A diplomatic deep freeze set in today between Britain and Iceland, a day after the Icelandic president blocked the repayment of a $5.7 billion loan _ a move that threatened to plunge the tiny island nation back into another financial crisis, according to AP. Icelanders are already struggling with high interest rates, soaring unemployment and a virtually valueless currency, but President Olafur R. Grimsson"s decision Tuesday jeopardized the country"s bid to join the European Union and its access to vital aid. Some British newspaper editorials compared the current dispute to the Cod Wars of the 1970s when British naval boats challenged Icelandic fishing vessels in a dispute over fishing rights in the North Atlantic. British Financial Services Minister Paul Myners, meanwhile, said Iceland risked pariah status if a national referendum next month on the loan repayment _ triggered by Grimsson"s decision _ cemented a «no» vote. Iceland, a small nation of around 320,000 people, has been surviving on emergency funds from the IMF. The help, along with revenues from its fishing industry, has allowed it to slowly start rebuilding its economy. While $1.9 billion of the loan repayment is due to the Netherlands, Icelanders are more livid with Britain after it used anti-terrorist legislation at the height of the credit crisis to freeze Icelandic assets in an attempt to protect its own citizens. Grimsson has said his decision to veto the bill and put the loan repayment issue before a national referendum _ only the second time in the country"s history a president has vetoed a bill _ was determined by overwhelming public opinion.
