Following its financial meltdown in October 2008, Iceland hoped that EU membership would protect the country from a similar economic crisis in the future, and six months later, in July 2009, Reykjavik applied to become a member state. The European Commission responded positively – in less than a week, a very rapid timeframe when compared to countries in the Balkans which have sometimes had to wait years before their applications were even considered.
Iceland is in a much better position than Balkan countries because it is already part of both the European Economic Area and the Schengen Area (the European passport-free zone) – which amounts to adopting two-thirds of EU laws. Altogether, Iceland seems to have an ideal profile for EU membership: it has a high per capita gross domestic product, a small population and a track record of political stability (at least until the crisis in October).
So Iceland’s bid is viewed positively by many European nations, especially its Scandinavian neighbors. Sweden’s Foreign Minister Carl Bildt announced that his country (which currently holds the EU presidency), favors accession. Specifically, he said that Iceland’s membership would reinforce the Nordic dimension of the EU at a crucial time of climate change when the Arctic and North Atlantic have become increasingly important both for natural resources and for new commercial waterways.
Technically, tough negotiations lie ahead over the fishing industry. Iceland has never adhered to the 26-year-old EU Common Fisheries Policy, which stipulates that EU waters must be open to any member state and are subject to fishing quotas. Fishing is very important to Icelanders, professionally and psychologically, so in the absence of a deal amounting to a special exception, there could well be a “no” vote on the EU application when it is put to a referendum, as it must be under Icelandic law. Polls in July 2009 showed that opposition to membership is rising in Iceland – up 10 percent in June to 48.5% of the population. .
Other complications come from EU member states. The Icelandic parliament has postponed any agreement to reimburse foreigners’ lost savings stemming from the bankruptcy of Iceland’s savings bank, the Icebank. Claims run to €1.3 billion ($1.85 billion) in the Netherlands and €2.3 billion ($3.3 billion) in the UK. The Netherlands is threatening to block Iceland’s bid for membership until such claims have been paid.
A speedy entry for Iceland has encountered opposition in Italy and Austria, which do not want to offend their neighbors in the Balkans by letting Iceland get so far ahead of these countries’ long-stalled applications. To head off potential social unrest, the European Commissioner for enlargement, Olli Rehn, offered visa-free entry into the EU by January 2010 to citizens of Montenegro, Macedonia and Serbia.