November 26, 2008
Geir Haarde, the Icelandic Prime Minister has constituted a commission to examine the possibilities for EU membership. His Independence Party will consult on membership as soon as January 2009.
This development comes in the wake of the collapse of the Icelandic banking system, which has profoundly shaken the country. A formal request for membership would be volte-face for a party that has persistently rejected an EU accession. But considering its shaky currency situation and the impossibility of joining the euro-zone as a non-EU member, Iceland has no choice but to seriously examine the pros and cons of EU membership.
Iceland with its tiny population of 0.3 million people is a healthy and extremely prosperous country; it ranks second after Norway in the “UN Development Indicators”. The present crisis will not substantially affect its ranking.
During the last 20 years, Iceland has transformed into a modern service economy, with some 70 percent of its national income and employment stemming from services
It is also one of the few countries on earth that are able to become self-sufficient with green energy, thanks to its huge hydro-electric, wind and geothermal potentials. Thanks to these resources it has been able to move into energy-intensive industries like aluminium.
Strategically the island, as big as Ireland, controls the North Atlantic. It is a NATO member.
More important in view of potential EU membership, it has joined the European Economic Area in 1992, alongside with Norway. In that capacity, it has taken on board essentially all EU internal market legislation and become a Schengen member country.
EU membership should not pose big problems. Fishery no longer carries the importance it used to. Iceland should therefore have fewer objections to the common fishery policy. It urgently needs to diversify its economy. For this to achieve, EU membership will be helpful.
For the EU, Icelandic membership would allow strengthening its Nordic dimension and send a strong signal to Norway reviewing its EU strategy.
Iceland will have to put its financial house in order as a precondition for membership. The agreement with the IMF on a rescue package constitutes a crucial step in that direction.
Sticking to its tradition, the EU will keep a purely neutral stance while Iceland is debating on its course of action. Once the country has made its mind, negotiations could start rapidly. They should not last longer than two years, considering the high degree of regulatory alignment on the EU.
Assuming prior ratification of the Lisbon Treaty, Iceland should be welcome as the 29th EU member country, after or simultaneously with Croatia, say in 2011.