By Johan Ahlander and Tom Little
REYKJAVIK, Aug 30 (Reuters) - Icelanders have voted to stay out of the European Union, broadcaster RUV reported on Sunday, rejecting a government push to reopen membership talks and siding with those who said Iceland's fishing waters were too important to risk.
Some votes from one constituency are pending but these were not expected to change the outcome, RUV said.
A 'no' vote would disappoint Brussels, as some officials had cast the island nation of 400,000 as a low-risk case that could ease scepticism toward EU enlargement and strategically strengthen the bloc when Arctic security is in focus.
The government has framed membership as a shield against trade wars and Arctic rivalry and presented the referendum as a "now or never" moment, with Prime Minister Kristrun Frostadottir warning that a "no" would put the membership question aside.
The government is due to hold a press conference at 1 p.m. (1300 GMT).
DECADES OF MEMBERSHIP DEBATE
Iceland first applied to join the EU in 2009 when a financial crisis hit the country's small, exposed economy. A Eurosceptic government ended talks in 2013.
Geopolitical turmoil, including war in the Middle East and U.S. import tariffs, has brought urgency to an issue Icelanders have debated on and off for decades.
"Yes" campaigners have said joining the bloc could help to lower interest rates and offer more security in a world unsettled by the war in Ukraine and U.S. President Donald Trump's rhetoric about annexing another Arctic island, Greenland.
"No" campaigners said EU membership would threaten the island's sovereignty and fishing waters.
The referendum campaign has fuelled debate about Iceland's place in the world, Prime Minister Kristrun Frostadottir told reporters after casting her ballot in the capital on Saturday.
"We've been waiting for this for years to be able to have a vote," Frostadottir said, adding that her government would continue its work regardless of the outcome.
INTEREST RATES AND THE COST OF LIVING
Debates inside Iceland have focused on interest rates, fishing rights and the cost of living rather than on security.
Iceland has grappled with high inflation and interest rates that have made mortgages expensive. Supporters of a "yes" vote have said EU membership, and possibly adopting the euro, could bring relief. Iceland's central bank interest rate is 8%, compared with 2.25% at the European Central Bank.
"It would not solve Iceland's structural faults, but it could become a catalyst to a more healthy economy," said chief economist Vilhjalmur Hilmarsson at Viska, one of Iceland's largest labour unions.
Opposition leader Gudrun Hafsteinsdottir, who has led the "no" campaign, said the economic case is overstated. "These are not problems that Brussels will solve for us. These are problems that Icelandic politicians must solve," she said.
Voter Ragnhildur Skarphedinsdottir, 70, said Iceland was managing well on its own and that she was voting "no".
"By staying independent as we are, we look brightly to the future," she said before casting her ballot in Reykjavik.
Under EU rules, fishing quotas are based on historical fishing patterns, among other factors. Some Icelandic officials have said Iceland would therefore retain control of its waters, since no EU country has fished there for decades.
Hafsteinsdottir disputes that. "I know that the European Union will come up with some promises of some flexibility, especially in the beginning, but we know that it will not be for good," she said.
(Reporting by Tom Little and Johan Ahlander in Reykjavik and Stine Jacobsen and Louise Rasmussen in Copenhagen; Writing by Stine Jacobsen; Editing by Terje Solsvik, Christopher Cushing and Barbara Lewis)
