Crisis-stricken Iceland votes

REYKJAVIK: Iceland's general election got underway Saturday seven months after the country's economic collapse, with voters expected to snub the party seen as responsible for the crisis in favour of the interim leftist government.

The country's 228,000 eligible voters began casting their ballots in chilly springtime weather as polling stations opened at 9:00 am (0900 GMT) across the country.

"Rarely before has been more at stake in general elections. The future of the nation is at stake, whether it will rise again from the recession," an editorial in daily Morgunbladid said.

Icelanders were expected to give the cold shoulder to the conservative Independence Party that governed the country for 18 years until it resigned in January amid massive protests over the crisis that brought Iceland to the brink of bankruptcy.

Public opinion polls have suggested a comfortable victory for the pro-EU Social Democratic Party, led by Prime Minister Johanna Sigurdardottir, and its junior coalition partner the Left Green Movement.

Political observers have predicted a "disaster" for the Independence Party, which was in government in the early 1990s when the financial markets were deregulated and has been blamed for the country's dire straights.

But party leader Bjarni Benediktsson, elected less than a month ago to replace former prime minister Geir Haarde, told AFP he remained hopeful as he voted at the Fjolbrautaskoli school outside Reykjavik.

"I am optimistic and relatively confident. I've noticed what the polls have said but I think we will get better results than what the polls showed," he said.

Three surveys published Friday showed the Independence Party taking between 21.9 and 23.6 percent of votes, suggesting its worst electoral showing since its 1987 score of 27 percent.

The Social Democrats were tipped to garner between 29.2 and 31.8 percent of voter sympathies, while the Left Greens were credited with 24.1 to 27.2 percent of votes -- enough for the two parties to obtain a majority.

"There are many things we have to do. We have been working for the last two or three months to get the country going," Sigurdardottir, who took over in February after the previous government resigned, told reporters as she voted in central Reykjavik.

While Icelanders had enjoyed a standard of living envied by the rest of Europe, the collapse of the country's oversized financial sector amid the global crisis that erupted last year has had a devastating impact.

The state had to take control of three major banks in October, as the local currency, the Icelandic krona, plunged.

Thousands of people lost their savings and their jobs, and unemployment, which was virtually non-existent before the crisis, was expected to hit 10 percent by the end of this year as the economy shrinks by 10 percent.

The country received a 2.1-billion-dollar (1.58-billion-euro) bailout from the International Monetary Fund in November, and some early signs of a recovery have been observed.

Sigurdardottir is a fierce advocate of joining the European Union and adopting the euro, arguing that doing so would shelter the island nation of 320,000 people from the global turbulence.

"EU membership application is a priority issue for the Social Democrats. It is necessary to achieve stability," she said during a final debate Friday.

The Left Greens are however opposed to EU membership, though they have insisted on the need for a debate on the issue which deeply divides Iceland amid scepticism that Brussels will interfere with its large fishing industry.

The two parties have nonetheless said they plan to carry on their coalition if they win enough votes in the election.

Gerdur Hellgadottir, a 56-year-old medical secretary who cast her ballot Saturday, said she voted for the Left Greens because of the EU issue.

"Of course we have to discuss this issue, but I think there's no need to apply for EU membership right away," she told AFP.

Some 10 to 15 percent of votes are expected to abstain or submit blank ballots, many of them believed to be Independence Party supporters.

Polls were to close at 10:00 pm (2200 GMT) and preliminary estimates were due shortly afterwards. Final results were expected early Sunday.