UK's Landsbanki action 'as damaging to Iceland as Treaty of Versailles'

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The strained relations between Britain and Iceland after the collapse of Icesave has surfaced in official documents, which warn the UK it was inflicting damage equal to the Treaty of Versailles.

A diplomatic fight ensued between the two nations following the demise of Icesave's parent Landsbanki's demise in October, which affected 300,000 British savers. Private correspondence reveals relations were further stretched than publicly disclosed, after the Treasury used terrorism laws to freeze the assets of Landsbanki in case Iceland refused to compensate British savers, the BBC reports. In a letter addressed to the UK several weeks after the crash, Iceland's foreign minister Ingibjorg Solrun Gisladottir warned of the disastrous impact on the Icelandic economy. "Total possible...

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