ISLANDS AND SMALL STATES INSTITUTE
UNIVERSITY OF MALTA
Postal address: University of Malta, Msida MSD 2080, Malta
Secretariat: Tel/Fax: +(356) 21344879: email: islands@um.edu.mt
WILL AND SHOULD ICELAND JOIN THE EU?
Iceland, with a population of just over 300 thousand, and with one of the highest GDP per
capita in the world, is experiencing a major financial crisis. All three of the country's
major banks have collapsed. This had major repercussions on the Icelandic economy as
the national currency lost most of its value.
Prof Baldur Thórhallsson talking during a public lecture on the theme “Will and should
Iceland join the European Union?” said that there is
still considerable uncertainty as to whether Iceland
will decide to join the EU, even though half the
population is in favour of joining the EU.
The public lecture organised by the Islands and
Small States Institute at the University of Malta was
held on Thursday 12 March 2009. Prof
Thórhallsson explained that in the early sixties
Iceland thought seriously about applying for
membership in the European Community with
Britain and others, but in the end it did not join. In
1967, however, Iceland became part of European
Free Trade Area and later the European Economic
Area and, as a result, adopted most of the EU
regulations. However, there still remained
scepticism regarding supra-national arrangements
and before the 2008 crises erupted, the feeling in
Iceland was that the country should remain outside
the EU.
Caption: Prof Baldur Thórhallsson
The latest opinion poll indicated that half of the population are in favour of joining the
EU and two thirds of the population want to adopt the Euro. However the Icelandic
political elite are not too enthusiastic about joining the EU. They believe too much in
national identity and have a fiercely nationalistic and independent frame of mind. They
do not like the idea of transferring power to Brussels.
Unlike the Eastern European states, Iceland is not incentivised to join the EU for security
reasons, because it forms part of NATO and has a special security agreement with the
US. Of interest is that the US will probably be in favour of Iceland joining the EU.
The Upcoming Elections
The upcoming elections in April 2009, will decide whether Iceland will or will not join
the EU. The two major parties are the Social Democratic Alliance, which is in favour of
EU membership, and the Independence Party (centre-right) which is against. At present,
it is uncertain as to who will win. What can be said at this stage is that if the economic
crisis persists, joining the EU will become increasingly attractive for Iceland, and if the
Independence Party changes its attitude, Iceland will surely join the EU.
The Iceland private sector in general is in favour of adopting the Euro, but there is mixed
feeling as to whether Iceland should join the EU. The agriculture and fishing sectors are
traditionally not pro EU membership. The Icelandic media, however, is generally in
favour of joining.
Advantages of EU Membership
Prof Thórhallsson said that Iceland is ready to join the EU in many ways and its economy
is tied to the EU in many ways. The Island State has in fact adopted many EU rules and
regulations.
Prof Thórhallsson argued that there are many benefits associated with EU membership.
The consumers will benefit from lower prices. The island state could eventually adopt the
Euro. Economists generally agree that if the economy of Iceland is to stabilise, it needs to
adopt the Euro and to join the EU.
Another benefit is that Iceland will be able to have a part in the decision making. The
island state is currently adopting many EU rules without having a say in their
formulation. Following the recent EU enlargement, Malta and Cyprus have shown that
even a small state can have a major role in EU decision making.
Participants attending the public lecture