Treading on icy waters

I was in Reykjavik last week when McDonald's closed down its three restaurants in Iceland citing a "very challenging economic climate" in the country. Tellingly, one of my hosts, a professor at the University of Iceland, turned up late for a meeting saying he had been waiting for his daughter to come back from school but she turned up with her friends at McDonald's "for one last time".

Restaurants come and go and, of course, McDonald's departure cannot be the end of the world. But the sobering symbolism in losing the Golden Arches could not be lost in a country that, until last year, ranked as one of the world's richest states.

In under a year, Iceland experienced a catastrophic fall triggered by the financial crisis that led to the collapse and subsequent nationalisation of its three main banks, to a tumbling in the value of its currency, which went into free-fall, to spiralling inflation, sky-rocketing debt and high unemployment, all in quick succession.

The economic collapse quickly led to social and political upheaval and a snap general election, where the government was swept away.

The collapse was not just catastrophic but also, in many ways, humiliating as the country became a victim of the vicious speculation of its "Viking raider" entrepreneurs in the over-stretched banking sector and had to turn to the International Monetary Fund and other countries for financial support. But support is tagged with a high price and stiff conditions.

Since the early 1990s, Iceland has been a member of the European Economic Area (EEA), which is the closest one can get to the EU, short of membership. But this still excludes Iceland from participation in the eurozone and, therefore, the euro was not there to provide Iceland with a monetary safety net.

And whereas most EU laws already apply to Iceland as an EEA member, the country is not represented in EU institutions; so, essentially, it obeys EU laws but it cannot make them.

This explains why one of the main electoral platforms of the new government, led by the Social Democratic Party, was EU membership and, indeed, Iceland applied for membership last July. Iceland now awaits the European Union's decision to confirm its status as a candidate country and to embark on accession negotiations as soon as possible.

With EU membership now firmly on the national agenda, Icelandic parties are smarting up for a fight of the century. And it promises to be bloody.

The leading opposition party, the centre-right Independence Party, is on the no side of the fence and appears to be hardening its position. It claims that membership would, on balance, be negative, citing concerns over sovereignty and difficulties for the all-important fisheries sector.

On the other hand, the governing Social Democrats are pro-membership as are most other political parties to a greater or lesser degree.

Outside politics, employers are all for and so are academics.

And the public?

Whereas, in the aftermath of last year's collapse, support for EU membership shot up, it has since been in steady decline. The most recent opinion poll put support for membership at a low ebb of 38 per cent. This means that, as things stand, Iceland risks following in Norway's path in rejecting EU membership in a referendum that is due to be held after accession negotiations.

In this fast evolving context, I was invited to Reykjavik to address a public lecture on the influence of a new small member state of the European Union. Needless to say, I was not in Reykjavik to tell Icelanders what to do: that is not my remit. I was there to share my experience in Malta in my capacity as a member of the European Parliament but also as a former member of Malta's EU negotiating team and as the former head of Malta's EU public communications campaign.

Malta's experience is relevant for Iceland in more ways than one.

Not only are we a small - indeed, the smallest - member state which integrated successfully into the European Union and into the Schengen and euro zones in a relatively short period of time but we are also a country that endured a tough political battle over the thorny subject of membership.

Malta has since established itself as a reliable partner in Europe and overcame a difficult adjustment period during the first years of membership. With the prospective entry into force of the Lisbon Treaty, Malta now also stands to gain a sixth seat in the European Parliament (thanks to its insistence that a minimum threshold of six seats should be established) and a member in the European Commission on a permanent basis (thanks to Ireland).

Iceland now looks at Malta's experience with keen interest.

But its quest for membership must first tread some icy waters.

Dr Busuttil is a Nationalist member of the European Parliament.

www.simonbusuttil.eu