The United States and Britain urged Russia on Friday to bring to justice all those responsible for the slaying of opposition politician Boris Nemtsov.

A Russian court on Thursday convicted five men of murdering Nemtsov, but allies of the politician have said the investigation was a cover-up and that the people who had ordered his killing remained at large.

“We call once more on the Russian government to ensure that all involved in the killing of Boris Nemtsov, including anyone involved in organizing or ordering the crime, are brought to justice,” the U.S. State Department said in a statement, calling Nemtsov a “champion of democracy and human rights.”

Britain said it wanted Russia to further investigate Nemtsov’s death.

“The Foreign and Commonwealth Office supports Boris Nemtsov’s family in their call for a fuller investigation into who ordered his murder,” a spokesman for Britain’s Foreign Ministry said. “Responsibility for his murder goes further than those already convicted, and we call on the Russian government to bring the perpetrators to account.”

Litvinenko slaying

Russia and Britain have repeatedly clashed publicly over Syria, Ukraine and the 2006 London slaying of former KGB agent Alexander Litvinenko.

Trump had frequently called during the 2016 U.S. presidential election campaign for warmer ties with Russian President Vladimir Putin, despite criticism from lawmakers in his own Republican Party.

Allegations that Russia interfered in the U.S. presidential election last year and colluded with Trump’s campaign have overshadowed the businessman’s unexpected victory and dogged his first five months in office.

Russia and the United States are also at odds over Ukraine, NATO expansion and the civil war in Syria, where Moscow supports President Bashar al-Assad.

Trump and Putin are due to meet next week in Hamburg at the summit of leaders from the Group of 20 major world economies.
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French far-right leader Marine Le Pen was charged Friday with allegedly misusing European Parliament funds to pay two parliamentary aides who also work at her National Front headquarters. Her lawyer said she denies the charges and will fight to get the investigation suspended.

Investigators suspect some National Front lawmakers used legislative aides for the party’s political activities while they were on the European Parliament payroll. Le Pen is president of the far-right National Front party.

 The prosecutor’s office said Le Pen was summoned and handed preliminary charges of breach of trust and complicity in breach of trust concerning two parliamentary aides when she served at the European Parliament.

Misuse of EU funds

 Le Pen is suspected of using parliamentary funds to pay Catherine Griset from 2009 to 2016 and bodyguard Thierry Legier from 2014 to 2016 for allegedly working as aides in Strasbourg, seat of the European Parliament, even though they also have roles in her far-right National Front party.  Griset was charged in February for allegedly receiving money through a breach of trust.

 Le Pen is also charged with complicity in breach of trust in connection with her role as president of the National Front from 2014-2016. That charge could not immediately be clarified.

Le Pen denies the charges.

“It makes no sense,” National Front vice president Florian Philippot, Le Pen’s top lieutenant, said on the BFM-TV station. “She is obviously 24 hours out of 24 both the president of the National Front and a European deputy.”

Le Pen plans to file an urgent demand Monday at the Appeals Court asking that the preliminary charges be annulled due to “the violation of the principle of separation of powers,” her lawyer, Rodolphe Bosselut, said in a statement. She will also seek a suspension of the investigation.

His reference to “separation of powers” may relate to a contention that the French justice system should not interfere in the affairs of political parties. Bosselut could not immediately be reached for comment.

Faces prison time, fine

The preliminary charges are thrown out if investigators fail to come up with convincing evidence. The case goes to trial if they do. A conviction for breach of trust charge carries a potential penalty of up to three years in prison and a fine of 375,000 euros ($428,000).

Le Pen had twice refused summonses from authorities while campaigning, first for the French presidential election which she lost May 7 to Emmanuel Macron, then for a lawmaker’s seat in the French National Assembly which she won on June 18. Due to that win, Le Pen gave up her seat in the European Parliament.

Other European parliamentarians, including Le Pen’s father Jean-Marie Le Pen and her companion Louis Aliot, have also been investigated for allegedly misusing parliamentary aides’ wages. Aliot last week refused to respond to a summons by investigators, French media reported.

Cloud of suspicion

Some leading politicians are now living under a cloud of suspicion as to whether they misused funds meant to pay aides’ salaries.

The one-time front-runner in France’s presidential race this year, conservative Francois Fillon, was charged over allegations that he paid his wife, who served as his parliamentary aide, and two children for work they did not perform. Fillon suffered a big loss in the first round of the presidential vote.

