Iceland’s last parliamentary elections were held in 2009 and saw both the Social Democrats and the Left Greens come together to tackle the economic crisis that hit the country after three of its largest banks collapsed the year before. At the time, both parties were divided on whether EU membership was best for Iceland.
Public enthusiasm in joining the EU is waning- David Casa
The Social Democrats supported EU entry while the Left Greens were against EU membership. However, due to the crisis, both parties saw the benefits of EU membership and began the accession process.
Public support for joining the EU also grew after the crisis. As a result of the collapse in the banking sector, many Icelandic people were in negative equity due to the number of mortgages taken out in foreign currencies because of the strength of the krona against other major currencies. Unemployment rose over 10 per cent and Ice-land’s GDP decreased for 10 consecutive quarters.
Since 2009, the accession negotiations have advanced well with 27 of the 35 chapters open for discussion, 11 of which are provisionally closed. In the lead up to this year’s parliamentary elections, scheduled for April 27, the Icelandic Government has made an administrative decision to slow down negotiations and four specific policy areas are to remain untouched until after the election.
These are areas of economic sensitivity for Iceland such as fisheries and agriculture but also the right of establishment and services and the free movement of capital. These chapters will be the more complex of the 30 to negotiate. Iceland is not expecting any particular derogations in the area of fisheries and believes the EU will present a proposal that is satisfactory to Iceland.
The chapter on competition has also been closed for the duration of the election. The reason for this is to safeguard Iceland’s position in the negotiation advancements already made. During talks in December, six new chapters were opened including the free movement of goods, taxation and external relations. To provisionally close such chapters requires the EU to look at what Iceland has done in each of these areas. In addition, it would need to set targets that must be met. The opening of the six chapters is believed to illustrate that the accession talks are entering a crucial phase.
However, the Social Democrats and Left Greens are slightly behind in the polls. Should the opposition, the Europe sceptical Independence Party and the Progressive Party, form a government, the accession negotiations could come to a complete standstill.
Despite being blamed for the crisis, through its economic liberalisation policies, the Independence Party has public support on its stance against EU membership.
Recent polls show that the Icelandic people would vote against joining the EU if a referendum were held. As the country emerges stronger from the crisis, public enthusiasm in joining the EU is waning because it is no longer deemed necessary. Iceland has enjoyed a good period of growth with a growing GDP for the last seven consecutive quarters. In addition, unemployment has dropped to below five per cent.
This economic recovery is due to a number of steps taken bythe Government.
Firstly, it introduced capital controls, a measure banned in the EU under the Single Market Act. In addition, the Icelandic Government let the collapsed banks fail.
The Government also turned to Scandinavian neighbours, the International Monetary Fund and the UK for financial assistance. Iceland still owes the UK £2.3 billion and is refusing to sign legislation authorising its repayment.
Despite Iceland’s achievements in resorting financial stability and returning to a period of growth, there are still many arguments why Iceland would benefit from EU membership. In particular, it is advocated joining the EU and the euro would ease Iceland’s currency issues.
A recent banking report has shown two possibilities for the krona. Iceland could keep its own currency but this would require further capital control, which may be concealed. The second option for Iceland would be to adopt a currency that has historically been stronger than the krona; this would therefore require it joining the EU.
Nevertheless, there is still a long way to go in the accession discussion and the slowingdown of negotiations in the lead-up to the parliamentary elections means it will be highly unlikely that we will see an accession treaty during this parliamentary term.
David Casa is a Nationalist MEP.