Icelandic government survives no confidence vote

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Iceland's parliament late Wednesday narrowly rejected a no confidence proposal against the government just days after its plan to repay foreign creditors of the failed Icesave bank was defeated by referendum.

Following a more than five-hour parliamentary debate, the proposal was voted down shortly before 2200 GMT, with 32 votes against and 30 in favour, with one member of the 63-seat Althingi abstaining.

"This was close, but it was a majority ... I'm happy the discussion took place," a relieved Prime Minister Johanna Sigurdardottir said after the result was announced.

A separate motion calling outright for the government to be dissolved and new elections to be called was meanwhile easily defeated, with 36 votes against, 22 in favour and five abstaining.

The votes came just four days after nearly 60 percent of Icelandic voters rejected a government and parliament-backed plan to refund 3.9 billion euros ($5.6 billion) to Britain and the Netherlands for money they spent on compensating 340,000 of their citizens who lost money on Icesave.

The online bank went under at the height of the global financial crisis in 2008.

The result -- the second referendum rejection of a repayment plan in just over a year -- has embarrassed the barely-majority government, since the parliament had approved the plan with a 70 percent majority.

Iceland's largest opposition party, the centre-right Independence Party which ruled the country for most of the past century, called late Tuesday for the vote of no confidence against the government, insisting the Icesave debacle showed Sigurdardottir's cabinet did not have the backing needed to rule.

"There is nobody in this country who has any trust in the government. The only thing possible is to force an election," Independence Party chief Bjarni Benediktsson said during Wednesday's debate.

Icelandic Finance Minister Steingrimur Sigfusson meanwhile said after the vote that he was "not worried about the state of the ruling government. Often before has a government pushed through with a bare majority."

He said he was especially "pleased there was a clear majority that rejected an election. I think it's important that there not be an election at this point."

Sigurdardottir's leftwing coalition, which is made up of her Social Democrats and the Left Green Party, now counts just 33 of the 63 seats in parliament after two Left Green MPs moved to the opposition as independents last month.

© 2011 AFP

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