Iceland and the European Union
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Iceland is not a member state of the European Union (EU) and has never applied for membership. Iceland is, however, a member of the European Free Trade Association (EFTA), along with Norway, Switzerland and Liechtenstein. In 1992 Iceland and its EFTA partners (except for Switzerland, which rejected the agreement in a referendum) signed the European Economic Area (EEA) agreement with the European Union, which was designed to allow the EFTA countries to participate in the European Single Market without having to join the EU. The EFTA Secretariat in Brussels reported in 2005 that Iceland had adopted approximately 6.5% of EU regulations as a result of signing the EEA agreement[1].
The present coalition government of Iceland, consisting of the conservative Independence Party (Sjálfstæðisflokkurinn) and the liberal Progressive Party (Framsóknarflokkurinn), is against joining the EU. No party has explicitly stated that Iceland should join the Union but the Alliance (Samfylkingin) is in favour of membership negotiations resulting in a deal which would then be submitted to a referendum.
The most contentious issue regarding possible EU membership for Iceland is the loss of control over natural resources, notably fishing grounds due to the Union's Common Fisheries Policy. Opponents also point to the good performance of the Icelandic economy, high growth and low unemployment, as a sign that there is no pressing need to join the EU. It is commonly argued that the membership of EEA already brings most of the potential benefits of an EU-membership without the costs. Then there are those who view the EEA membership as costly and the experience with the EEA as a negative one and therefore oppose EU-membership. Unwillingness to hand over a part of Iceland's sovereignty to a supranational organization is another source of opposition to EU membership, as in other European countries.
Proponents of EU membership largely rely on economic arguments: they view the euro as a solution to the dramatic exchange rate fluctuations of the króna, which have posed a challenge for many Icelandic export businesses. It is also pointed out that Iceland has Europe's highest grocery prices and completely opening the Icelandic market to EU products might result in lower prices. Foreign Minister Valgerdur Sverrisdottír has said in an interview with Iceland Radio that she seriously wishes to look into whether Iceland can join the euro without being a member of the 27-nation EU, according to Norwegian news NRK. Valgerdur Sverrisdottír believes it is difficult to maintain an independent currency in a small economy on the open European market.
Former Prime Minister Halldór Ásgrímsson, seems to be also in favour of joining the EU, and predicted on 8 February 2006 that the country will join the EU by 2015. He added that the decisive factor will be the future and the size of the eurozone, especially whether Denmark, Sweden and the UK have joined the euro or not. [2] His prediction, however, did not receive much support in Iceland; instead, it received much criticism, not the least from people within his own government. [3]
Although new Prime Minister Geir H. Haarde has not made any specific announcements on the matter since taking office, a speech he made as Foreign Minister in an official visit to Sweden in February 2006 made his position clear. In response to Ásgrímsson’s earlier prediction Haarde stated that, "I don't share that point of view. Our policy is not to join in the foreseeable future. We are not even exploring membership." Further in a speech at a conference at the University of Iceland on 31 March 2006, Haarde repeated what he had said on a number of occasions – that no special Icelandic interests demanded membership of the EU. In the same speech he further explained in detail why it would not be in the interest of Iceland to adopt the euro.[1]
An opinion poll on the matter conducted in August 2005 (after the rejection of the proposed European Constitution in France and the Netherlands) showed that 43% of respondents were in favour of EU membership while 37% were against, 20% were undecided. When asked whether Iceland should start membership negotiations, 55% were in favour while 30% were against. 54% of respondents were against adopting the euro while 37% were in favour. [4] However, the most recent poll in Iceland was produced on 18 February 2006 (after the prime minister's prediction) by the newspaper Fréttablaðið where 42% were opposed to applying for EU membership while 34% were in favour.[5]
