Iceland's government pledged on Sunday to restart talks and swiftly reach a new debt accord with Britain and Netherlands, a day after Icelanders crushed in a referendum the previous $5 billion Icesave deal.
Some 94 percent of Icelanders rejected a deal from late 2009 on Iceland repaying the British and Dutch governments for covering the losses of depositors in their countries with money in Icesave accounts of a collapsed Icelandic bank.
Britain and the Netherlands have already offered better terms than those in the rejected deal; but the referendum provided Icelanders with the chance to vent anger at their leaders and banks as well as foreign officials they feel have treated their country unfairly.
Iceland now needs speedy resumption of formal negotiations on an issue blocking foreign aid to its crisis-hit economy.
It is not a matter of days or a few weeks but it's important that we do this as swiftly as possible, Finance Minister Steingrimur Sigfusson told a news conference, when asked about the timing of a new Icesave debt deal.
He said if talks dragged on, they would face an obstacle in the shape of parliamentary elections in both Britain and the Netherlands due by mid-year, which could hamper progress.
It is in everyone's interest to do this swiftly, he said.
Iceland's center-left government survived the crushing defeat of the Icesave bill it brokered and supported until early this year by promising to quickly secure a better deal.
The Icesave debts come to more than $15,000 for each one of the 320,000 people on the island. Much of that should be raised by selling overseas assets of the failed bank Landsbanki, so the focus of negotiations is on the interest payments, which Icelandic officials say could cost their taxpayers $1 billion.
Britain said it was prepared to be flexible in talks, a good sign after last-ditch negotiations collapsed before the referendum despite an improved offer from the British and Dutch.
The fundamental point for us is that we get our money back but in terms of the terms and conditions, and so on, we are prepared to be flexible, because it's not in our interest to have Iceland excluded, British finance minister Alistair Darling told BBC television.
The Dutch government said late on Saturday it was committed to finding a solution that is consistent with international practice and that it realized that the Icelandic government would need time to reflect.
But it also appeared to harden its position earlier on Saturday by linking the Icesave dispute to Iceland's hopes of joining the European Union.
Brussels invited Iceland to accession talks last month but the Icesave row with the two EU members has hit support for membership in the traditionally independent North Atlantic island first settled by Vikings a thousand years ago.
Iceland has accused Britain and the Netherlands of holding it hostage by linking the Icesave issue to Reykjavik receiving the next tranche of aid from the International Monetary Fund.
With the cash in its coffers, Iceland would be able to open its borders to capital flows that feed investments.