LONDON: Iceland's Prime Minister Johanna Sigurdardottir urged Britain and the Netherlands to show understanding over the repayment of billions of euros after the collapse of the Icesave bank in an article Friday.

Writing in the Financial Times newspaper, Sigurdardottir said there was a "mutual interest of all three nations in Iceland's capacity to fulfil its debt obligation."

She added: "Iceland will not be deterred from resolving issues that stand in the way of economic reconstruction at home and confidence building abroad.

"It is to be hoped that the people of large countries such as the UK and the Netherlands are aware of the lasting impact their governments can have on small countries such as ours at a time of great distress."

Iceland's government is facing a battle to convince lawmakers to approve a widely unpopular deal to repay billions of euros to Britain and the Netherlands following the collapse of Icesave.

Icesave, an online subsidiary of the Landsbanki bank which was nationalised in October 2008, attracted over 320,000 British and Dutch savers due to its high interest rates.

But they lost their savings when accounts were frozen during last year's credit crunch.

The British and Dutch savers were part-compensated by their own governments, who then turned to Reykjavik looking for money. The issue is further complicated by Iceland's desire to join the European Union.

Icelanders were "willing to make sacrifices to secure normal relations and trade with the world" but were "angry" at having to take on the burden of compensation for the Icesave accounts, Sigurdardottir wrote in the