Iceland vote on debt

Yayın tarihi 8 Ocak 2010

The Icelandic Parliament will discuss the prospect of a public vote on repaying Britain and the Netherlands billions of dollars when the country's banks collapsed in 2008.

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Icelandic MPs are meant to be enjoying a lengthy Christmas break, instead they've been summoned back to parliament to discuss the fall out of President Olafur Grimsson's refusal to sign a bill allowing more than five billion dollars to be paid to the British and Dutch governments.

A quarter of the population had signed a petition calling for him to withhold his signature. The money was meant to compensate the two governments after they bailed out savers put at risk when the online Icesave bank collapsed in 2008.

Now a public referendum will be held, possibly next month. But ministers have warned Iceland's bid to join the EU could be damaged, and the country risks losing desperately needed financial aid. There's also the danger of a constitutional crisis - the Prime Minister Johanna Siguroardottir said she wasn't convinced his actions were legal.

Meanwhile frantic diplomatic efforts have been made to try and build bridges with both the British and Dutch governments, and other Nordic countries who had made an agreement on refunding the compensation a condition of further aid payments.

Dominic Hughes, BBC News, Brussels

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