Oct 9, 2008 (LPAC)-- The Prime Minister of Iceland, Geir Haarde, reiterated that Iceland can not, and will not pay the foreign liabilities of its banking sector, and the interests of Iceland will have first priority.

On Wednesday Oct. 8th, making it very clear to differentiate the debt of the nation and the debt of the banks, Haarde told a press conference: "The point is this. The total indebtedness is so, that there is no way that the Icelandic population can take responsibility for the debt these private companies have incurred. It happens everyday in bankruptcies, that some are burnt."

Earlier in the week the Icelandic government shocked British Chancellor of the Exchequer Alistair Darling with the announcement that they had no intention of paying the Icelandic bank's obligations in Great Britain.

When asked whether joining the European Union and the Euro was an option, he said: "We would have been worse off [if Iceland had been in the Euro Zone]. Many of the smaller countries have been completely marginalized in the EU."

While confirming that there was an expert group from the International Monetary Fund in Iceland saying "We will make good use of them as long as they stay." But added that they have not asked the IMF for a loan. "We have not borrowed from them since 1983. We all have that option." When asked why Iceland has gone to Russia for a loan, he said "The Nordic countries have been very helpful. Besides them no other countries [than Russia] responded with the help we need."

The Icelandic government passed this week emergency legislation to deal with the banking collapse. Unlike the British or U.S. plans, this was not a bank "rescue" plan but legislation that gave the government the authority to seize any bank or financial company, put it through a bankruptcy or other procedure that would put the interests of the Icelandic nation over that of the banks.