Iceland, join the EU
Should Iceland apply to join the European Union? And should the EU fast-track an Icelandic application to let the North Atlantic country in as soon as possible?
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Iceland belongs in the European Union. Although a long way from continental Europe, it is clearly a...
Iceland belongs in the European Union. Although a long way from continental Europe, it is clearly a European country, with a Scandinavian Christian heritage, a stable liberal democracy and a developed economy. For the EU, Icelandic membership would be a natural extension of the existing union, balancing its expansion eastwards. Icelandic entry would pose very few problems of assimilation compared to the much larger and poorer former-communist-states that joined in 2004. For Iceland, EU membership would provide it with a welcoming home and a source of economic stability. As a member of one of the most powerful international blocs, Iceland would also be in a stronger position to participate in future global efforts on climate change, financial and trade reform, and international security and development initiatives.
Iceland is a proudly independent country and should remain so. Founded by Viking settlers over a thousand years ago, it has a unique heritage that makes it very different from European countries such as France and Germany. Traditionally it has looked both East and West, refusing to limit itself by a narrow definition of its interests. Instead Iceland has a national myth of splendid isolation that is incompatible with the merging of sovereignty required by EU membership. Its traditions of local democratic accountability also contrast starkly with the corruption and distant bureaucratic systems of Brussels. Nor is Iceland alone in resisting the EU’s embrace: Norway and Switzerland both continue to prosper outside the EU, while Greenland actually chose to leave the Union. Even long-standing members states such as the UK harbour grave doubts about the costs to them of EU membership, and may well choose to break with Brussels one day.
Iceland needs to join the EU because of the economic crisis (“kreppa”) in which it finds itself, cre...
Iceland needs to join the EU because of the economic crisis (“kreppa”) in which it finds itself, creating an emergency situation. Although Iceland appeared to benefit hugely from globalisation, with its biggest banks and companies expanding aggressively abroad, the global recession has shown that small, open economies are unable to survive outside strong economic blocs such as the EU. While Iceland’s economy has been devastated, with GDP set to shrink by 10% in 2009, similar small states such as Belgium and Ireland have weathered the storm much better within the shelter of the EU. Part of this has to do with the confidence of international markets in the EU, as well as the greater economic integration they have within the enormous single market. But it is also due to the strong regulatory framework provided by EU institutions that prevented their economic excesses reaching the same proportions as those of Iceland.
Joining the EU will do nothing to resolve Iceland’s huge problems. EU membership is not a magic wand that will reduce the island’s huge debts or correct its economic imbalances. Instead it is a smothering embrace that will wrap the dynamic Icelandic economy in the red tape of Brussels regulations, making future economic growth slower by stifling the entrepreneurial talents of the Icelandic people. Given that Iceland already enjoys free trade with EU states through its membership of the European Economic Area, and its citizens have freedom of movement through the Schengen agreement, EU membership offers no further economic benefits worth the price of giving up Icelandic sovereignty.
Icelandic sovereignty is already something of a myth – the economic crisis shows how little freedom ...
Icelandic sovereignty is already something of a myth – the economic crisis shows how little freedom of action a small nation really has today. The country does participate in the European Economic Area (EEA), giving it open access to the EU market. This already requires it to share sovereignty by accepting three-quarters of the EU’s regulations, even though it plays no part at Brussels in shaping these (Norwegians call this “government by fax”). Iceland even contributes financially to the EU’s social and cohesion funds. So it is only a very small step for Iceland to become a member state and participate fully in the European Union. Far from giving up its autonomy, membership of the EU would give it influence in Brussels over the rules and policies it must already follow.
It is a big step to move from membership of the EEA to full EU membership. Crucially, the EEA does not involve states signing up to the agriculture and fisheries aspects of the EU’s internal market – both of which would have huge implications for Iceland. And under the forthcoming Lisbon Treaty reforms foreign policy would also have to be shared while small states are no longer guaranteed a Commissioner to protect their interests. Granted, Iceland does pay a nominal amount into EU funds at present, but it can expect to become a major net contributor if it joins, once its present financial crisis has been contained.