Macron himself is determined to avoid any possible connection to the lax or corrupt political practices of the past. Three of his ministers bowed out of their jobs shortly after being appointed — the justice, defense and European affairs ministers — over concerns they could be caught in the investigations into the political use of salaries to parliamentary aides.

 
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An investigation by the international chemical weapons watchdog confirmed Friday that sarin nerve gas was used in a deadly April 4 attack on a Syrian town, the latest confirmation of chemical weapons use in Syria’s civil war.

The attack on Khan Sheikhoun in Syria’s Idlib province left more than 90 people dead, including women and children, and sparked outrage around the world as photos and video of the aftermath, including quivering children dying on camera, were widely broadcast.

“I strongly condemn this atrocity, which wholly contradicts the norms enshrined in the Chemical Weapons Convention,” Organization for the Prohibition of Chemical Weapons Director-General Ahmet Uzumcu said in a statement. “The perpetrators of this horrific attack must be held accountable for their crimes.”

The investigation did not apportion blame. Its findings will be used by a joint United Nations-OPCW investigation team to assess who was responsible.

The U.S. State Department said in a statement issued Thursday night after the report was circulated to OPCW member states that “The facts reflect a despicable and highly dangerous record of chemical weapons use by the Assad regime.”

President Donald Trump cited images of the aftermath of the Khan Sheikhoun attack when he launched a punitive strike days later, firing cruise missiles on a Syrian government-controlled air base from where U.S. officials said the Syrian military had launched the chemical attack.

It was the first direct American assault on the Syrian government and Trump’s most dramatic military order since becoming president months before.

Syrian President Bashar Assad has denied using chemical weapons. His staunch ally, Russian President Vladimir Putin, said earlier this month that he believed the attack was “a provocation” staged “by people who wanted to blame him (Assad) for that.”

Both the U.S. and the OPCW were at pains to defend the probe’s methodology. Investigators did not visit the scene of the attack, deeming it too dangerous, but analyzed samples from victims and survivors as well as interviewing witnesses.

The Syrian government joined the OPCW in 2013 after it was blamed for a deadly poison gas attack in a Damascus suburb. As it joined, Assad’s government declared about 1,300 tons of chemical weapons and precursor chemicals, which were subsequently destroyed in an unprecedented international operation.

However, the organization has unanswered questions about the completeness of Syria’s initial declaration, meaning that it has never conclusively been able to confirm that the country has no more chemical weapons.
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German lawmakers voted to legalize same-sex marriage in their last session before the September election.

Lawmakers voted 393 for legalizing “marriage for everybody,” and 226 against with four abstentions. 

The measure brought to a vote in Friday’s session was fast-tracked after Chancellor Angela Merkel said Monday lawmakers could take up the issue as a “question of conscience,” freeing members of her conservative coalition, which has been against same-sex marriage, to individually vote for the measure.

Merkel said she voted against same-sex marriage because she believes the country’s law sees it as between a man and a woman, but that the opposite view must be respected. 

She said “for me marriage as defined by the law is the marriage of a man and a woman” but she continues to see the interpretation as a “decision of conscience.” 

The measure, which is expected to see legal challenges, also opens the door for gay couples to adopt, which Merkel says she supports.

Germany has allowed same-sex couples to enter civil partnerships since 2001, but same-sex marriages remained illegal.

All of Merkel’s potential coalition partners after the Sept. 4 election, including the center-left Social Democrats of her challenger, Martin Schulz, have been calling for same-sex marriage to be legalized. 
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The European Union has pledged to support Italy as it continues to admit thousands of migrants who are crossing the Mediterranean every day from North Africa. 

So far this year nearly 80,000 people have made the journey, and more than 2,000 have died

Poor health

Most of the tens of thousands of people plucked from the Mediterranean this week have been taken to ports on the Italian coast. They are severely dehydrated, usually malnourished and suffering from infections and skin diseases. But there are other troubling signs.

Marcella Kraay of Doctors Without Borders spoke to VOA via Skype from the group’s rescue ship, Aquarius, as it disembarked more than a thousand migrants at the Italian port of Corigliano Calabro.

“We also see the results of people actually being physically assaulted, sexually assaulted, tortured,” Kraay said.

Help from EU

Italy’s representative to the European Union has warned the situation is “unsustainable,” and threatened to stop vessels of other countries from bringing migrants to its ports. 

Kraay sympathizes with Italy’s position.

“We have not in any way formally been informed of this by the Italian government. But my first impression of this is that the main thing here is that it is actually a cry for help coming from the Italian government. And it would be actually good for other EU member states to take a bit more responsibility.”

