Iceland vote surprises opponents of compensation plan (News Feature)

By Lennart Simonsson Mar 8, 2010, 16:28 GMT

Reykjavik/Stockholm - Icelanders' resounding 'no' to plans to repay some 5.4 billion dollars to the British and the Dutch after the collapse of the Icesave bank has surprised even one of the co- founders of a group which had pushed for the referendum.

'We were expecting a 'no' vote but we did not imagine we could get a 'no' vote of over 90 per cent,' Erikur Svavarsson of the In Defence group told the German Press Agency dpa on Monday.

Official results from Saturday's plebiscite showed that 93.2 per cent of voters opposed the proposal, 1.8 per cent supported it. The remaining 5 per cent of the ballots were invalid or blank. Turnout was almost 63 per cent.

The referendum sent a 'very strong message' to the British and Dutch governments that the people of the North Atlantic country want an agreement that reflects 'shared risk and shared responsibility,' Svavarsson added.

'Icelanders are not willing to pay an obligation of a private bank with their own welfare,' he said. The sums asked for in the rejected proposal equalled 12,000 euros (16,300 dollars) per inhabitant of the 300,000-strong nation, he calculated.

Critics of the compensation plan have argued that the sums threaten to throttle Iceland's economic recovery, and that the country was already saddled with big debts.

Prime Minister Johanna Sigurdardottir's government on Monday underlined that it was still seeking a 'mutually acceptable solution' and said there had been 'steady progress' talks in the weeks preceding the referendum.

Reykjavik had tried to avert the referendum by seeking more favourable terms but despite some progress, no deal was reached.

British Chancellor Alastair Darling on Sunday said London is prepared to discuss repayment terms with Reykjavik.

'It's not a matter of whether the sum should be paid. There is no question we will get the money back but what I am prepared to do is to talk to Iceland about the terms and conditions of the repayment,' Darling told the BBC's Politics Show.

Svavarsson welcomed Darling's remarks saying that the Icelandic prime minister could have avoided the referendum by withdrawing the bill earlier.

The referendum was called by the president in January following a citizens' protest organized by In Defence. Over 61,000 people - or a quarter of the electorate - signed a petition against the deal.

Sigurdardottir opted not to vote Saturday, a move that 'surprised' Svavarsson.

In Defence had no plans to form a political party the 37-year-old lawyer said, adding that the group of 'concerned citizens' that included economists, psychologists, physicians, and mathematicians would continue to monitor the outcome of the Icesave talks.

Securing a solution to the Icesave issue is key to freeing up loans secured by Iceland from the International Monetary Fund, the Nordic countries and Poland after the economic meltdown in 2008.