EU presidency warns Iceland over banking row

The Spanish EU presidency warned Iceland yesterday that the row over the Icesave bank collapse could hurt its bid of joining the bloc.

"It could slow the negotiation process a bit," Spanish Foreign Minister Miguel Angel Moratinos said. "But we hope that it will go alright.

"I hope that the Icelanders see EU in their future," he told journalists.

Iceland's President Olafur Ragnar Grimsson said on Tuesday that he would not sign a controversial Bill to compensate the British and Dutch governments for reimbursing Icesave investors, triggering anger in London and The Hague.

Mr Grimsson said he would put the bill to a referendum instead.

Iceland's Parliament voted last July to join the EU, in the hope that membership would help stabilise the economy following the collapse of its once-booming financial sector.

The European Commission is preparing an opinion for the EU's 27 member states on how long the small island nation, where the economy was ravaged by the economic crisis, might need to join.