EU Migration Commissioner Dimitris Avramopoulos offered Italy his support.

“Italy is under huge pressure and we are not going to leave this country alone.”

Italy legally bound

But Italy is obliged to take in the migrants, says refugee law expert Professor Geoff Gilbert of the University of Essex, also via Skype.

“The law of the sea, international refugee law, and international human rights law are all coming into play together. While I have a lot of sympathy for the Italian situation, I do not believe Italy can send back boats, even boats that are seaworthy, into the Mediterranean.”

Gilbert says Rome is likely trying to force the implementation of the 2015 EU agreement to share refugees across the bloc, which has so far made little progress.

This week more than 400 migrants in Italy clashed with police at the French border, demanding to be allowed through.
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Police and aid groups say more than 60 percent of illegal prostitutes in Belgium are trafficked from Nigeria. Many are only teenagers and almost all come from Benin City, a city in the south of Nigeria.

Rosa was sexually exploited by Nigerian traffickers and had to prostitute herself on the streets of Spain, Norway, France and Belgium. But Belgian police saved her after two years.

“The police took me and asked me question if I want to talk. If I talk they are going to make a better way for me. They will give me document, I say yes because the stress is too much,” she said.

Rosa – not her real name – was struggling in Nigeria, making ends meet for herself and her daughter. She was told she could marry a man in Europe. After crossing Morocco and reaching Spain by boat, she was told to repay a $55,000 debt and forced into prostitution.

Europol said last year that Nigerian human trafficking rings are one of the biggest challenges for European police forces.

Police now see those who were trafficked as victims, whether they have documents or not.

After speaking to the Belgium police, Rosa ended up in Payoke, a shelter for victims of sexual exploitation. There are three similar shelters in Belgium. Payoke has helped at least 4,000 women and witnessed a rise in Nigerian women from the early 1990s.

Payoke founder Patsy Sorenson says the shelter only helps victims who agree to file charges against the traffickers.

“The reason also that we ask their cooperation, is that we like to fight also against the traffickers,” she explained. ” It is a win-win situation also for them. When they cooperate we are able to offer them a lot of things. So that they are able to start a new life.”

Citizenship offered

A court case usually takes about two to three years. In that time, the shelter helps the girl get her life organized and after five years the victims can apply for Belgian citizenship.

Police commissioner Franz Vandelook says another big challenge is that most Nigerian illegal prostitutes end up trafficking and exploiting other girls once they have paid of their debt, meaning they will no longer be seen as a victim.

“They know very well what they have suffered in the past, and of course at a certain moment they decide to transform themselves to a madam too, because of the money of course,” he said. “And they need money to feed the family who is still in Nigeria. So I can understand the situation, but in our society, in our European society, we can not accept the situation.”

Sorensen of Payoke says the women still face many challenges once they have decided to start a new life. Their family in Nigeria still needs money, their health is often a concern, many are still scared of the traffickers, and they often feel lonely while dealing with their traumatic experiences.

Rosa says when she started the court procedures, friends of the traffickers in Nigeria would beat her mother so badly she needed hospital treatment.

Despite the challenges, Rosa feels it was worth it.

“I can say now I am very happy because I am getting a good life now. Because before I was having a lot of stress, but now my stress is gone down. I can really say that I am very OK,” she said.

The International Organization for Migration says last year about 37,000 Nigerians arrived by boat in Europe, about one-third of them women. It is estimated more than 8,000 of them will end up in prostitution.

 
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European leaders stressed their commitment to the Paris climate accord Thursday, despite the American decision to pull out of the deal, ahead of a G-20 summit.

Following a meeting in Berlin hosted by Angela Merkel, Germany’s chancellor told reporters that European G-20 participants are committed to the Paris climate deal and will discuss it at the summit next month.

“We deplore, at least I say that for Germany, that the United States of America has decided to leave this agreement,” Merkel told reporters. “But we will obviously also address issues of climate change during the summit meeting.”

French president Emmanuel Macron echoed Merkel’s statements, saying that European leaders had “reaffirmed their very strong commitment to the Paris accord”.

Macron added, however, that “it is no use isolating a state.” Merkel also spoke about the importance of the U.S. being in the group of 20 nations.

President Donald Trump announced last month that the U.S. would pull out of the Paris Climate Accord, which seeks to limit carbon emissions and reduce the rising global temperatures.

Trump calls the pact unfair to the U.S., saying it would hurt the economy while doing next to nothing to prevent global warming. He has proposed renegotiating the Paris accord. But other world leaders say that would be impossible.

