Iceland Towards EU Membership

Dr. Dilek Yiğit*


On 17 June 2010, the European Council approved the start of accession talks with Iceland by stating that “ The European Council welcomes the Commission opinion on Iceland’s application for membership of the EU and the recommendation that accession negotiations should be opened. Having considered the application on the basis of the opinion and its December 2006 conclusions on the renewed consensus for enlargement, it notes that Iceland meets the political criteria set by the Copenhagen European Council in 1993 and decides that accession negotiations should be opened”(1) in the Presidency Conclusions. As known, Iceland has been coping with the economic crisis and its consequences for domestic and international politics in recent years.

Due to the economic crisis, Iceland’s government resigned and early parliamentary elections were called. General elections took place in April 2009, and centre left government won a victory. On a proposal by the new government, the Parliament of Iceland voted in favour of applying to join the European Union. With regard to the Parliament’s decision, Prime Minister Johanna Sigurdardottir said: “This is probably the most historic vote in the history of our parliament”(2). After the Parliament’s vote in favour of applying for membership, Iceland officially applied to join the European Union on 16 July 2009.

Iceland’s application for membership may be regarded as a result of the economic downturn on the grounds that Iceland needs the European Union for help. Nonetheless, the foreign minister of Iceland, Össur Skarphedinsson rejected that the economic crisis is the main reason for the application for membership, and put that “ The financial crisis may have re-triggered the debate, but Iceland’s application for EU membership is driven by a deeper, longer-term logic”(3). 

Iceland’s application was welcomed by the Union, and the commissioner Olli Rehn said after receiving the news, “ I am pleased that EU’s enlargement agenda may soon extend to Europe’s north-western corner as well, with Iceland, a country with deep democratic traditions, in addition to our continued commitment to South East Europe”(4).

On receiving the application by Iceland, the Council of the European Union requested the Commission to prepare its Opinion on Iceland’s application for membership(5). Subsequently, the Commission assessed Iceland’s application for EU membership on the basis of the criteria set by the Copenhagen European Council in 1993 and submitted its Opinion on 24 February 2010.

The Copenhagen political criteria requires the candidate country to achieve stability of institutions guaranteeing democracy, the rule of law, human rights and respect for and protection of minorities(6). Regarding the Copenhagen political criteria, the Commission decided that Iceland satisfies the criteria, and stated in its Opinion that “ Iceland is a functioning democracy with strong institutions. It is a parliamentary republic with deeply rooted traditions of representative democracy and division of powers. Its constitutional and legal order and governing institutions are stable…Iceland has a comprehensive system for safeguarding rights and there is a high level of cooperation with international mechanisms for the protection of human rights”(7).

The Copenhagen economic criteria requires the existence of a functioning market economy, as well as the capacity to cope with competitive pressure and market forces within the Union(8). Regarding the Copenhagen economic criteria, the Commission stressed that although Iceland is integrated into the European Union economy and can be considered a functioning market economy, the global financial crisis caused the deep recession, the implementation of the IMF programme was delayed due to economic crisis and subsequent political situation, and macroeconomic stabilisation is not complete in Iceland(9).

European Union membership also requires the ability to take on the obligations of membership including adherence to the aims of political, economic and monetary union(10). In this regard, the Commission stated that “ Iceland is on the whole well prepared to assume the obligations of membership in most areas, in particular fields covered by the EEA. In the following areas, Iceland will need to make serious efforts to align its legislation with the acquis and / or to implement and enforce it effectively in the medium term in order to meet in due course the accession criteria: fisheries, agriculture and rural developmennt; the environment; free movement of capital; financial services; as well as customs union; taxation; statistics; food safety, veterinary and phytosanitary policy; regional policy and coordination of structural instruments; financial control”(11).

The Commission also assessed Iceland’s application for membership in the light of the Union’s capacity to absorb new members, and stated “ Iceland’s accession would have a limited overall impact on the European Union and would not affect the Union’s capacity to maintain and deepen its own development”(12).

