Iceland and EU accession options

It all started when a huge amount of lava burst out of the ocean and created an island in the middle of the Atlantic. Although the island was conquered by fearsome Vikings, Icelanders have been a peaceful and harmonious community since their Independence in 1944. The country reached a high level of social and economic development and for the last 60 years has consolidated a strong model of social stability and democratic governance, with one of the highest HDR in the word. Considering this outstanding presentation, no member state would have any reason against the accession of Iceland, but Iceland would also have no reason to apply.

Everything changed two years ago when the devastating financial crisis hit harder in Iceland than anywhere else, due to the failure of its biggest banks. This is at the rood of Iceland’s application for EU membership in July 2009. Minister for Economic Affairs Gylfi Magnusson put it clearly when he said: “This last chapter in the tragic history of the Icelandic currency has had considerable effect on the discourse on European Union membership in Iceland. Because of this, many people look toward the Euro as a more promising route to a stable monetary system for the Icelandic economy.”  [1]

This is also at the origin of an episode that has marked the application process because it has confronted Iceland with the British Government. Schematically, Icelanders decided that their county was not going to pay back without negotiation what UK had to reimburse to investors that had lost their savings when Icelandic banks collapsed. But besides finances the story of ‘Icesave’ is not the first one that has brought London and Reykjavik into a dispute. One of the other engines of Icelandic economy, fishing, has been a reason for clash since the 70’s.

Fishing issues are actually one of the most complicated chapters that the negotiation team will have to conciliate during the next months. The Ministry of Foreign Affairs consulted the main stakeholders of the industry and it made clear to the parliament that Iceland will have to keep its 200 mile fishing jurisdiction when integrating to the EU, but this is one of the few areas where competences have been practically totally transferred to European level. Among other reasons, fishing is very sensitive for Iceland because according to EurActiv it accounts for up to 60% of the exports.

If Iceland receives a special treatment or long moratorium in integrating this sector, countries like Spain or Portugal, also with interests in North Atlantic fisheries could start to complain. But other than this, Iceland is already very integrated economically; it is part of the European Economic agreement since 1994 and member of the Schengen treaty since 2000. Actually, Iceland is even more integrated in other areas than some member states are, because it is actually applying important European regulations that the poorest member states have serious problems to enforce.

Despite the problems with fisheries, the key factors that explain the likelihood of Iceland to be a Europhobic country are more political than economical.

Now, said that, the most important question remains. Do Icelanders want to be Europeans? Considering the narrow majority (33 to 28) that agreed to application in the parliament, it doesn’t seem to be a very popular posture. Moreover, polls show that almost two thirds of census would vote ‘no’ in a referendum on accession, and comparative politics tells us that parliamentarians are always more pro integration than their voters.

This is not a minor question for us neither only important for them, because even if presumably Iceland will be a net contributor, having another Europhobic country in the council and more Eurosceptic members in the European Parliament will only bring negative consequences to future European political achievements. Even if Iceland is quite a small state, studies clearly show that their relative power is much bigger than their size.

Despite the problems with fisheries, the key factors that explain the likelihood of Iceland to be a Europhobic country are more political than economical. The island has a political system framed in Nordic parliamentary democracy, which has always been characterized by high rates of social cohesion, social trust and political efficacy. These feelings towards the others create a strong sense of political representation, both from the representatives and the citizens. These factors combined with the strong position of the parliament (which is known to be the oldest in the world) within the political system make the Icelanders very sensitive to any loss of political power. Even if Europe represents gaining power for the country on the international stage, no one can deny that the parliament loses some of its competences and the political representation is affected. Something similar happens in Denmark, where surveys show a very sceptical population and the parliament holds every move of the executive in Brussels.