The issue of fishing should not prevent Iceland joining the EU. Today it is a smaller part of Icela...
The issue of fishing should not prevent Iceland joining the EU. Today it is a smaller part of Iceland’s economy, only employing a fraction of its workforce, so it would be wrong for the fishing lobby to hold the country’s future hostage to its own interests. In any case, the EU’s Common Fisheries Policy is changing, allowing more decision-making at a local level and providing more protection for endangered stocks. Iceland’s entry would actually help to accelerate this trend, as existing members such as the UK and Ireland are already sympathetic to revision of the Common Fisheries Policy.\
Nor is whaling not a deal-breaker. The last hunt was in 2006 so it clearly has little or no economic significance. The rise of environmental tourism has made whale-watching trips more lucrative anyway, so it is already in Iceland’s interest to join the rest of the EU (and almost all the other countries in the world) in abandoning whaling.
As an island nation, it is crucial for Iceland to retain control of its territorial waters and not to bargain away its economic sovereignty for EU membership. Iceland still has an active whaling fleet, which would have to be scrapped as the price for EU membership due to the squeamishness of European citizens ignorant about this vital part of Iceland’s maritime traditions. Even more importantly, fishing continues to be a major part of the Icelandic economy, based upon careful exploitation of its exclusive economic zone in the North Atlantic. As a result, Iceland has very successfully managed its fish stocks, whereas the EU’s Common Fisheries Policy is a disaster that has allowed such over-fishing that key commercial species are nearly extinct in EU waters. Joining the EU not only means that Iceland would have to adopt demonstrably worse fisheries policies, it would also have to allow the state-subsidised fleets of countries such as Spain free access to its waters. And countries such as Spain and Portugal will never allow Iceland into the EU unless it is prepared to accept the same fisheries rules that apply to current members.
Iceland needs to adopt the Euro in order to bring stability to its economy. The financial crisis ha...
Iceland needs to adopt the Euro in order to bring stability to its economy. The financial crisis has caused the value of the Icelandic krona to collapse and led to high interest rates, ruining all of Iceland’s banks and most of its businesses. And in the good times many of Iceland’s citizens took out loans in foreign currencies like the Euro which they cannot now afford to repay. Savings and pensions have likewise become worthless. Swapping the krona for the Euro would provide shelter from the economic storm, allowing normal trade and investment decisions to resume and bringing interest rates down to ease pressure on ordinary citizens. As adopting the Euro is only possible for EU member states, Iceland should seek membership as quickly as possible.
Iceland is suffering economic pain now, but Euro membership does not offer an easy way out of the financial crisis. Indeed, entering the Euro would mean that Iceland would lose the normal economic advantages of a cheaper currency. In any case, Euro zone members have suffered heavily from the global recession and the one-size-fits-all interest rate imposed by the European Central Bank contributed a great deal to credit booms in Spain and Ireland. For debt-laden countries and uncompetitive economies such as Italy and Greece, being within the Euro has prevented currency devaluation, but it has not saved them from economic stagnation and an increased cost of government borrowing.
Allowing an EU member to adopt the Euro is as much a political decision as a strictly economic one, ...
Allowing an EU member to adopt the Euro is as much a political decision as a strictly economic one, and apparently rigid criteria have previously been bent. This means Iceland could seek assurances on rapid Euro-entry as part of its entry negotiations. And even if Iceland cannot ditch the krona for the Euro immediately upon entry, but has to wait a couple of years in order to meet the ECB’s formal criteria, the prospect of eurozone membership will still reassure the markets and contribute hugely to an easing of the economic pressures upon Iceland.
Brussels is unlikely to allow Iceland to join the Euro immediately – this would require the European Central Bank to suspend the usual rules about levels of government debt and currency stability. Given that the ECB has recently rejected lobbying from newer EU countries outside the Eurozone such as Poland, the Czech Republic and Hungary to allow them to join the Euro quickly and on easy terms as a way out of their own financial and currency difficulties, it is hard to believe Iceland would get an easier ride. So by the time Iceland was allowed into the Euro, it would already have had to solve its financial problems itself, and so wouldn’t need to join anyway.
What do you think?