Icelanders vent anger at government, not IMF

By Omar Valdimarsson

REYKJAVIK, Nov 20 (Reuters) - A $10 billion IMF-led package may rescue Iceland's financial system but the government faces a backlash from the public, angry at how a prosperous island became an economic basketcase almost overnight.

Public ire with politicians and financial chiefs has found an outlet in the protests that have become a regular sight in the capital since the crisis took hold last month.

Traditionally, Icelanders would grumble quietly in their corner but the wave of protests signalled an important change in mentalities, said Sigmundur Ernir Runarsson, a news director for Iceland's Channel 2.

"The anger we see now is directed at this destruction and particularly the fact that no one seems man enough to accept responsibility for it," he said.

"New sagas are being written every day and even though the battles are still waged with words only, the battle spear is not far away."

Thousands of voters in this North Atlantic island state streamed into the capital Reykjavik at the weekend in the largest public rally since the start of the crisis. The peaceful protest is scheduled to be followed by another on Saturday.

The financial crisis has prompted speculation in local media of elections early next year. Support for joining the European Union has soared to 70 percent, prompting Prime Minister Geir Haarde, a long-standing opponent to membership, to convene a commission to study the issue.

Membership is a pre-requisite for adopting the euro, a step that has become increasingly popular with residents since the collapse of the crown currency.

CRIPPLING RATES

Thousands of Iceland's 320,000 people now face the prospect of losing their homes and savings as a result of the financial meltdown.

The central bank hiked interest rates by six percentage points to a record 18 percent last month as a condition for receiving aid from the International Monetary Fund.

But there has been scant criticism of the fund from ordinary people, politicians or local media.

Runar Sigurdsson, a 62-year-old guest house owner, said he had not wanted to see Iceland borrowing from the fund at first. Now he is more upset that it took so long to win an IMF loan.

A decision on the IMF programme was delayed until Iceland agreed to sort out its wrangles with Britain and the Netherlands over its obligations to foreigners who had deposits in failed bank Landsbanki.  Continued...