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Iceland's PM asks EU not to link Icesave with aid

Linking the Icesave issue and Iceland's IMF aid program could have potentially damaging and unfortunate effects, the island's prime minister told the European Commission President.

A statement from the prime minister's office said Johanna Sigurdardottir told President Jose Manuel Barroso and Enlargement Commissioner Olli Rehn at a meeting on Thursday that IMF aid and related loans from the country's Nordic neighbors were an important part of rebuilding Iceland's shattered economy.

“It was a very good meeting in which we discussed frankly the Icesave issue and the situation in Iceland,” the statement quoted Sigurdardottir as saying. “It is extremely important to explain to key players in the EU the situation in which Icelanders find themselves and to explore all possible avenues for solutions and of course everything was on the table.”

The country will vote in a referendum on the so-called Icesave bill to repay Britain and the Netherlands money lost when Iceland's banks collapsed. Failure to solve the issue has led to delays in the flow of much-needed aid. (Reuters)