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Iceland Hopes for Support from Nordic Neighbours

Economic output in Iceland was estimated to drop some 10 per cent next year, the prime minister of Iceland said Monday, Oct. 27, leading to calls for help to the country's Nordic neighbors.

Iceland's Prime Minister Geir H. Haarde

Iceland's Prime Minister Geir Haarde hopes his neighbors will come to the rescue

"We are going to get through this crisis and move on," Prime Minister Geir Haarde told reporters before a meeting of Nordic prime ministers in Finland.

Haarde said he hoped the cash-strapped North Atlantic nation will be able to get loans from its Nordic neighbours.

The global financial crisis that has battered Iceland was one of the main topics at the meeting of the Nordic Council organization that groups Denmark, Finland, Iceland, Norway and Sweden as well as three self-ruling territories including Greenland.

Haarde said many of Iceland's 320,000 inhabitants will be hit by the crisis that has seen the collapse of its three largest commercial banks.

It will be "painful," he said, stating that some will lose their jobs, others will lose their savings, and that the crisis will set Iceland back some five years.

On Friday, Reykjavik and the International Monetary Fund (IMF) signed a deal for a 2.1-billion-dollar emergency loan from the IMF to help stabilize Iceland's economy.

The deal with the IMF, that needs approval by the IMF board, was the first by a Western country since the mid-1970s when Britain signed a similar deal.

However, it is estimated that Iceland needs an additional 4 billion dollars in loans although Haarde did not specify the sum Monday.

Haarde said a possible deal with the Nordics would not rule out a possible deal with Russia, referring to recent talks held in Moscow.

The central banks of Denmark, Norway and Sweden in May signed a swap facility arrangement with the Icelandic central bank which recently drew 400 million euros (543 million dollars) from Denmark and Norway.

The financial unrest has fuelled support in Iceland for joining the European Union, according to a poll commissioned by the Frettabladid newspaper.

The weekend poll of some 800 people suggested more than two in three supported an EU application, up from one in two in February.

Haarde, whose Independence Party has opposed joining the bloc, said discussions about membership would have to await the resolution of the crisis.

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