Icelanders petition president to veto Icesave bill

REYKJAVIK Sat Jan 2, 2010 12:58pm EST

A page from icesave online bank is seen on a computer screen, in London, October 7, 2008. REUTERS/Dylan Martinez

A page from icesave online bank is seen on a computer screen, in London, October 7, 2008.

Credit: Reuters/Dylan Martinez

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REYKJAVIK (Reuters) - Nearly a quarter of Icelandic voters have signed a petition asking their president to veto a bill on repaying $5 billion lost by British and Dutch savers when the island's banks collapsed, organizers said on Saturday.

The petition also called on President Olaf Ragnar Grimsson to call a referendum on an issue which has aroused resentment that taxpayers are being left to pay for banks' mistakes.

Earlier this week parliament approved the amended bill to reimburse Britain and the Netherlands for the amount, which was lost by savers in both countries in 2008 who deposited funds in high-interest "Icesave" online savings accounts.

But the president has yet to sign the bill into law and 56,089 people, who represent 23 percent of the island nation's electorate, have signed the petition, the organizers said.

"I consider it to be a reasonable demand that the economic burden placed on the current and future generations of Icelanders, in the form of a state guarantee for Icesave payments to the UK and Dutch governments, be subject to a national referendum," the text of the petition read.

InDefence, the group responsible for gathering the signatures, said the Icesave legislation represented a "huge risk" for Iceland's economic future.

"All projections based on realistic assumptions ... showed without doubt that Iceland would be unable to meet the payments stipulated by the Icesave loan agreements as set out in the disputed legislation," it said in a statement.

Passing the Icesave legislation would boost Iceland's hopes of swift entry into the European Union, but the deal is deeply unpopular with the Icelandic population.

Parliament approved the bill by a slim margin -- 33 members voted in favor, with 30 voting against -- and one junior government minister has resigned over the dispute.

The longstanding dispute has held up payment of some aid funds from international lenders, made it difficult to relax capital controls imposed at the height of the financial crisis, and clouded Reykjavik's chances of joining the EU.