Sounds like a bad deal all the way round...
http://news.yahoo.com/s/ap/20100306/ap_on_bi_ge/eu_iceland_financial_crisis
Basically, it sounds like when one of Iceland's main banks, Icesave, went under, British and Dutch investors lost their shirts. The British and Dutch govts apparently compensated the investors similar to what our FDIC would do, and now those govts are knocking on Iceland's door wanting their money back - to the tune of over 5 billion dollars. And the deal worked out would have gotten the money from guess where - the taxpayers.
The Icelandic president/PM refused to sign the deal, which triggered a national poll on the bill. And from the sound of it, the taxpayers are pissed and going to vote hugely against it - they would have to fork over 25% of their monthly income each month for the next 8 years to pay back the UK and Netherlands.
The taxpayers see it as not being their problem - the bank execs got greedy and mismanaged the bank and overspent causing it to go under, and the British and Dutch got greedy going for the higher than normal interest rates the bank offered and ignored any signs of trouble - why should they have to pay back someone else's money, when they lost it due to their own incompetence?
And the IMF is dropping hints that if the public nixes the deal, Iceland just might find it rather difficult to get any loans from them in the future.