BERLIN (Reuters) - Icelanders are sure to vote against repaying $5 billion in "Icesave" debts if a referendum goes ahead on Saturday, but conditions are good for reaching a revised deal with Britain and the Netherlands, Iceland's Foreign Minister was quoted on Wednesday as saying.
In an interview with Financial Times Deutschland, Foreign Minister Ossur Skarphedinsson also said the two European Union countries could try to hinder Iceland's ambitions to join the bloc, but he had no reason to believe they actually would.
The referendum on repaying debts to Britain and the Netherlands following the collapse of Iceland's banking system in 2008 was focusing minds, he said.
"We're continuing to negotiate and because of the deadline we're under high pressure like never before. Those are good conditions for achieving an agreement," he said. Should the referendum take place, a "no" was certain and the negotiations would be further drawn out, the newspaper quoted him as saying.
The widely expected rejection of the 2009 agreement on Icesave online bank accounts may freeze foreign aid needed to resuscitate Iceland's economy, hit the center-left government and cloud its prospects of joining the EU.
Surveys show nearly three-quarters of Icelanders want to nullify the old agreement on repaying debts owed to Britain and the Netherlands, whose governments compensated those savers in their countries who lost money in Icelandic deposit accounts.
Skarphedinsson was hopeful Icelanders would accept any cancellation of the referendum should a new deal more favorable to Iceland be struck.
"If we reach a deal in the short term, the conditions would be so good that there wouldn't be any great frustrations among the population," he said.
Skarphedinsson expressed cautious confidence that the British and Dutch governments would not frustrate Reykjavik's drive to join the bloc.
"Of course both countries could try to make our entry more difficult. But I have absolutely no reason to believe that they will do so," he said.
Britain and the Netherlands have proposed softer terms than those agreed to late last year, but talks broke down last week as Iceland held out for a better deal.
(Writing by David Stamp; Editing by Andrew Callus)
