Iceland Votes Against Repaying Bailout Debts
Icelanders have rejected the latest plan to repay the UK and Netherlands some 4bn euros lost when the country's banking system collapsed in 2008.
Partial referendum results show 58% voting no, and 42% supporting the plan.
"The worst option was chosen. The vote has split the nation in two," Prime Minister Johanna Sigurdardottir said on state TV.
It is the second time a referendum has rejected a repayment deal, and the case will now go to an international court.
Landsbanki ran savings accounts in the UK and Netherlands under the name Icesave and investors there lost 4bn euros (£3.5bn; $5.8bn).
When it collapsed in 2008, the British and Dutch governments had to reimburse 400,000 citizens - and Iceland had to decide how to repay that money.
'Such a revulsion'
"The Icelandic nation has been put in a terrible situation," Reykjavik voter Helgi Sigurdsson told the Associated Press news agency.
"It has two choices - both are bad. Probably a lot of people stood for a long time holding the ballot slip."
Parliament had backed this deal, but President Olafur Ragnar Grimsson refused to sign it, leading to the referendum.
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