Angela Merkel will host the Group of 20 economic powers in Hamburg on July 7 and July 8, where the world leaders are expected to discuss a number of issues in addition to climate change.
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A Moscow court has convicted five people for the murder of the Russian opposition leader, Boris Nemtsov.

Nemtsov was an opponent of the Russian government, and was especially critical of Moscow’s support for Ukrainian separatists. He was shot dead late at night in 2015 as he walked across a bridge near the Kremlin.

The official TASS news agency reported that the jury found Zaur Dadayev, a former officer in the Chechen security forces, guilty for shooting Nemtsov. Four others were found guilty of involvement in the murder.

The five men – all Chechens – were allegedly promised cash for carrying out the assassination. Nemtsov’s allies have questioned the investigation and asked why officials have failed to probe the role Chechen officials may have played in bankrolling the murder.

 
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Italian officials say their government has told the European Commission in Brussels it is considering stopping ships that are not Italian-registered from disembarking at its ports migrants who were rescued while trying to cross the Mediterranean from Libya.

The dramatic move comes after nearly 11,000 asylum-seekers and economic migrants, mainly from African nations, arrived on Italian shores in a four-day period from war-wracked Libya. In a letter to the commission, Italy’s ambassador to the EU, Maurizio Massari, said the situation has become “unsustainable.”

In a meeting Wednesday, Massari informed Dimitris Avramopoulos, the EU’s commissioner for migration, that his government is now considering denying landing rights to any ships that aren’t flying the Italian flag or are not part of the EU interdiction and rescue mission in the Mediterranean.

Libya as migrants’ gateway to Europe

Italian Prime Minister Paolo Gentiloni has accused fellow EU nations of “looking the other way,” and not doing enough to assist Italy with the surge in migrants crossing the Mediterranean. Libya has become the main gateway to Europe for migrants and refugees from across sub-Saharan Africa, and also from the Arabian Peninsula, Egypt, Syria and Bangladesh.

Many are fleeing war and persecution, but most who are using Libya are seeking to escape poverty. Italy has become the main point of arrival for all of those rescued off the coast of Libya. Stranded refugees often are picked up by boats operated or funded by private charities and non-government organizations.

An intense debate has erupted in Italy about whether ships operated by mainly international NGOs have effectively been in league with the people-smugglers, and thus inadvertently enabling the trade to continue

Nearly 11,000 arrivals in four days

There has been a dramatic rise, partly thanks to good weather, in the number of migrants attempting the short but perilous Mediterranean crossing. In the four-day period through Tuesday (June 24-27), 8,863 migrants landed in Italy, including more than 5,000 on Monday alone, according to the International Office for Migration. Another 2,000 landed on Tuesday.

In the first five months of this year, 60,228 migrants arrived in Italy by boat. The IOM reported that 1,562 died at sea. At the current rate, and with months of good sailing weather ahead, the number of migrants is on track to exceed the 200,000 who landed in Italy in 2016.

Around 15 percent of those arriving this year are Nigerian. Twelve percent are Bangladeshi; Guineans account for 10 percent and nine percent are Ivorians.

Other EU nations have closed their borders to migrants, hoping to block them from moving north. Poland and Hungary have refused to host some asylum seekers to help ease the burden on Italy and Greece, another front line country. Greece has seen a huge decline in asylum-seeking numbers since the EU concluded a deal with Turkey to curb refugees and migrants using Turkish territory to head to Europe.

The surge in migrants this week prompted Italy’s interior minister, Marco Minniti, to cancel a trip to Washington to address the growing humanitarian crisis, which is quickly morphing into a political one for the country’s left-leaning coalition government. In municipal elections this month the coalition lost ground to center-right parties such as Matteo Salvini’s Northern League, which has called for a “stop to the invasion.”

Domestic opposition growing

Italy’s right-wing Forza Italia party has campaigned for the denial of landing rights to ships carrying migrants. And even the maverick radical Five Star Movement is moving to a more anti-immigrant position, calling for a halt to any new migrants being lodged in Rome.

Italy is now asking for the European Commission to change EU asylum procedures and allow Italy to stop new migrant landings or reduce them dramatically. But it is not clear whether a denial of landing rights would comply with international seafaring law or commitments Italy made when it signed the 1951 Refugee Convention.

After meeting Ambassador Massari on Wednesday, EU migration commissioner Avramopoulos praised Italy’s exemplary behavior to date and agreed: “Italy is right that the situation is untenable.” 

