Iceland's president has insisted the country will honour its compensation obligations to foreign governments over the Icesave bank collapse and said understanding was growing abroad for his position.
As storm clouds swirled over Reyjkavik after his decision not to sign the Icesave legislation and instead put it to a referendum, Olafur Ragnar Grimsson argued it was vital that Iceland's people back the measure.
His move on Tuesday sparked the ire of the British and Dutch governments amid fears they would lose the €3.8 billion ($A5.9 billion) compensation provided by the bill.
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But Grimsson told reporters in Iceland yesterday that as the dust began to settle, international understanding was growing that Reykjavik did indeed intend to meet its commitments.
"I feel, as yesterday progressed and especially today, that there was ever more understanding and support for the cause of Iceland," he said, adding: "We now feel a much broader understanding of Iceland's cause."
Both the British and Dutch governments reacted angrily to Grimsson's decision to submit the bill to a vote, warning it could impact their support for Iceland's ambitions to join the European Union.
In an interview with the BBC, Grimsson said "the view being put forward that we will not honour our obligations is completely wrong.”
"Iceland fully recognises its obligations and responsibilities to pay ... and (what) will be put to a referendum is simply in what way and in what forms and in what terms," he added in an interview to Swedish Radio.
And speaking to the Financial Times, Grimsson said: "I hope that the people of these two countries and their political leaders will, in keeping with the longstanding democratic traditions of Britain and the Netherlands, acknowledge that a referendum is a democratic way of making a decision."
"I strongly believe that for the future progress in Iceland, it is important that the (electorate) is convinced that it has itself been a partner in this resolution."
On Thursday, Icelandic Foreign Minister Oessur Skarphedinsson said he had received assurances from his British counterpart David Miliband in a telephone call that London still supported Iceland's EU bid despite the row.
"In Miliband's replies, it was clear that... Iceland continues to have the full support of the UK regarding our EU application," Skarphedinsson said.
Icelandic resentment
The Icesave payout has stirred up resentment among many ordinary Icelanders.
About 60,000 people have signed a petition against the bill which they fear will doom them to decades of poverty, all because of the mistakes of a handful of bankers and financial regulators that brought their financial sector tumbling down in October 2008.
The Icelandic parliament is expected to discuss on Friday whether to hold the referendum on February 20th.
A poll published late on Wednesday by Capacent Gallup showed that 53 percent of Icelanders would approve the bill in the referendum. That contrasts with another survey a day earlier which suggested that 58 percent were opposed to it.
Grimsson's veto prompted numerous credit ratings agencies to either downgrade Iceland's debt or change their outlooks to negative, as fears rose that a drawn out debate would complicate the country's economic recovery.
The International Monetary Fund has insisted the Icesave affair will not affect a $A2.3 billion rescue package it agreed with Reykjavik in November 2008, but Icelanders remain concerned that foreign loans and investments could take a hit.
Iceland's neighbours Denmark, Sweden, Finland and Norway, which have signed loan agreements of €1.78 billion ($A2.8 billion) with payouts dependent on the country's economic progress, have said they will follow the Icesave situation closely before making any decisions on future instalments.
On Thursday, Iceland's Finance Minister Steingrimur Sigfusson spoke with his Swedish counterpart Anders Borg by telephone to brief him of the situation and then flew to Oslo for talks with his Norwegian counterpart on Friday, his office said.
Sigfusson was also due in Copenhagen later Friday for talks with his Danish colleague.
