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ICELAND

Icelanders again reject debt deal; court case looms

REYKJAVIK | Iceland faces more economic uncertainty and a drawn-out European court case after its voters rejected for a second time a plan to repay $5 billion to Britain and the Netherlands from a bank crash.

The British and Dutch governments voiced disappointment with the result of Saturday’s referendum, in which almost 60 percent of voters opposed the repayment deal.

“We must do all we can to prevent political and economic chaos as a result of this outcome,” Prime Minister Johanna Sigurdardottir told state television.

The issue now will be settled by the court of the EFTA Surveillance Authority (ESA), the European trade body overseeing Iceland’s cooperation with the European Union.

“My estimate is that the process will take a year, a year and a half at least, Finance Minister Steingrimur Sigfusson told a news conference.

The debt was incurred when Britain and the Netherlands compensated their nationals who lost savings in online “Icesave” accounts owned by Landsbanki, one of three overextended Icelandic banks that collapsed in late 2008, triggering an economic meltdown in the country of 320,000 people.

Economists have said failure to resolve the issue means Iceland faces delays ending currency controls, boosting investment and returning to financial markets for funding.

But the center-left coalition government said it would not resign despite the defeat.

FRANCE

New veil ban to go into effect

TRAPPES | For Muslim women who cover their faces with veils, it is the moment for making plans. Starting Monday, a new law banning garments that hide the face takes effect. Women who disobey it risk a fine, special classes and a police record.

The law comes as Muslims face what some see as a new jab at their religion. President Nicolas Sarkozy’s party is set to hold a debate Tuesday on the place of Islamic practices, and Islam itself, in strictly secular but traditionally Catholic France.

The increasing focus on France’s Muslims — the largest such population in western Europe, at 5 million people — comes with presidential elections a year away and support for a far-right opposition party growing.

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