Iceland's Foreign Minister yesterday officially presented his country's application to join the EU, saying he expected accession in just three years' time.

The entry of this Nordic country would take from Malta the title of the smallest EU member state, at least in terms of population.

With a population of 320,000, the North Atlantic Island is expected to meet many of the membership criteria. The only real bone of contention would be negotiations over its fisheries sector, a key part of the Icelandic economy.

The independent-minded Icelanders are concerned that EU rules would give European fishing fleets access to their waters.

"To be frank with you, if we would get a rotten deal on fisheries, the Icelandic people would be quite angry," Foreign Minister Ossur Skarphedinsson said after presenting the EU application to his Swedish counterpart, Carl Bildt, whose country holds the EU Presidency.

"This is not only an issue of economics. It is also an emotional issue. It is also an issue related to sovereignty," said Mr Skarphedinsson, a former fisherman.

He said he was confident the two sides would "find a solution that will be acceptable for both the existing framework of Europe and to our special needs as a nation".

In 2007, fishing employed four per cent of Iceland's work force, just over 7,000 people. But seafood accounted for almost half of Iceland's exports and 10 per cent of the gross domestic product.

Iceland's Parliament last week voted to seek EU membership as a way to stabilise the country's economy, which was one of the first causalities of the global recession after years of strong growth.

The EU has to approve the accession and Iceland will also hold a referendum on the issue.

The country is already part of the European Economic Area, giving Icelanders the right to live and work in the EU while allowing the country to run its own agricultural, fishing and monetary policies.