Other EU member states must “step up” and contribute financial support to Italy, Avramopoulos said, along with aid to African nations like Libya to try to reduce the numbers of people leaving for Europe.

“Now is the moment to deliver, and we will hold them to this,” the commissioner said.

Avramopoulos made almost exactly the same remarks in February, and similar promises have been made by other EU officials. The bloc’s 28 national leaders also agreed last week that “front line” countries Italy and Greece should receive more help with the arrivals.

Last month, the interior ministers of Germany and Italy urged the European Union to set up a border mission along Libya’s frontier with Niger in a bid to stop mainly African migrants from reaching Europe. In the past, the EU has tried to curb the migrant flow by working with various authorities in Libya, which is divided between rival governments and their militia backers, but to little avail.

In a sign of the deepening chaos in the north African country, a five-vehicle United Nations convoy was ambushed Wednesday 30 kilometers from the Libyan capital Tripoli. Several U.N. employees were held for a while, then released. Local media reported the ambush was staged in an attempt to gain the release of three drug-runners arrested by a vigilante force in Tripoli.
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Pope Francis elevated five senior clerics from outside Italy and the Vatican to the top rank of cardinal on Wednesday, urging them to be humble and not forget refugees and victims of war, terrorism and injustice.

Appointing new cardinals is one of the most significant powers of the papacy, allowing a pontiff to put his stamp on the future of the 1.2 billion-member Church.

Cardinals are the pope’s closest advisers in the Vatican and around the world and those under 80 years old are known as “cardinal-electors” because they can choose his successor.

Humble servants

The new cardinals come from Mali, Spain, Sweden, Laos and El Salvador and all five are under 80 years old. All of those countries, except for Spain, are getting their first cardinal.

With their elevation at a ceremony, known as a consistory, in St. Peter’s Basilica, Francis has now named nearly 50 cardinal-electors of a total 121.

During the ceremony where the new cardinals received their red hat, known as a “biretta,” the pope said they were called to be humble servants of others and not “princes of the Church.”

They had to “look at reality” and care for “the innocent who suffer and die as victims of war and terrorism.”

Swiss bank account

They should combat “the forms of enslavement that continue to violate human dignity even in the age of human rights; the refugee camps which at times seem more like a hell than a purgatory; the systematic discarding of all that is no longer useful, people included.”

The new cardinals are Archbishop Jean Zerbo, 73, from Mali, Archbishop Juan Jose Omella, 71, from Spain, Bishop Anders Arborelius, 67, from Stockholm, Bishop Louis-Marie Ling Mangkhanekhoun, 73, from Laos, and Bishop Gregorio Rosa Chavez, 74, from San Salvador.

The Church in Mali has denied recent French media reports about alleged irregularities concerning a bank account reportedly held by the Mali Church in Switzerland. A statement this month denied that it was involved in embezzlement but did not comment directly on the Swiss bank account.

The fact that none of the five are Italian and none hold Vatican positions underscores Francis’ conviction that the Church must be a global institution that should become increasingly less Italian and Europe-centric.

It was Francis’ fourth consistory since his election in 2013 and he has used each of them to show support for the Church in countries where Catholics are in a minority, in this case Sweden, Mali and Laos.

Chavez, the new cardinal from El Salvador, was a close associate of Archbishop Oscar Romero, who was assassinated by a right-wing death squad in 1980. Francis is keen to see Romero made a saint during his pontificate.

Boost of morale in Sweden

The naming of Arborelius, the Swede, was significant because Sweden is where the Lutheran World Federation was founded in 1947 and because this year marks the 500th anniversary of protestant Martin Luther’s Reformation. Francis, who visited Sweden last year, is keen to further Catholic dialogue with Protestant churches.

Sweden is also one of the world’s most secular countries and the naming of a cardinal there will boost the morale of the tiny Catholic population.

After the ceremony in the basilica, the five new cardinals went to pay their respects to 90-year-old former Pope Benedict, who resigned in 2013 and is living on the grounds of the Vatican.

 
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Iceland spent nearly a decade trying to keep foreign money in the country after a financial collapse, now it is trying to keep some of it out.

The economy is booming again and hedge funds and other foreign investors want exposure to a surging tourism sector, banks, property, infrastructure and the soaring krona currency.

Most capital controls from the 2008 banking crisis were lifted in March, allowing money to flow in and out of the country more freely.

But with over 20 financial crises since 1875 and warnings from economists about the risk of overheating again, the government is being cautious.

It has left in place restrictions making it prohibitively expensive to buy government bonds which offer returns of 4.5 percent, the highest of any developed economy.

