From Socialist Voice, April 2009

EU membership for Iceland still a toss-up

by Gösta Torstensson

The financial crisis and popular protests have given Iceland a new government, a coalition of Social Democrats and the Red-Green Movement. The protests led to the conservative prime minister, Geir Haarde, dissolving his government.
     Iceland, with its population of 320,000, has been the hardest-hit of all countries by the financial crisis. The main explanation is that the capital markets were deregulated and the banking system privatised as part of adapting to the European Union’s internal market, which paved the way for a number of risky investments abroad.
     Since 1994 Iceland has been a member of the European Economic Area and therefore part of the internal market, in which there is free movement of capital. Last autumn Icelandic banks had debts that were nine times the country’s GNP.
     When the crisis arose, in October, the state was forced to take over responsibility for the three largest banks. The Icelandic crown has lost 45 per cent of its value since the beginning of 2008.
     According to a recent prognosis, the GNP is expected to drop by 9.6 per cent this year, and unemployment will increase to 7.8 per cent and reach 9 per cent in 2010. The Central Bank has decided to maintain its interest rate at 18 per cent, in order to reduce inflation. The inflation rate in December was 18 per cent, an increase from 17 per cent in November. The economy has stabilised with a loan of 17 billion crowns from the International Monetary Fund and nearly 520 billion crowns from other countries, including Sweden.
     The financial crisis and the collapse of the banks have put the question of membership of the European Union on the political agenda again. At the beginning of October 2008 opinion polls put support for membership at 70 per cent. Since then enthusiasm has diminished considerably: an opinion poll carried out by the daily Morgunblaðið and published on 23 January showed that 38.3 per cent are against membership and 37.7 per cent in favour.
     Several days later an opinion poll in the daily Fréttablaðið showed that 60 per cent were against membership and 40 per cent in favour. (In that opinion poll there was no alternative for those unsure of their opinion.)
     In his New Year’s speech the prime minister, Geir Haarde, said that Icelanders would be voting on membership this spring.
     With the new government and new election, the plans of the establishment have been moved along. The chairperson of Heimssýn (Iceland’s “No to EU” movement), Ragnar Arnalds, says that the situation in Iceland regarding membership of the European Union is still a toss-up. “The bank collapse and the free fall of the Iceland crown have weakened support for EU opposition, but this, hopefully, is only temporary,” he said. “The demand for a new and more stable currency is the strongest argument for membership.”
     Ragnar Arnalds sat in the Alþingi, the Icelandic parliament, for thirty-five years for the party that preceded today’s Left-Green Movement and is a former Minister for Finance. Today he is a member of the supervisory council of the Central Bank.
     The leadership of the Independence Party has put the question of membership of the European Union on the agenda when the party holds its national meeting in March. Up to now it has been clearly opposed.
     According to the latest opinion poll, in the daily Fréttablaðið, 70 per cent of the members of the Independence Party are opposed to membership. The general secretary of Heimssýn, Hjörtur Guðmundsson, who is active in the Independence Party, says that the question has been discussed thoroughly before the coming national meeting.
     The new red-green government is divided on the issue of membership. The Left-Green Movement says no, while the Social Democrats have continually supported membership.
     The chairperson of the Social Democrats has said that she wants a referendum on membership at the same time as the new elections in April. The Progressive Party opened its national meeting in January by calling for application for membership. However, this party is divided and also insists on very strict demands that, according to experts, would mean that the European Union could not consider the application. Among these demands are that Iceland retain sovereignty over fishing and agriculture.
     The new government has announced that a parliamentary committee will be appointed to investigate and analyse eventual membership. This committee will present its results on 15 April.
     The chairperson of the Left-Green Movement, Steingrímur Sigfússon, who is the new Minister for Finance, Fishing, and Agriculture, said that his party will not allow itself to be swept along with the euphoria for the European Union. He excludes a referendum under all circumstances during the period of the present government.
     What will happen after the new elections on 25 April is an open question. In the meantime there are positive signals from Brussels concerning eventual membership for Iceland. If Iceland were to apply in the near future, and negotiations were quickly carried out, Iceland could join the European Union in 2011, at the same time as Croatia, according to the Commissioner for Expansion, Olli Rhen, in a statement to the Guardian.
     The Treaty on the European Economic Area has forced Iceland to adapt to EU legislation in many areas. According to the professor of political science at Bifröst University, Eirikur Bergmann, Iceland has already adopted 80 per cent of all EU legislation.
     Nevertheless, the question of EU membership is very controversial in Iceland. The leadership of the Icelandic Employers’ Association had decided to actively support membership; however, a survey among members of the association showing that they are equally divided forced the association to withdraw from participation in this debate.
     Fishing is one of the main reasons why Iceland has chosen to remain outside the European Union. Nearly 30 per cent of all Iceland’s exports are fish. The export of fish and fish products provided 15 billion crowns in foreign currency. Iceland has no desire to see all the European Union’s fishing fleets in its waters. Fishermen have not changed their opinion. So, despite the friendlier climate for the European Union in Iceland, it is probable that fishing will have a decisive influence on whether Iceland says yes or no to membership.
     “The new year will be very exciting for those of us who struggle against Iceland’s membership of the EU,” says Ragnar Arnalds.

Home page  >  Publications  >  Socialist Voice  >  April 2009  >  EU membership for Iceland still a toss-up
Baile  >  Foilseacháin  >  Socialist Voice  >  Aibreán 2009  >  EU membership for Iceland still a toss-up