Consequently, in its Opinion, the Commission recommended the launch of EU membership negotiations with Iceland. The Commission’s opinion was welcomed by the President of the European Parliament Jerzy Buzek, he said that “Iceland’s application for membership shows that the European ideals are reaching the farthest corner of Europe and inspires hope, prospect, solidarity. It is my belief that Iceland has a place in the European Union family”(13). 
When can Iceland join the EU? With regard to a timetable for the accession process, Commissioner Stefan Füle said that “ From the current members that recently joined that were already part of the European Economic Area, you could make your own conclusions about the challenges and the sort of framework, such as Finland and Austria. The process for them lasted plus or minus 14 months if I remember correctly” (14). Commissioner Olli Rehn has put that Iceland can be a member of the Union in parallel with Croatia if the accession negotiations are rapid and he also underlined that the EU prefers two countries becoming the members of the EU at the same time (15). At this point, a central question is this: Why can Iceland which applied for membership in 2009 be expected to join the Union in parallel with Croatia, of which accession talks with the EU are nearing the final phase? The reason lies in the fact that Iceland has already a well-developed relationship with the European Union through the European Free Trade Association (EFTA), the European Economic Area (EEA), and Schengen area. Moreover, Iceland participates in a number of EU agencies and programmes(16).

Prof. Jerzy Buzek
24th President of the European Parliament

Iceland has a bilateral free trade agreement with the European Economic Community ( EEC) since 1972. Iceland joined the European Free Trade Area (EFTA) in 1970. After several changes in EFTA membership, the EFTA members currently are Iceland, Liechtenstein, Norway and Switzerland. After the United Kingdom and Denmark left the EFTA to join the EEC in 1973, the relationship between the EEC and EFTA was enhanced, duties on trade in industrial products between the EEC and EFTA were eliminated. In order to enhance economic cooperation further and form a homogeneous economic space between the EEC and EFTA, the negotiations on the European Economic Area (EEA) began in 1990 and was concluded with the EEA Agreement, which entered into force on 1 January 1994. The Agreement brought together the EU members and the EFTA countries except Switzerland, which has a bilateral agreement with the EU. With the aim of extending the European Internal Market to the three EFTA countries, the EEA Agreement covers the four freedoms- the free movement of goods, services, persons and capital, and also necessiates the incorporation of the EU Internal Market acquis into the EEA.

By way of a bilateral free trade agreement between the EU and Iceland, and the EEA Agreement, the EU has become Iceland’s main trading partner. According to the figures in 2008, the EU’s share in Iceland’s total import was 54,3%, and in Iceland’s total export was 75,9 %. (17). Due to the fact that the EEA Agreement covers the four freedoms, Iceland have already an access to the single market and adopted a significant part of European acquis. In this respect, the foreign minister of Iceland Össur Skarphedinsson said that “we have adopted 22 out of 35 chapters of acquis. communautaire into Icelandic law” (18). In a similar vein, Commissioner Olli Rehn put it “ It is already implementing major parts of the acquis communautaire. Thus, the remaining distance to be covered will be shorter than for other countries that do not have such strong ties with the EU” But he also added that “ the remaining distance may not necessarily be any easier”(19).

What will influence the remaining distance? The first issue that came to mind is the EU’s fisheries policy which is not covered by the EEA Agreement. If Iceland wants to be a member of the Union, it has to bring its fisheries policy into line with the European acquis, but does Iceland want to give up the right to control its fisheries? As Gudjonsdottir puts it “…the Icelandic government feels that only Icelanders themselves should have legal custody over the fish stocks, as well as over agreements with other nations regarding fisheries from fishing stocks around Iceland”(20). A former foreign minister of Iceland, Jon Baldvin said that “ Iceland will never join if we have to allow access to our fishing stock”(21). Fisheries will probably be a controversial issue, which affects the pace of the accession talks between the EU and Iceland.

