By Mia Shanley and Omar Valdimarsson
REYKJAVIK, July 13 (Reuters) - Iceland is trying to address widespread public anger over a deal to reimburse Britain and the Netherlands for billions lost in Icelandic accounts by ensuring it can renegotiate its debt if needed.
A political adviser to Iceland's foreign affairs minister told Reuters on Monday that some members of parliament wanted better conditions on a deal to pay back depositors who lost money in Icesave accounts.
'This is the highest bill Iceland has ever seen,' Kristjan Guy Burgess said. 'Parliament wants to be sure that it's going to be possible for Iceland to shoulder this responsibility.'
Some 300,000 savers in Britain, and others in the Netherlands, had funds deposited in Icesave accounts run by Landsbanki, one of the three top Icelandic banks that failed last year when the country's financial system collapsed.
Burgess said parliamentary committees had been tied up working on the details of the Icesave bill, which is headed for a vote in parliament later this week.
Whether or not the Icesave issue is resolved could have huge implications for the hard-hit Atlantic island, whose recently elected government hopes to submit an application to join the European Union this month after parliament votes on starting accession talks this week.
Analysts say the EU is not likely to entertain an application unless an Icesave deal is set in stone while Icelanders, just warming to the prospect of joining the 27-member bloc, are fuming over promises made by the government and conditions set in the deal.
'The treaty with the UK and the Dutch governments is not going down very well here in Iceland,' said Magnus Magnusson, Director at the Social Science Research Institute at the University of Iceland.
The issue was mainly between Iceland and the Dutch and British governments last year but it has quickly become an issue between the EU as a whole and Iceland, he said.
'The question now is will Icesave get in the way?' he said.
In front of parliament, protestors have placed a row of black and white signs that call for the resignation of the finance minister over the Icesave deal, and the issue has become a hot topic on Icelandic chat sites and blogs.
A parliamentary source who participated in meetings on Monday said a central bank legal team spoke on the matter and had been highly critical of the deal, saying the option to renegotiate if needed was not strong enough.
Under the deal, the Iceland Compensation Scheme is to make payments over 15 years, with an initial 7-year grace period. Some 2.3 billion pounds paid out by the British government and 1.2 billion euros from the Netherlands are to be treated as a loan to the scheme.
'We need a clear understanding from them that this has to be sustainable for us,' Burgess said. Keywords: ICELAND ICESAVE/ (Editing by Angus MacSwan, tel: +46-8-700 1017, e-mail: mia.shanley@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
REYKJAVIK, July 13 (Reuters) - Iceland is trying to address widespread public anger over a deal to reimburse Britain and the Netherlands for billions lost in Icelandic accounts by ensuring it can renegotiate its debt if needed.
A political adviser to Iceland's foreign affairs minister told Reuters on Monday that some members of parliament wanted better conditions on a deal to pay back depositors who lost money in Icesave accounts.
'This is the highest bill Iceland has ever seen,' Kristjan Guy Burgess said. 'Parliament wants to be sure that it's going to be possible for Iceland to shoulder this responsibility.'
Some 300,000 savers in Britain, and others in the Netherlands, had funds deposited in Icesave accounts run by Landsbanki, one of the three top Icelandic banks that failed last year when the country's financial system collapsed.
Burgess said parliamentary committees had been tied up working on the details of the Icesave bill, which is headed for a vote in parliament later this week.
Whether or not the Icesave issue is resolved could have huge implications for the hard-hit Atlantic island, whose recently elected government hopes to submit an application to join the European Union this month after parliament votes on starting accession talks this week.
Analysts say the EU is not likely to entertain an application unless an Icesave deal is set in stone while Icelanders, just warming to the prospect of joining the 27-member bloc, are fuming over promises made by the government and conditions set in the deal.
'The treaty with the UK and the Dutch governments is not going down very well here in Iceland,' said Magnus Magnusson, Director at the Social Science Research Institute at the University of Iceland.
The issue was mainly between Iceland and the Dutch and British governments last year but it has quickly become an issue between the EU as a whole and Iceland, he said.
'The question now is will Icesave get in the way?' he said.
In front of parliament, protestors have placed a row of black and white signs that call for the resignation of the finance minister over the Icesave deal, and the issue has become a hot topic on Icelandic chat sites and blogs.
A parliamentary source who participated in meetings on Monday said a central bank legal team spoke on the matter and had been highly critical of the deal, saying the option to renegotiate if needed was not strong enough.
Under the deal, the Iceland Compensation Scheme is to make payments over 15 years, with an initial 7-year grace period. Some 2.3 billion pounds paid out by the British government and 1.2 billion euros from the Netherlands are to be treated as a loan to the scheme.
'We need a clear understanding from them that this has to be sustainable for us,' Burgess said. Keywords: ICELAND ICESAVE/ (Editing by Angus MacSwan, tel: +46-8-700 1017, e-mail: mia.shanley@thomsonreuters.com) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.