Icelanders to vote next Saturday on EU membership; Prime Minister: "An opportunity, not a final decision"

Icelanders are casting their votes in a referendum next Saturday on whether to resume accession talks with the European Union, with the outcome expected to be decided by a narrow margin. At this stage, Icelanders are not being asked to decide whether they want to join the 27-member bloc, but rather whether they want their government to negotiate potential terms of membership, including the highly sensitive issue of fishing rights.

Prime Minister Katrín Jakobsdóttir told Agence France-Presse: “This is an opportunity, not a final decision,” adding that the referendum paves the way for a “yes” answer that mitigates risks. On election day, voters will be asked to answer “yes” or “no” to the question: “Should Iceland resume accession negotiations with the European Union?” This implicitly raises the question of whether the country, with a population of 400,000, ultimately believes it is better to remain sovereign or to tie its fate to the European Union.

If the referendum approves the move, a membership agreement negotiated with Brussels would be put to a new referendum. The North Atlantic island nation applied for EU membership in 2009, following the 2008 financial crisis that devastated its banks and economy. Membership negotiations began in 2010 but were suspended in 2013 after a skeptical government came to power.

However, much has changed in the world since then. While Iceland’s economy is experiencing renewed growth, albeit with sharp fluctuations in its local currency, households are grappling with rising inflation and increasing interest rates. The Central Bank of Iceland has raised interest rates three times this year, bringing them to 8%. This makes the euro an attractive option for indebted households.

Given that marine products account for about 40% of Iceland’s goods exports, fisheries will be the key issue in accession negotiations with the bloc. For the European Union, the potential accession of a wealthy and stable country, already largely integrated into the single market through its membership in the European Economic Area, would serve as a prominent example of European enlargement policy and strengthen its presence in a region of significant strategic importance.