VZCZCXRO9508
OO RUEHFL RUEHKW RUEHLA RUEHROV RUEHSR
DE RUEHRK #0240 2941312
ZNY CCCCC ZZH
O 201312Z OCT 08
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC IMMEDIATE 3852
INFO RUEATRS/DEPT OF TREASURY WASHINGTON DC
RUEHZL/EUROPEAN POLITICAL COLLECTIVE

C O N F I D E N T I A L REYKJAVIK 000240 
 
SIPDIS 
 
STATE FOR EUR/NB 
 
E.O. 12958:  DECL:  10/20/2018 
TAGS: EFIN ECON PGOV IC
SUBJECT:  Foreign Minister Expected to Ask the Secretary for 
Financial Assistance 
 
Classified by:  Ambassador Carol van Voorst for reasons 1.4 (b) and 
(d). 
 
¶1. (C)  MFA Permanent Secretary Gretar Mar Sigurdsson, the acting 
chief of the MFA during Foreign Minister Gisladottir's extended 
absence,  informed the Ambassador October 17 that Gisladottir intends 
to play a leading role in the government's efforts to secure 
international financing after she returns to Iceland October 20.  The 
Minister plans to call the Secretary this week to request that the 
U.S. consider contributing to the estimated ten billion dollars in 
foreign loans that Iceland requires to get through the current 
financial crisis. 
 
¶2.  (C) Sigurdsson acknowledged that the four-week absence of the 
Foreign Minister (who is also the head of the junior coalition 
partner) has resulted in organizational and leadership problems among 
the various ministries and agencies involved in managing the 
financial crisis.  Sigurdsson's own serious illness has further 
hampered MFA efforts to stay on top of rapidly changing developments. 
 Gisladottir, however, has the political and popular clout to help 
the Prime Minister define and steer the country towards the best 
possible outcome for its citizens.  Sigurdsson added that she is 
determined that the present government coalition of her Social 
Democratic Alliance and the Prime Minister's Independence Party will 
survive the present difficulties. 
 
¶3. (C)  Sigurdsson said the government is uncomfortable with the 
prospect of a large loan from Russia and wants to avoid the 
dependency that such a financial obligation would necessarily entail. 
 Iceland would prefer to reduce its obligation to Russia by relying 
on a basket of loans from a mix of lending countries.  So far, the 
Japanese have indicated a willingness to be generous, and the Chinese 
have also suggested they might contribute.  The MFA would like the 
U.S. and Germany to make significant contributions.  The MFA's plan 
is for Gi#zn*Q|Qspite the 
outpouring of horrifyingly bad news for Icelandic citizens, the 
government has demonstrated a puzzling lack of urgency, combined with 
a reluctance to reach out to those non-Nordics who might possibly be 
in a position to help.  Without pressure from this Embassy, for 
instance, the Finance Minister would not even have asked to meet with 
Treasury officials during his recent visit to Washington.  Part of 
this may be the sheer difficulty in collecting information from the 
financial institutions here and overseas; part of it may be the 
hesitancy to show foreigners how bad the financial situation is; part 
may be inter-governmental and political squabbles within the 
coalition partners, and between departments and David Oddson's 
Central Bank.  The virtual decapitation of the MFA during this period 
is certainly one reason for the appearance of hapless stumbling, and 
Gisladottir's absence from Alliance Party and coalition counsels was 
definitely felt.  The news that she is prepared to exert her usual 
authority and add a decisive and capable executive to the 
government's small and over-stretched body of decision-makers is good 
news for her country and for our relationship. 
 
¶6.  (C) Embassy Comment continued:  Gisladottir returned on October 
18 and attended a well-publicized party meeting the following day. 
Sources close to her say, though, that the operation in New York to 
remove a brain tumor was more serious than the public is aware, and 
that she faces a long and difficult convalescence.  She announced 
yesterday that she will undergo a follow-up operation in the near 
future in Iceland.  We have heard privately that she may then require 
chemotherapy.   Although this astute, powerful, and decisive leader 
obviously wants to be engaged as the government maps its way out of 
this crisis, it is unclear how active a role her health will permit 
her to play. End comment. 
 
van Voorst