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Voters in Iceland reject $5.3B plan to repay bank debts

REYKJAVIK, Iceland - Still smarting from the crippling aftermath of the global financial crisis, Iceland's voters yesterday resoundingly rejected a $5.3-billion plan to pay off Britain and the Netherlands for debts spawned by the collapse of an Icelandic Internet bank, according to initial results.

Results returned from around 83,500 ballots - or more than 40 percent of the total ballots expected - counted so far showed 93 percent of voters said "no" in the referendum. Final results are expected overnight.

The referendum results are indicative of how angry many Icelanders are at bankers and politicians as the nation struggles to recover from a deep recession. The global financial crisis wreaked political and economic havoc on Iceland, as its banks collapsed within a week in October 2008 during the credit crunch and its currency, the krona, plummeted.

Icelanders were deciding whether to back a plan outlining the payment of $3.5 billion to Britain and $1.8 billion to the Netherlands as compensation for funds that those governments paid to around 340,000 of their citizens who had accounts with bank Icesave, an Icelandic Internet bank that failed along with its parent, Landsbanki.

The deal would require each person in the country of just about 320,000 to pay around $135 a month for eight years - the equivalent of a quarter of an average four-member family's salary.

Many voters object to the terms of the deal imposed by the debtor countries, not the idea of payment itself.

"This result is no surprise," Prime Minister Johanna Sigurdardottir said. "Now we must turn to the task of finishing the negotiations on Icesave."

Britain and the Netherlands have been pushing hard for repayment and there have been fears that they will take a hard-line stance on Iceland's application to join the EU.

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