Abstract
This paper examines the background of the main issues involved in Iceland's possible application for EU membership and points out potential developments. A deep economic and political crisis has prompted Iceland to start considering EU membership more seriously than ever before, but important challenges remain. This paper seeks to reflect on them while offering suggestions on how best to manage Iceland's accession process.
The first challenge concerns Iceland's macro-economic stability. The Icelandic economy is recovering from the deep financial and economic crisis that hit the country in 2008. The key motivation for Iceland's membership application is the adoption of the euro. The Icelandic krona has long been a volatile currency, and its value plunged during the crisis of 2008. The introduction of the euro would help stabilise the Icelandic economy; however, Iceland is currently unable to fulfil the Maastricht convergence criteria. In addition, before joining the EU, Iceland needs to settle the dispute with the UK and the Netherlands over the repayment of Icesave bank deposits.
A second issue is fisheries. The EU's Common Fisheries Policy (CFP) is one of the main obstacles to Iceland's EU membership. The fishing industry has always been the backbone of Iceland's economy and plays an important role in its politics. The country's fishing sector is one of the most competitive in the world. Therefore, Icelanders are reluctant to join the highly debated CFP. A far-reaching reform of the CFP is currently being worked on. Therefore, depending on the outcome of the reform, the disagreements over fisheries could be overcome.
A third issue is the Icelanders’ deep-rooted sense of independence. Despite sharing values and a common European culture with the rest of the EU, Icelanders have never sought to join it. Reflecting on the experience of other small Member States might help Icelanders overcome their fear of being dominated by larger EU Member States. Still, convincing the Icelandic people to decide in favour of EU membership in a referendum will be a major challenge for the government. Two successively elected Parliaments will have to vote in favour of changing the country's constitution in order to make EU membership possible. Therefore, the Icelandic people's sense of independence and the EU's patience will be tested more than once. Procedural matters and issues of political mentality have combined to create a delicate political balance even before negotiations have begun.
The paper also summarises the main advantages and disadvantages that Iceland's potential EU membership would have both for the country and for the EU. In general, the benefits for both sides are significant. Difficult points in negotiations are not insurmountable but will require patient political nurturing and resourcefulness from Icelandic and EU actors. The author suggests that these actors will have to deal with the issues outlined here in a way that enables them to reach out to the Icelandic electorate even during the negotiation process.
Footnotes