Iceland and the EU: Foul-weather Friends?

This blog post is the second in a series of posts that come from students of our Politics of the European Union undergraduate course. As part of the course, students were asked to write about an issue pertaining to European integration. The best blog posts have been selected to provide an opportunity to exceptional young scholars at UCD to contribute to the debate on the future of Europe, and to promote the insightful scholarship being undertaken at UCD to a wider public audience.

Throughout the lifetime of the European project, enlargement has been a constant theme and relentless process. For the past decades the European Union has expanded in waves, to a background of constant negotiations with yet more prospective members. Often a highly contentious issue, each accession has attracts debate and the appetite for enlargement has been waning since the ‘big bang’ expansion of 2004, when 10 central and Eastern European countries joined. Despite this decline in support for enlargement, it remains a hugely successful EU policy, as each application and new member is affirmation that membership of this club is worthwhile and coveted; this is, by extension, endorsement of the entire project itself. Most prospective new members are Balkan or Eastern European, and naturally Ukraine (not yet an actual candidate country) is grabbing all the headlines at the moment.

But a perhaps far more intriguing episode is playing out in Europe’s most north westernmost corner-Iceland. With the Icelandic government currently staging a massive rowback on Iceland’s membership negotiations, what does this mean for EU enlargement, and is it an indicator of a wider trend of states pulling away from Brussels?

Traditionally Iceland has ‘enjoyed a high level of integration with the EU, being a member of the European Free Trade Agreement and Schengen Agreement, while applying much of EU law (Delegation of EU to Iceland Report, 2013, p1). It has enjoyed these while maintaining scepticism towards ‘political integration’ (Busch and Molendowski, 2011, p119) and a public consensus that Iceland should not become a member state.   That consensus was rocked by the 2008 financial crisis, as Iceland’s banks collapsed, leaving the króna in shreds. The EU was seen as a possible avenue of assistance, and public support for joining soared to its highest ever level; jumping from 48% in 2007 to 80% in 2008. (Kersan-Škabić and Tijanić, 2009,p123) Iceland’s application to join was duly lodged in 2009, and negotiations proceeded well, given the high levels of existing integration between Iceland and Europe. Štefan Füke, Commissioner for Enlargement, described the development as ‘a win-win for both sides’ (Füke, 2009) and there was even speculation of an accession n date as early as 2011 (Kersan-Škabić and Tijanić, 2009,p122). Iceland was described as a ‘shoo-in’ (Stratfor, 2009, p21) for membership and the process was shaping up to be ‘the shortest ever’ (Kersan-Škabić and Tijanić, 2009,p121). Much to the consternation of other candidate countries, it seemed Iceland was being fast-tracked to EU membership, and would be skipping the queue (Stratfor, 2009, p23).

In May 2013 however, the centre right Progressive Party and Independent Party came to power (BBC, 2013) and immediately scaled back the negotiation process, pledging a referendum. Just last week, the parliament (Althingy) voted to withdraw from the talks (Robert, 2014), and thousands of protesters have taken to the streets, clamouring for a referendum on the issue. 5 such protests were held before Saturday. The government have ruled out a fresh application to the EU until such a referendum, but as of yet one is not forthcoming (Ministry for Foreign Affairs, 2014). Despite these protests, it seems the government rowback is in line with public opinion, influenced by the Eurozone crisis and widespread discontent with its handling and austerity across Europe. 5 years ago with the króna in tatters, joining the Europe was a very attractive prospect. But as the Eurozone crisis deepened, support for membership has slipped rapidly (Busch Molendowski, 2011, p113) returning to pre-crisis levels. As can be seen in both these graphs, by 2012 most Icelanders saw EU membership as ‘a bad thing’ and did not believe Iceland had benefitted from membership of the European Community (Eurobarometer, 2012).

Proceedings had already been dampened by bilateral disputes between Iceland and the United Kingdom about billions of unpaid deposits lost during the collapse of Icesave, a major financial institution that went bust (Cini and Pérez-Solórzano Borragán, 2013, p236). Negotiations would certainly not have been smooth in the area of Common Fisheries Policy (CFP) either. Iceland’s fishing industry is a key sector, contributing hugely to its economy. The fishing community are ardently anti-EU, there has been a litany of disputes about quotas and conservation between Iceland and the EU in past decades. Some form of opt-out or exemption for Iceland’s fishing industry would have been essential in any agreement.

Geopolitical considerations undoubtedly contributed to a loss of interest in joining the EU. Iceland has already signed a free trade agreement with China, has longstanding allies in the Scandinavian and Nordic countries, and has forged strong links with the United States and Canada; who are no doubt interested in its proximity to the Arctic, an as of yet untapped source of minerals. (Gobel, 2012).

Prior to 2008, Iceland had proven it could look after itself, forging its own links and becoming one of the most developed nations in the world. Although there is vocal demand for a referendum, many Icelanders have reverted to their pre-2008 EU stance- we can enjoy the economic benefits from our existing arrangements, without further binding laws, political integration or ceding sovereignty. This illustrates the lack of warm sentiment towards the EU or desire for closer social ties with Europe. Interest in the EU was purely economic, with Iceland solely interested in financial and trade benefits. Perceived financial gain remains the priority for potential new members.

Enlargement was the EU’s big success story, so it is no surprise to have candidacies such as Iceland’s faltering in the wake of the Euro crisis. In the past EU enlargement has been on a single trajectory, with countries applying, making necessary adjustment to domestic conditions, and acceding to the Union. Iceland is a break in this chain (Greenland did actually leave the EU, but it was never a fully sovereign state) and it is possibly an omen of further bumps on the road ahead for the EU at large. The EU is facing into a challenging period as the chances of Iceland joining have diminished considerably, there is the prospect of a British exit in 2017, and potential future members in Eastern Europe face increased pressure to shun the EU in favour of a Russian-led Eurasian Union. The Icelandic halt is but one indicator of a potentially receding union.

Niamh Richardson is a 2nd year Politics and History student at UCD. Her main areas of interest are British politics, development and European integration. She is particularly interested in issues related to imperialism and colonialism. Upon graduation she aims to undertake a Masters, possibly in Development Practice, and then pursue a career in the Defence Forces.