Iceland’s latest spat with UK rocks EU acession hopes
Posted by on 06/01/10
Ollie Rehn - when Enlargement Commissioner, said "Iceland is clearly a democratic country", he said, "which has already negotiated perhaps two-thirds of the criteria needed to join the Union…this means that were Iceland to pose its candidature, we could quickly complete the negotiations".
In practice, it is likely to be more complicated and more protracted. One of the biggest attractions of EU membership for Iceland would be to join the Euro, after the virtual destruction of its currency. This, however, requires a preliminary period of two years during which the Icelandic krona would need to be within the narrow band of the Exchange Rate Mechanism.
It would be difficult for Iceland to negotiate an exemption from this requirement, which is embedded in the Maastricht treaty
Icelanders are feeling sore about EU – particularly UK – for making their situation worse
The Icelandic government succeeded in negotiating a $6 billion IMF rescue plan, backed by Norway, Sweden, Denmark and Russia, but its approval by the IMF board has been delayed three times. The UK has been blamed for interfering in the process. Gordon Brown has become something of a hate figure. His action in using anti-terrorist laws to freeze the British assets of a failing Icelandic bank caused immense offence, and undoubtedly helped to put the skids under efforts to keep the bank afloat.
Iceland featured on a UK Governmentlist of terrorist entities that included Al Qaeda, Sudan an North Korea.
More broadly, Iceland, which is a member of the European Economic Area, and participates in many EU programmes, including the Schengen agreement, was disappointed that the Union did not mobilize itself quickly to come to the stricken country's aid, forcing it to turn instead to countries such as Russia and Japan, with which it has no formal links.
Despite the widespread disappointment with the EU, many Icelanders appear to have concluded that their best bet for the future would be to join the Union as soon as possible. An opinion poll published in Frettabladid, Iceland's leading newspaper, on 18 October, showed 70 per cent wanting a referendum on EU membership, with 49 per cent saying they would vote in favour, and 27 per cent against. Membership has never been so popular
Alastair Darling hinted darkly on 4th January that the British Government could block Icelandic membership if they did not sign the bank repayment deal. The Icelandic President gave a press conference yesterday to say that he would not be signing the so called "Icesave" bill but instead submit the repayment to a referendum where it is set to be rejected. Th $5bn owed to UK and the Netherlands may not sound like much but it is in tiny Iceland - where it works out as €12,000 per family. Cant see how any Repayment Bill referendum could be a vote winner when it costs this much. However, the UK is adamant that it wants its money. UK Treasury Minister, Lord Myners says the repayment agreement represents a good deal for Iceland. However, this will not resonate much with Icelandic voters in a referendum. Already question marks are being raised in Rekjavik by opponents of repayment over the legal definition of the EU directive on saving guarantees which the UK and the Netherlands are basing their demands on for repayment for bailing out savers.
Clearly a successful accession plan should begin with a senior No 10 meeting and general Charm Offensive
In practice, it is likely to be more complicated and more protracted. One of the biggest attractions of EU membership for Iceland would be to join the Euro, after the virtual destruction of its currency. This, however, requires a preliminary period of two years during which the Icelandic krona would need to be within the narrow band of the Exchange Rate Mechanism.
It would be difficult for Iceland to negotiate an exemption from this requirement, which is embedded in the Maastricht treaty
Icelanders are feeling sore about EU – particularly UK – for making their situation worse
The Icelandic government succeeded in negotiating a $6 billion IMF rescue plan, backed by Norway, Sweden, Denmark and Russia, but its approval by the IMF board has been delayed three times. The UK has been blamed for interfering in the process. Gordon Brown has become something of a hate figure. His action in using anti-terrorist laws to freeze the British assets of a failing Icelandic bank caused immense offence, and undoubtedly helped to put the skids under efforts to keep the bank afloat.
Iceland featured on a UK Governmentlist of terrorist entities that included Al Qaeda, Sudan an North Korea.
More broadly, Iceland, which is a member of the European Economic Area, and participates in many EU programmes, including the Schengen agreement, was disappointed that the Union did not mobilize itself quickly to come to the stricken country's aid, forcing it to turn instead to countries such as Russia and Japan, with which it has no formal links.
Despite the widespread disappointment with the EU, many Icelanders appear to have concluded that their best bet for the future would be to join the Union as soon as possible. An opinion poll published in Frettabladid, Iceland's leading newspaper, on 18 October, showed 70 per cent wanting a referendum on EU membership, with 49 per cent saying they would vote in favour, and 27 per cent against. Membership has never been so popular
Alastair Darling hinted darkly on 4th January that the British Government could block Icelandic membership if they did not sign the bank repayment deal. The Icelandic President gave a press conference yesterday to say that he would not be signing the so called "Icesave" bill but instead submit the repayment to a referendum where it is set to be rejected. Th $5bn owed to UK and the Netherlands may not sound like much but it is in tiny Iceland - where it works out as €12,000 per family. Cant see how any Repayment Bill referendum could be a vote winner when it costs this much. However, the UK is adamant that it wants its money. UK Treasury Minister, Lord Myners says the repayment agreement represents a good deal for Iceland. However, this will not resonate much with Icelandic voters in a referendum. Already question marks are being raised in Rekjavik by opponents of repayment over the legal definition of the EU directive on saving guarantees which the UK and the Netherlands are basing their demands on for repayment for bailing out savers.
Clearly a successful accession plan should begin with a senior No 10 meeting and general Charm Offensive
I am the Director for European Affairs at Bell Pottinger Public Affairs and I have over 12 years experience in UK and EU political communications and and public affairs campaigning. I have set up "ResEuropa" ( – Latin for European Affairs) to share my insights and thoughts on what's been happening in Brussels. Any views expressed are purely my personal opinions and you are more than welcome to agree with them.