Iceland's EU bid must be negotiated with payback: Netherlands

(THE HAGUE) - Talks on Iceland's bid to join the European Union should go hand in hand with negotiations for a compensation deal for the collapsed Icesave bank, a Dutch minister said on Thursday.

Outgoing foreign minister Maxime Verhagen told parliament that "discussions with Iceland on joining the EU should continue come what may, but similarly, we want our money back come what may," his spokesman Gijs Korevaar told AFP.

Talks on Iceland's EU bid should not be conditional on the payback of 3.9 billion euros (5.3 billion dollars) to Britain and the Netherlands beforehand, the minister said.

The money was used to pay 340,000 British and Dutch citizens hit by the fall of the online Icesave bank in October 2008.

The minister said "we must discuss the two things simultaneously", adding: "The one discussion cannot be concluded without the other. The EU negotiations can never be finalised without Iceland having met all the conditions for membership, which includes the payback."

In a March 6 referendum, more than 93 percent of Icelandic voters rejected a deal to repay the money owed to Britain and the Netherlands.

Reykjavik has vowed to quickly negotiate a new, more advantageous deal, but no new talks have been announced.

The conflict has led Britain and the Netherlands to block approval for further installments from the International Monetary Fund of a 2.1-billion-dollar loan to Iceland, of which half remains to be paid.