Iceland hits back at UK jibes

The Icelandic president claims his country will bounce back

The Icelandic president has hit back at Scottish critics who used the collapse of its banking-based economy to promote an anti-independence stance.

President Olafur Ragnar Grimsson said Scots should not make a final judgement yet and insisted Iceland could recover more quickly than bigger countries.

He said court action against the UK after it used terror laws to freeze Icelandic assets was being considered.

He also accused Britain of behaving like a bully against a small country.

First Minister Alex Salmond had looked to Iceland and other small independent countries in Northern Europe, such as Ireland and Norway, as examples Scotland could follow.

But after most of these countries found themselves badly hit by the financial crisis, Mr Salmond's so-called "arc of prosperity" was dubbed by some opposition politicians as the "arc of insolvency".

They said it proved the case for Scotland as an independent country was on shaky ground.

Independence debate

In an interview with BBC Scotland, Mr Grimsson hit back at the comments.

The Icelandic president said: "Because of the smallness of the Icelandic nation and because of the inherent strength which independence and our own political institutions give us, there is an enormous force in this country for rebuilding and restructuring the economy as soon as possible.

"I think those in Scotland who want to utilise the difficulties in Norway, Iceland or Ireland in the internal debate about the future of Scotland should first of all look at the difficulties in London, and in England and in the United Kingdom as a whole as well as a number of other countries on the continent and the United States.

"And secondly, wait two or three years and see what will be the relative position of these countries vis-a-vis Britain as a whole, Germany, France, the United States or others."

It was being a bully against a small country because I am absolutely certain that if it was the case of France and Germany, the British government would not have acted in the same way - absolutely not President Olafur Ragnar Grimsson

Mr Grimsson said discussions were ongoing with the European Union, including Britain, on how to help savers caught up in the country's banking collapse.

Though he said those who had put their funds into accounts with higher returns would have known there were greater risks.

He said other countries had overlooked that the people and institutions of Iceland had also been badly affected by the crisis, and he claimed they had been treated unfairly by the UK Government.

"In all fairness we would have large claims of compensation against the British government although the law in Britain is written in such a way it might be difficult for us to get it back," he said.

"There again, we come to this embarrassing notion: was Britain behaving in this way because it was dealing with a small country.

"It was being a bully against a small country because I am absolutely certain that if it was the case of France and Germany, the British government would not have acted in the same way - absolutely not."

President Grimsson insisted there was "goodwill and determination" among Icelandic people to do their best in resolving the issue, but he said Iceland should not be asked to compensate Britain, Germany, and other countries to a larger extent than its own people.

Eight Scottish councils had a total of £46m in Icelandic banks before they fell victim to the global money crisis.

Strathclyde Fire Board, several charities and about 30,000 domestic savers also had money frozen.