On Monday, the central bank took another step to try and break the cycle of boom and bust on the isolated North Atlantic island, clamping down on derivatives and other avenues it was worried were being used to bet on the krona.

“There are a bunch of people I know who would love to put money into Iceland but they simply can’t because of restrictions on the inflows,” said Mark Dowding, who runs a hedge fund at BlueBay Asset Management and bought into the Icelandic government bond market in 2015, before the central bank rules were introduced.

The government is preparing other steps to make Iceland less attractive — a contrast to other economies recovering from crisis which have welcomed inflows of money.

The government is preparing to raise taxes for the tourism industry which has been growing at 20 to 25 percent a year as foreigners flock to its volcanoes, glaciers and geysers. It is also considering a currency peg for the krona.

Opportunities

Iceland offers other exciting investment opportunities.

Growth of more than 6 percent is forecast this year and the krona is up 20 percent versus both the dollar and euro over the last 12 months.

The central bank has cut interest rates four times in the last year and analysts say it would need to cut further if it wants to slow the rise of the currency. That could further stimulate the economy.

“Once every decade or two, I come across a market overseas which is most attractive and is worth considering,” said Gervais Williams, a portfolio manager at London-based Miton Group. “That last happened in 1995 in Ireland, and Iceland is the market I now like.”

Cumulative net capital inflows have gone from almost nothing to 150 billion crown ($1.45 billion) in two years.

New cars sales are at the highest in 10 years, Marriott will open Iceland’s first five-star hotel next year. Data center firms are also moving in as the climate and cheap geothermal energy cut the costs of cooling huge server stacks.

A potential float of Arion Bank, the domestic arm that emerged from the collapsed Kaupthing bank, meanwhile is expected to lead to a surge of new foreign money into the stock market which currently lists just 17 firms.

Several hedge funds — Och-Ziff Capital Management Group, Taconic Capital Advisors and Attestor Capital — bought stakes in Arion privately, after the bulk of capital controls were lifted earlier in the year.

On the back of the shifts, London and Iceland-based fund firm GAMMA Capital Management launched its first two funds — including one hedge fund — for foreign investors in November last year after requests from abroad.

“We have been getting a lot of interest … but investing in Iceland brings a lot of hurdles, so we created a simple conduit,” said Hafsteinn Hauksson, economist at GAMMA. Both funds have more than doubled in size this year, he said.

Red hot

Nevertheless, there are concerns that Iceland could overheat again.

The International Monetary Fund said in a report last week that there was a need for “vigilance with regards to credit growth and the real estate sector, labour market tightening and wage increases.”

It called for capital inflows to be managed carefully.

Iceland has a history of spectacular booms and bust.

The head of Iceland’s central bank regularly describes its 2007-2008 banking bust — when the top-three banks, Kaupthing, Glitnir and Landsbanki collapsed under heavy debts — as “the third-biggest bankruptcy in the history of mankind.”

A 2015 report by Bank of Iceland economists noted that this was not Iceland’s first financial crisis.

“In fact, over a period spanning almost one and a half century [1875-2013], we identify over twenty instances of financial crises of different types,” it said. “Recognizing that crises tend to come in clusters, we identify six serious multiple financial crisis episodes occurring every fifteen years on average.”

The report said the crises typically involved a sudden collapse in the currency and capital inflows.

Glacier bonds

Wary of its history and nervous that the end of capital controls would bring a wave of foreign money, the central bank brought in a rule in May 2016 forcing buyers of its bonds to park additional money in a low interest account.

That costly “special reserve ratio” arrangement has meant foreign investment in Icelandic debt has dropped close to zero.

Along with repeated interest rate cuts, it has taken some of the steam out of the crown over the last month.

“In the current domestic and global circumstances, the risk of excessive and volatile carry-trade type capital inflows was becoming significant,” a central bank spokesman said of why the measure was brought in.

Monday’s decision to scale back some exemptions aimed to make it harder for foreign investors to bet on the krona.

Those exemptions had made it possible to conduct carry trades by issuing krona-denominated bonds — nicknamed Glacier bonds — and entering derivatives contracts with domestic banks.

“Experience has shown that capital inflows in connection with foreign issuance of krona-denominated bonds [Glacier bonds] could weaken monetary policy,” the central bank said.

Iceland also still has controls in place that prevent proceeds from the sale of pre-crisis bonds leaving the country unless the investor signs up to the terms of the central bank’s buyback arrangement, which offer a punitive exchange rate.
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