Icelanders head to the polls on Saturday to determine whether or not their nation ought to reenter negotiations to hitch the European Union, a vote that might have financial and safety implications past the small Arctic nation.
The election comes 13 years after Iceland, beneath a Eurosceptic authorities, paused the final EU accession talks, believing the nation would fare higher outdoors the bloc.
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However a lot has modified since then.
Arctic safety issues have grown amid Russia’s war against Ukraine and United States President Donald Trump’s threats to invade neighbouring Greenland, the price of residing has climbed and Iceland’s foreign money has saved wavering.
Prime Minister Kristrun Frostadottir, whose Social Democrats party is pro-EU, mentioned she is going to honour no matter selection the general public makes.
If Icelanders vote “sure”, the nation would seemingly begin years of negotiations with Brussels to hammer out membership phrases. It could then maintain a second referendum on whether or not to formally grow to be a part of the EU.
Frostadottir has mentioned a “sure” vote would see the nation “enter negotiations with our heads held excessive and stand collectively in in search of a superb settlement”.
If the result’s “no”, “all hypothesis about what [EU membership] would possibly contain will likely be put aside”, she mentioned.
Knife-edge vote
Latest surveys present Icelanders are virtually evenly break up on the proposal.
A Gallup opinion ballot carried out this week discovered that 51.6 % of respondents have been towards new EU membership talks, whereas 48.4 % favoured them.
An earlier survey by Icelandic pollster Maskina confirmed a slender majority of 51.3 % of respondents backing new EU accession talks.
Gabriella Gricius, affiliate professor of technique on the Norwegian Army Academy, mentioned Iceland’s lack of armed forces has at all times left it “reliant on NATO and particularly the US for its safety”.
“Because the US has grown extra unpredictable, and particularly, its rhetoric round Greenland has grown extra regarding, it’s not stunning that Iceland is in search of extra safety ensures by means of the EU,” Gricius informed Al Jazeera.
Adam Fishwick, a lecturer in worldwide relations on the College of Iceland, mentioned the anticipated advantages of membership could be lowered inflation, a extra secure foreign money and fewer customs obstacles for shoppers.
“There can also be alternatives for regional improvement in Iceland, which is a vital concern right here, with entry to devoted EU funds,” he informed Al Jazeera.
Nevertheless, the controversy over EU accession stays “fairly polarised”, he famous. Opponents concern the small nation of 395,000 individuals would “lose management over on a regular basis coverage selections” and have restricted sway in a bloc full of bigger European powers, Fishwick mentioned.
Voters to weigh affect on inflation, foreign money
The advantages of EU membership for Iceland aren’t as apparent as for different potential candidates.
Iceland is a comparatively rich nation that, as a member of Schengen and the European Financial Space, already will get loads of the single-market entry that will include EU membership.
Nevertheless, the nation has skilled rising financial pains lately, primarily concerning the price of residing. Shopper costs in 2025 exceeded these of any EU state and have been 87 % greater than the EU common.
Iceland’s foreign money, the krona, in the meantime, has been susceptible to exchange-rate swings that opponents say decrease funding confidence and make it extra pricey to borrow cash. Earlier this yr, the Ministry of Finance and Financial Affairs concluded that the prices of sustaining Iceland’s personal foreign money most likely outweigh the advantages. Adopting the euro, it mentioned in a report, might assist cut back rates of interest and transaction prices.
Becoming a member of the EU may assist tackle each points.
Iceland would grow to be part of the bloc’s customs union, wherein items transfer freely between members and face a standard tariff when imported from non-member international locations. It may additionally undertake the extra secure euro as its foreign money.
Fishing trade issues: ‘Spine of the financial system’
A significant concern, although, is the affect on the nation’s fishing trade, an financial pillar that in 2024 immediately contributed about 8 % of gross home product (GDP) and way more not directly.
By becoming a member of the EU, Iceland would grow to be topic to the EU’s Frequent Fisheries Coverage, which governs European fishing fleets and fish shares.
Iceland’s fishing trade fears this transformation may result in new catch quotas, elevated international competitors and, extra broadly, much less management over native fishing coverage.
“The elemental objection to EU membership is that Iceland wouldn’t retain full management over its fisheries – the normal spine of the financial system,” Valur Ingimundarson, professor of up to date historical past on the College of Iceland, informed Al Jazeera.
Even when Icelanders vote “sure” to proceed with EU negotiations, the nation is unlikely to go ahead with EU membership except it secures “ironclad” exemptions concerning its fishing trade, mentioned Ingimundarson.
‘Further safety ensures’
Mounting safety pressures within the Arctic, coupled with uncertainty about US dedication to its conventional European companions, are additionally contributing to Iceland’s renewed curiosity within the EU, say analysts.
Although Iceland is a founding member of NATO and has a 75-year defence treaty with the US, it has no standing armed forces of its personal and is positioned in a geopolitical hotspot that each Russia and the US have sought to mission energy in.
Whereas Russia has expanded its army presence within the Arctic lately, President Trump has repeatedly threatened to use force to grab close by Greenland.
Ingimundarson mentioned pro-EU Icelanders see “the EU as a supply of political and financial safety for a small state confronted by coercive great-power politics and uncertainty concerning the US as a dependable safety accomplice”.
Iceland’s International Minister Thorgerdur Gunnarsdottir has mentioned membership could be “a useful addition” for Iceland, despite the fact that NATO and the US would nonetheless be its core safety companions.
In feedback to Reuters, Gunnarsdottir mentioned Iceland has been “disillusioned” with the US’s “stress marketing campaign waged towards each Greenlanders and Denmark”.
Russia poses a safety risk “in our waters and close by, within the North Atlantic”, mentioned Gunnarsdottir.
For the EU, bringing Iceland into its orbit would broaden EU territory a lot deeper into the North Atlantic, probably deepening its strategic focus there, mentioned Gricius, the professor.
“Icelandic membership within the EU wouldn’t essentially change Arctic safety dynamics, as Iceland is and can proceed to be an Arctic state,” she mentioned. “Nevertheless, it could affect how the EU behaves within the Arctic, because the EU would then embrace 4 of the eight Arctic states – Iceland, Finland, Sweden and Denmark.”
