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### Viewing cable 08REYKJAVIK240, Foreign Minister Expected to Ask the Secretary for

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
08REYKJAVIK240 | 2008-10-20 13:01 | 2011-01-13 05:05 | CONFIDENTIAL | Embassy Reykjavik

`

    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

`