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Iceland says EU presidency sees no Icesave effect on EU bid

Published 01/09/2010, 11:15 AM
Updated 01/09/2010, 11:18 AM

REYKJAVIK, Jan 9 (Reuters) - EU president Spain has told Iceland it sees the impasse over Icelandic debts to Britain and the Netherlands as a separate issue from Reykjavik's application to join the bloc, Iceland's government said on Saturday.

It said Foreign Minister Ossur Skarphedinsson had spoken with Spain's Miguel Angel Moratinos, who on Friday said a refusal to repay Britain and the Netherlands for money their nationals lost in a bank collapse could slow EU entry bid.

"In their conversation, Mr. Moratinos stated that the Spanish EU Presidency viewed the Icesave issue and Iceland´s EU application as separate issues, and that the new situation that has arisen in Iceland would not have any impact on EU´s treatment of the application," the statement said.

It did not indicate whether the discussion took place over the telephone or in person.

Iceland's parliament authorised the government on Friday to hold a referendum no later than March 6 on terms under which Reykjavik will repay Britain and the Netherlands for money lost in high-interest Icesave bank accounts during a financial meltdown in 2008. Britain and the Netherlands compensated savers in full and want their money back.

Reaching agreement with the two EU countries is vital for the flow of aid to Iceland, still in the grip of a devastating recession.

Icelandic President Olafur Grimsson unexpectedly refused to sign an amended law this week approving repayment, citing a wave of popular anger over the bill. Under the constitution, his refusal forced Iceland to hold a referendum on the bill. (Reporting by Omar Valdimarsson in Reykjavik via Stockholm newsroom; Writing by Adam Cox; Editing by Jon Boyle)

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