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Iceland govt resigns amid financial collapse

AFP, Reykjavik
Icelandic Prime Minister Geir Haarde announced yesterday the immediate resignation of his government following massive protests over its handling of the country's dire economic crisis.
"I'm here to announce that I and the leader of the Social Democrats have decided that we will not continue with the coalition," Haarde told reporters, adding that he would seek a broad coalition with all parliamentary parties.
The announcement came just days after Haarde called for snap elections on May 9 in which he would not run due to health reasons, after months of protests calling for the government's resignation.
Iceland's President Olafur Ragnar Grimsson accepted the resignation.
Many Icelanders blame the government for the collapse of the country's financial sector in October, which led the state to take control of three major banks as the economy and currency faltered badly.
The coalition, made up of Haarde's Independence Party and the Social Democrats since May 2007, had been in negotiations since the weekend, with the junior coalition partner demanding the post of prime minister.
"We couldn't accept the Social Democratic demand that they would lead the government. That is not something we agreed on in 2007," Haarde said.
In the 2007 elections, the Independence Party won 36.6 percent of votes and the Social Democrats garnered 26.8 percent. The next elections had initially been scheduled for 2011.
The head of the Social Democrats, Foreign Minister Ingibjorg Solrun Gisladottir, said a more powerful leadership was needed.
"The government's actions in the last weeks and months were not swift enough," she said.
Haarde said last week he would not seek re-election and would resign as head of the Independence Party-at a party congress at the end of March because he was suffering from a malignant tumour of the oesophagus.
But that did little to quell protests in the country of just 320,000.
Some 5,000 people turned out Saturday for another demonstration in Reykjavik calling for the government’s immediate resignation.
Commerce Minister Bjorgvin Gudni Sigurdsson, a Social Democrat, announced his resignation on Sunday, apologising for the stunning financial collapse but refusing to take all blame for the dramatic events that ensued.