A London MEP today opposed EU membership for Iceland - because of the millions of pounds the country owes the capital.
Marina Yannakoudakis made her protest when the European Parliament debated Iceland's ongoing EU negotiations.
She refused to back a resolution supporting membership because it stated that money owed by Iceland's Landsbanki after the collapse of Icesave "must not be an obstacle" to accession.
She insisted: "As a London MEP I cannot support this resolution. Six London borough councils had a total £120 million invested with Icesave; Transport for London invested a further £40 million and the Metropolitan Police £30 million."
Local authorities were suffering painful budget cuts after the economic downturn:
"These councils and organisations have not seen a penny of their money since Icesave's collapse in October 2008. The Icelandic government is dodging its legal obligation to pay minimum compensation to these and other British depositors."
Ms Yannakoudakis said Baroness Margaret Thatcher had once asked the EU for "our own money back", adding: "That is what we are asking of Iceland - until they pay up I cannot support their membership application."
More than 100 UK local councils and thousands of private UK investors had nearly £5 billion on deposit in Icesave accounts at the time of the collapse.
But another London Tory MEP, Charles Tannock, told MEPs he was confident all debts would be paid.
He described the nation as a "small, stable, wealthy democracy", and pointed out that Iceland's Supreme Court had recognised the country's obligations over compensation for Icesave depositors.
Mr Tannock continued: "I understand around one third of the recognised priority claims have now been repaid. Given Iceland's successful completion of the International Monetary Fund's economic recovery programme last year and its return to positive economic growth, we have no doubt that the other outstanding claims will be repaid."
UK Independence Party MEP for the West Midlands Mike Nattrass voiced opposition to Icelandic EU membership, but not because of the banking collapse. He said it was in the country's own interest to stay out of the EU because its fishing industry could be destroyed by the Common Fisheries Policy.
"For the love of cod, don't do this - say no," he pleaded.
However, Iceland's onward march towards EU membership was endorsed by 596 votes to 52.