Iceland eyes Icesave approval, boosts EU bid

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Bickering over the Icesave issue has held up the release of IMF funds, which are dependent on the island successfully negotiating a review by the Washington-based global lender.

EU BID DELAY

The dispute has also clouded Iceland's bid to join the EU - launched earlier this year - souring public opinion in the north Atlantic country towards the 27-nation bloc.

"Right now support for the EU is at its lowest point because of the Icesave issue and it might be better to remove this issue out of the way next week before moving forward," said Skarphedinsson.

"Once the people have recuperated from this very sensitive Icesave issue, I think people will look at the EU in a more calm way. they will focus on the real, positive issues of EU membership instead of this single issue."

Iceland hoped to get approval from EU leaders at a summit next month to formally launch accession negotiations, but Skarphedinsson said the decision may be postponed until the next summit in March due to a delay in appointing a new European Commission.

Leaders will make their decision based on a recommendation by the EU executive which steers the bloc's enlargement policy.

"There are no substantive problems and most countries have indicated their support," he said.

"But the Commission has indicated there may be problems and it may be delayed until March. It's not a matter of life or death for us and we can wait."

The new Commission was due to take office on November 1 but has been delayed until EU leaders appoint a new EU president and high representative as part of the bloc's new reform treaty which enters into force next month.