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/CORRECTED REPEAT*/ICELAND: Questions Hang Over EU Membership

Lowana Veal

REYKJAVIK, Feb 15 2010 (IPS) - Views within Iceland towards membership of the European Union (EU) are mixed. Though Iceland has officially decided to apply for EU membership this does not mean that it will join, even if invited to do so.

Iceland is already a member of the EEA (European Economic Area), which provides many of the advantages enjoyed by EU countries but does not allow for uptake of the euro.

After the banks collapsed in October 2008, there was considerable discussion about the potential benefits of taking up the euro instead of the Icelandic krona, and whether this would be possible without becoming a member of the EU.

Urdur Gunnarsdottir, press officer with the foreign ministry, says that the advent of the euro would bring both advantages and disadvantages. “The main advantage of continuing with the Icelandic krona is that the autonomy of the Icelandic authorities over its monetary policy increases the possibility of a quick response to changes in the economic situation,” she says.

“The main disadvantage of the Icelandic krona,” she continues, “is its volatility to external influence because of its smallness. This has resulted in unsteady exchange rates and unpredictability for households and businesses. Lack of a reliable lender of last resort has also been detrimental to the Icelandic economy.”

The debate about the euro led to general discussion about whether membership of the EU would be a good idea per se.

However, of all the political parties in Iceland it is really only members of the Social Democratic Alliance (SDA) who are wholeheartedly positive towards EU membership.

Why are they so keen?

“Membership of the EU would greatly improve the situation of families and householders in Iceland, partly because of lower costs of goods and the much lower interest expenses,” says Baldur Thorhallsson, professor of politics at the University of Iceland and Chair of the SDA European Committee.

He says that it is important for Iceland to take up the euro, adding: “Entry into the EU and take-up of the euro are prerequisites for the increase in job opportunities for companies in high-technology and the software fields of industry. In this way it will be possible to boost jobs for young people and prevent them from leaving the country [to look for work abroad]. In addition, Iceland is part of Europe, Icelandic culture is European culture, and Icelanders have things in common with other Europeans.”

When a new government was formed by the SDA and the Left-Green Party (LGP) in February 2009 in the wake of the bank collapse and public protests, membership of the EU was one of the crucial points brought up by the SDA in the discussions that preceded the announcement of the new coalition government’s platform for action.

Although the SDA was known to be pushing for EU membership, the LGP was against it. How would this problem be resolved? Would one party give in or would there be a compromise?

The LGP acceded and agreed to EU membership if there was a national referendum first.

A few months later, on Jul. 16, a motion that Iceland would apply for EU membership was passed in the Icelandic Althingi (parliament). All of the SDA MPs voted for membership but only 8 of the 14 LGP legislators did so.

However, if the EU decides to accept Iceland as a member state, the option of joining it would then be put to the Icelandic public in a referendum. The results of the referendum would be advisory but not binding.

One of the major obstacles for Iceland joining the EU has to do with the fishing industry. Basically, Iceland wants control of its fishing resources, which it would not get if it became part of the EU because it would then have to take up the Commons Fisheries Policy (CFP).

Arthur Bogason, chair of the National Association of Small Boat Owners, explains further. “All decisions would be taken out of the country. Icelanders still remember when we where fighting for the extension of the fishing limits (Exclusive Economic Zone) to 200 miles in 1975. Many feel that by joining the EU, Iceland is giving away its sovereign rights over the fishing grounds and moving the decision making to Brussels.”

The EU bans whaling, which would put an end to Iceland’s controversial whaling activities.

Agriculture is another area of concern. Haraldur Benediktsson, chair of the Farmers’ Association, says that the position of Icelandic farmers is built purely on their interests. “The Commons Agricultural Policy does not suit Icelandic agriculture, which is narrow and practised under difficult conditions. Iceland produces 50 percent of its food needs today and for a nation that lives on an island far north in the ocean, food security must not falter,” he told IPS.

He went on to explain further: “Production must not be reduced so that we are in a bad position in regard to fresh produce if something goes wrong with transportation, for instance. Agriculture and processing are also the backbone of industry in rural areas – in some areas this accounts for 25-30 percent of employment. Most appraisals of independent parties on the effect on agriculture say that the reduction would be substantial on joining the EU.”

Capacent, a Nordic business consultancy, carries out surveys at six-monthly intervals for the Federation of Icelandic Industries on attitudes of Icelanders towards EU membership. The latest survey was carried out in late August/early September last year.

Gudbjorg Andrea Jonsdottir, research manager for Capacent Iceland, says that more people in the last survey were against EU membership than for it. “Nevertheless, the majority of Icelanders want discussions with the EU to proceed,” she says, adding: “Negativity towards EU membership seems to be increasing amongst Icelanders.”

In the last survey, when Icelanders were asked how they would vote if a referendum was held on EU membership, 61.5 percent said they would vote against while 38.5 percent said they would vote for it.

And at a recent party meeting, the LGP decided to reiterate its opposition to EU membership.

The road to the EU will not be easy.

(*The story moved at 12:50 GMT Feb 15, 2009 contained an error in the dateline. It should have been Reykjavic and not Helsinki)

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