INTERVIEW - Iceland eyes Icesave approval, boosts EU bid

By Darren Ennis

BRUSSELS (Reuters) - Iceland's foreign minister is confident parliament will approve by next week an amended bill to repay billions of dollars to Britain and the Netherlands, boosting the country's chances of joining the European Union.

"I am pretty confident that it will go through. Narrowly, but it will go through by next week," Ossur Skarphedinsson told Reuters in an interview on a visit to Brussels.

"I don't expect it to have the full governmental majority. But enough of a majority to go through."

Reykjavik struck a deal last month with London and Amsterdam to compensate the two EU states for bailing out British and Dutch investors who lost more than $5 billion in Landsbanki's high-interest "Icesave" accounts after Iceland's banks collapsed at the height of the global credit crunch.

The financial crisis devastated Iceland's economy and left it dependent on a $10 billion aid package headed up by the International Monetary Fund.

Britain and the Netherlands were unhappy about the original terms of an initial law passed in August by Iceland's lawmakers on how to repay the funds.

Under that measure, the Icelandic government's repayment guarantee ran out in 2024. The new bill extends it in five-year blocks should the money not have been repaid by that date.

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.