The second issue is caused by the banking crisis in Iceland, which has affected its relations with the UK and the Netherlands. The Icelandic Ice save internet bank collapsed in October 2008, and British and Dutch savers who lost money were compensated by their governments. Thus, the UK and the Netherlands demand that Iceland should pay savers’ money back(22). Moreover, this dispute is not regarded as a bilateral issue by the UK and the Netherlands, so it may be turned into an EU issue. The Dutch Prime Minister said, “ it will be hard for the country to join if it does not pay for losses incurred in the Icelandic banking collapse”(23). In a similar vein, a UK diplomat told “We are happy with the opening of negotiations. It doesn’t explicitly mean they have to pay up before they join, but realistically it will be very difficult for them to join if they don’t pay”(24). Thus, the dispute regarding the repayment of British and Dutch depositors’ money may arise as a problem in the accession talks.

In sum, Iceland moves towards joining the EU, and its deeply integrated relations with the EU enable us to come to the conclusion that the accession talks between the EU and Iceland should be a smooth and short process. Nonetheless, there are two issues, which probably will affect the pace of the accession talks. The first issue is the EU’s fisheries policy. In this regard, the question of how the EU and Iceland can reach an agreement on fisheries should be answered. The second is the dispute caused by the banking crisis in Iceland, and whether Iceland can be a member of the Union before paying British and Dutch savers’ money-back needs an answer. PR

Notes:

* Dilek Yiğit is Chief of Division at Undersecretariat of Treasury, Turkey.

1) European Council 17 June 2010 Conclusions, Brussels.
2) Leo Cendrowicz, Iceland’s Urgent Bid to Join the EU, July 17, 2009, www.time.com
3) Össur Skarphedinsson, “Accession is a logical step”, EuropeanVoice, 23 July 2009.
4) Statement by the Commission on the decision of the Icelandic Parliament to apply for EU Membership, Brussels, 16 July 2009.
5) Council conclusions on Enlargement, 2957th General Affairs Council Meeting, Brussels, 27 July 2009.
6) Enlargement: Uniting a continent, http://europa.eu/ pol/ enlarg, accessed on 20.04.2010. 7)Commission Opinion on Iceland’s application for membership of the European Union, Brussels, 24 February 2010, COM (2010) 62.
8) Enlargement:Uniting a continent, http:// europa.eu/ pol/ enlarg, accessed on 20.04.2010.
9) Commission Opinion on Iceland’s application for membership of the European Union, Brussels, 24 February 2010, COM (2010) 62.
10) Enlargement:Uniting a continent, http:// europa.eu/ pol/ enlarg, accessed on 20.04.2010.
11) Commission Opinion on Iceland’s application for membership of the European Union, Brussels, 24 February 2010, COM (2010) 62.
12) Ibid.
13) Press Releases, Buzak on accession negotiations with Iceland, Brussels -Wednesday, February, 24, 2010.
14) Leigh Philips, EU-Iceland talks should conclude in early 2011, commission says, euobserver.com, 24.02.2010
15) Leo Cendrowicz, Iceland’s Urgent Bid to Join the EU, July 17, 2009, www.time.com
16) Iceland-EU relations, http:// ec.europa.eu/ enlargement/ potential -candidates/ iceland/ relation/ index_en.htm, accessed on 14.05.2010.
17) Iceland-EU Bilateral Trade and Trade with the World, DG Trade Statistics, 22 September 2009.
18) Össur Skarphedinsson, “Accession is a logical step”, EuropeanVoice, 23 July 2009.
19) EU-Iceland relations, www.euractiv.com, 04 December 2009.
20) Vilborg Asa Gudjonsdottir, Iceland in the European Union: Will it ever happen?, EUMA Papers, Vol. 4, No. 19, September 2007, p.11.
21) Leigh Philips, EU-Iceland talks should conclude in early 2011, the commission says, euobserver.com, 24.02.2010.
22) Leigh Philips, Iceland gets EU green light, but Dutch PM warns of “hard demands” ahead, euobserver.com, 17.06.2010.
23) Ibid. 24)Ibid.

 

 

 

 

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