Tuesday 6 December 2016

EU urges membership talks with Iceland

James G. Neuger

Published 24/02/2010 | 12:33

Iceland, one of Europe’s biggest victims of the financial crisis, took a step toward joining the European Union to put its economy on a more stable footing.

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The European Commission today urged EU governments to start membership talks, a process that may take at least two years and includes no guarantee that Iceland will get in.

“The commission acknowledges Iceland’s adherence to the common values of the Union, such as democracy, rule of law and respect for human rights,” the commission, the EU’s executive agency, said in a statement.

It said there are “challenges ahead on the road to accession.”

Iceland’s EU bid is controversial at home and could be upended by any EU country, just as Cyprus has stymied Turkey’s membership quest and Greece is blocking the Republic of Macedonia.

The North Atlantic island, independent of Denmark since 1944, sought EU membership as a lifeline after the collapse of major banks pushed the krona down as much as 80pc on the offshore market and left the country reliant on as much as $10bn in international loans.

A 33-28 parliamentary vote in favour of EU membership in July reflected the split view in Iceland over whether surrendering some sovereignty to the EU is the answer to the economic crisis.

Business leaders

A backlash against the EU is under way in the country of 320,000 people, with 60pc of business leaders wanting Iceland to stay out, according to a poll released last week by Capacent Gallup.

Iceland faces a shorter route to the EU than Croatia or Turkey, two countries currently in entry talks.

Iceland’s gross domestic product per capita of $36,775 in 2008 makes it one of Europe’s richest countries, and it already observes two-thirds of EU laws and allows passport-free travel to most EU countries.

“No fast track for Iceland, but a shorter track,” Swedish Foreign Minister Carl Bildt told the European Policy Centre in Brussels yesterday. “I would hope we would get a fairly speedy decision on the opening up of enlargement negotiations.”

Iceland would need to clear up disputes with EU countries before joining, including a battle over compensating British and Dutch depositors for losses in “Icesave” accounts from the collapse of Landsbanki Islands hf in October 2008.

Iceland is pressing the UK and the Netherlands to cut their proposed 5.5pc interest rate on a $5.3bn loan that would cover foreign depositors in the failed lender.

A popular referendum on March 6 on the Icesave loan accord risks turning into a vote against foreign meddling in the island’s economy, further souring Iceland’s EU prospects.

Today’s recommendation requires unanimous approval by the EU’s 27 governments for entry talks to start.

Bloomberg

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