The World : Iceland Regime Quits as Economy Falters

The 15-month-old coalition government of Iceland Prime Minister Thorsteinn Palsson resigned after failing to agree on a program to deal with the country’s acute economic problems. President Vigdis Finnbogadottir is expected to decide within a day whether to call new elections or to ask a leader of one of the three coalition parties to try to form a government. Iceland’s fishing industry, which accounts for 70% of the island nation’s export income, has suffered heavy losses, sparking the economic crisis. The coalition members’ discussions broke down over a proposed austerity package--including a 6% currency devaluation, price controls, wage freezes and a 1.5% hike in income taxes.