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Iceland Returns Center-right Parties To Power

Since then, Iceland has in many ways made a strong recovery. Unemployment has fallen and the economy is growing.

But inflation remains naggingly high, and many Icelanders still struggle to repay home and car loans they took out â¿¿ often in foreign currencies whose value soared after the crash â¿¿ in the years of easy credit.

Some blamed the outgoing government of Prime Minister Johanna Sigurdardottir for agreeing to internationally approved austerity measures and accused it of caving in to pressure to compensate Britain and the Netherlands for their citizens' lost deposits in the failed online bank Icesave. Icelanders have twice rejected Icesave repayment deals agreed to by Sigurdardottir's government.

Despite being widely blamed for the financial meltdown, the Independents and Progressives say they are now best placed to lead the economic recovery.

The Progressives have promised to write off some mortgage debt, taking money from foreign creditors. Benediktsson's Independence Party is offering lower taxes and the lifting of capital controls that he says are hindering foreign investment.

"I think people knew that hard times were ahead in 2009," Benediktsson said. "But they were hopeful, and they were introduced to a plan that would bring us quicker out of the crisis than has been the reality.

"So people are now looking forward and asking themselves ... what kind of a plan is the most likely one to bring more growth, more job creation, to close the budget deficit, and have Iceland grow into the future? These are the issues that I think these elections are all about."

______

Lawless reported from London. Associated Press writer David Mac Dougall in Reykjavik contributed to this report.

Copyright 2011 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.
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