Household woes overshadow EU talks in Iceland election

Iceland's centre-right opposition vowed to create jobs and ease the population's debt burden, as the crisis-battered nation voted in a general election marked by discontent with the leftist government's austerity measures.

The right-wing Independence Party and the centrist-agrarian Progressive Party, who both want to end the northern Atlantic nation's EU accession talks, are expected to form a new coalition.

The two parties have staged a remarkable comeback since being punished in the 2009 election for financial woes hitting the small island nation of 320,000 people.

"We believe we can do a lot for indebted households," said Bjarni Benediktsson, the 43-year-old Independence Party leader, as he cast his ballot in Reykjavik.

"The elections in 2009 were more about the past. Now we're looking towards the future," he said.

Before the crisis, the mortgages offered by Icelandic banks were linked to inflation, resulting in spiralling borrowing costs for homeowners when the krona collapsed against other currencies.

After four years of tax hikes and austerity designed to meet international lenders' demands, the Independence Party has offered debt-laden voters tax credits.

The Progressive Party wants to go even further by asking banks to write off some of the debt.

The party's leader Sigmundur David Gunnlaugsson, 38 -- also seen as a candidate for the prime minister post -- voted in the sparsely populated eastern part of the country, reflecting his party's more rural profile.

"The homes have waited for justice for more than four years. It is important to use the opportunity we have now to achieve that," he wrote on Facebook on Saturday.

The biggest party traditionally picks the prime minister but polls in the final weeks of campaigning have put the two parties neck-and-neck. Social democratic Prime Minister Johanna Sigurdardottir, 70, said last year she would retire at the end of her tenure.

At 13:00 (1300 GMT), voter turnout in Reykjavik stood at 16 percent, down slightly from 19 percent at the same time in the 2009 election.

Although Iceland's future relationship with Europe was hanging in the balance, voters at polling stations seemed more concerned with voicing their discontent with the current government.

"The government was no good. They were elected for us, the people, and they didn't do anything for the nation," said Thordur Oskarsson, 73.

Another elector, 49-year-old Anna Katrin Kristiansdottir, noted that "everything was in ruins" when the leftist government took office, and accused voters of having a short memory.

"That's why the Independence Party and the Progressive Party, which led us to the disaster, are coming back already," she said.

Campaigning has been muted, with none of the rallies, baby-kissing or even posters often seen in elections.

Politicians have preferred wooing voters through word of mouth instead, sticking to an Icelandic tradition of meeting constituents in the workplace.

Another major platform this year has been Facebook, reflecting Iceland's high level of Internet penetration.

Extravagant campaign rallies and glossy advertisements have become even less effective in the wake of the past decade's financial excess, with some voters seeing it as a sign of profligacy and political corruption.

Voter discontent has spawned an unprecedented number of political parties. One of them, the online file-sharing activist movement Pirate Party, could be the first of its kind elected to a national parliament.

The party has pledged to spend literally nothing on its campaign, but is the third biggest party on Facebook by number of "likes" received.

A Gallup poll conducted between April 18 and 25 suggested the Independence Party would win 27.9 percent of votes while the Progressives would garner 24.7 percent.

Sigurdardottir's leftist coalition was swept to power in 2009 amid a wave of angry protests.

Icelanders blamed the then centre-right coalition government for allowing the country's financial sector to balloon out of control, causing the three main banks to collapse and pushing the nation to the brink of bankruptcy.

Polls close at 22:00, when the first estimates of the outcome are expected. The final results will be announced early Sunday morning.