icelanders did not have to face the same pressure from their partners, through the EU institutions.
"We raised almost every tax there was – and introduced new ones," recalled the then finance minister, Steingrimur Sigfusson, adding that there were considerable cuts in public spending too as government debt swelled to eye-watering levels.
By August 2011, Iceland had graduated from its International Monetary Fund bailout program with flying colors. "We became a poster child for them," suggests Sigfusson, noting how the fund is still struggling to right many other sinking economies on Europe's peripheries.
Iceland is now held up as an example by some of how to overcome deep economic dislocation without undoing the social fabric.
Since then, with government borrowing receding, Iceland has been able to return to the international debt markets, and has begun repaying its emergency loans. Meanwhile, the economy – having shrunk more than 10% in two years – bounced in 2011 and 2012, and will grow by about 1.9% this year.