* Iceland president seen securing re-election
* Rebellion over Icesave bailout popular with voters
* Frontrunner opposes EU membership bid
By Omar Valdimarsson
REYKJAVIK, June 28 Iceland's irascible veteran
President Olafur Grimsson has won over the hearts and minds of
voters for standing up to Britain and the Netherlands over
massive debts from a bank crash, an act of defiance likely to
win him a record fifth term this weekend.
Grimsson, 69, who also opposes joining the European Union,
was first a cheerleader for local banks' dizzy expansion abroad.
But after a 2008 bank crash, he salvaged his local standing
by becoming a staunch defender of the island's strategy of
protecting only domestic savers when the banks folded.
Iceland has made a good recovery from the banking collapse,
which came to epitomise the excesses of the liquidity-driven
boom which preceded the fall of Lehman Brothers. By contrast,
much of the euro zone is still struggling.
The North Atlantic island nation was mired deep in recession
for more than two years after the collapse. Unemployment soared
from virtually zero to about 10 percent, and the economy shrank
around 10 percent, but it has grown in the past five quarters.
Still, the crisis and austerity-laced recovery have tanked
the popularity of government and parliament, leaving a vacuum
that Grimsson has filled by tapping into a strong nationalistic
undercurrent with his defiance of foreign creditors.
"Olafur Ragnar is simply the pride of this nation," said
Elinborg Anna Arnadottir, 44, a beautician from Selfoss in
"It's more than enough to have a dysfunctional government.
We know that our man will not do their bidding without question,
but do his duty and meet the democratic needs of the people."
The defiant defence of his homeland against perceived
bullying by major powers was a throw-back to earlier in
Grimsson's political career, when he forged a reputation as a
combative left-wing leader and served as finance minister in
In 2010 and 2011 Grimsson vetoed bills approved by the
centre-left government in parliament to pay about $5 billion to
compensate Britain and the Netherlands, whose governments bailed
out their nationals who had money frozen in high interest rate
"Icesave" accounts in Icelandic bank Landsbanki.
The vetoes fuelled British and Dutch fury and trade body
EFTA has taken Iceland to court. However, voters overwhelmingly
approved the president's vetoes in referendums that boosted
"Basically, you could say this election is a referendum on
whether the president did right by refusing to sign the Icesave
legislation in 2010 and 2011," said Stefania Oskarsdottir,
assistant professor at the University of Iceland.
"Many Icelanders liked his performance, saying 'finally,
here is somebody who stands up for us'."
Grimsson also opposes Iceland's EU membership bid, which
will be put to a referendum once negotiations with Brussels have
been completed. For some, the recovery from the crisis has
removed the need for joining of the 27-nation bloc, with which
Iceland already has good trade links.
"We have gone through serious difficulties in the last three
years, but we will not have a bright future if we do not stop
the EU talks and reject the EU outright," said Sigurjon
Hafsteinsson, 47, a fireman from Keflavik near the capital.
"The best way to safeguard the independence of this country
is by re-electing Olafur Ragnar as president."
Opinion polls ahead of Saturday's vote have shown a clear
lead for Grimsson, whose 16 years as president already make him
one of Europe's longest-serving elected heads of state, over his
main contender and local TV personality Thora Arnorsdottir, 37.
"There are a lot of people who never voted for him before,
but now say that he stood up for Iceland on Icesave so they
will," said Bryndis Hlodversdottir, Dean of Bifrost University
A fifth term would be a record for an Icelandic president.
His predecessor, Vigdis Finnbogadottir, served four consecutive
terms. Grimsson had originally said he would not stand again.
Before Grimsson, the presidency was largely a ceremonial
post and his more interventionist stance has raised questions
among some voters. Those questioning voters are the ones
Arnorsdottir has sought to appeal to.
"I can't single-handedly change the atmosphere, but I can
try to focus on what unifies us rather than what divides us,"
she said. "There has been a lot of mud-slinging. My hope is to
use the influence of the presidency to close the trenches."
(Additional reporting and writing by Niklas Pollard; Editing by