Iceland out of the EU accession process

Iceland has officially announced the President of the EU Council its willingness to withdraw from the EU accession process. What are the motivations of Iceland justifying this withdrawal ? What is the impact of this decision on the eligibility of Iceland to EU funds ?

The Islandic government announced Friday, March 12, 2015 to stop its process of accession to the European Union. Iceland is today the third country to have interrupted his accession procedure after Norway and Switzerland.

Already a member of the European Economic Area (EEA), the Schengen area and the single market, the Icelandic government at that time the centre-left has submitted its bid to join the European Union on 16 July 2009. On June 17, 2010, the EU granted candidate status to Iceland formally approving the opening of accession negotiations. The Icelandic government aimed to join in 2013; with the rapid adoption of the euro in order to give the country the “stability” it dreamed to get out of the crisis.

Negotiations stalled

However, on 12 September 2013, Foreign Minister of Iceland Gunnar Bragi Sveinsson announced that the Government of Iceland for the new legislature, a centre-right coalition with the parties of Progress and Independence, suspended accession negotiations to the EU. On 22 February 2014 a bill of the Icelandic government is presented to withdraw the nomination. The withdrawal of Iceland in the accession process was made official March 12, 2015, without going through the referendum as promised by the government. Farewell the EU. The negotiations that were to be a formality broke down on three main topics.

The fishing problem

The first and most important is the problem of fishing. With the collapse of its financial system, fishing has again become an essential sector of the Icelandic economy. Its share in GDP rose from 4.7% in 2008 to 7.1% in 2012 and 42% of Icelandic exports of fishery products. But the entry into the EU would mean the adoption of smaller fishing quotas. However, given the economic importance of this sector, Reykjavik wants to continue to have that freedom. And then there is the thorny issue of whaling still practiced in Iceland to the great indignation of Brussels, which is a very sensitive topic in the northern island.

The euro unattractive

The second problem is that of the euro. We could see with no doubt the euro zone in July 2009 as an “island of stability”. This is not really the case after four years of deep crisis of European Monetary Union. Besides, in parallel, Iceland has greatly benefited at the cost of very high inflation of the depreciation of the Icelandic króna. Many Icelanders therefore question whether it is useful to lose control of its monetary policy and fear that their interests being ignored by the European Central Bank. However, the benefits of the euro are fairly limited as imports from the euro area accounts for only 27% of the total. The game might not be worth the effort.

Limited interest

Third reason for the failure of negotiations, it is the EU’s management. Iceland is out of the crisis by trying to protect the interests of its nationals, including practicing a default on foreign investors and renouncing de facto independence of its central bank. It would have been obviously impossible in case of accession to the EU. The parties opposed to the EU also underline the Brussels technocracy would be negative for the Icelandic democracy. Especially since Iceland member of the Free Trade Agreement with the EU and the Schengen area already has a good integration in the European space. An EU membership would not bring anything more to a country that few would count in Brussels.

In his discussion with Mr. Edgars Rinkevics, the Latvian Minister for Foreign Affairs, Gunnar Bragi Sveinsson, Islandic Minister for Foreign Affairs, emphasized the importance of continued strong relations and cooperation between Iceland and the EU, including on the basis the EEA Agreement.  

The Minister for Foreign Affairs expressed his earnest desire to strengthen the cooperation between Iceland and the EU, even further Mr. Edgars Rinkevics said he respected this conclusion and was in agreement on the importance of continuing positive and close cooperation between the EU and Iceland.   

The impact of the withdrawal of Iceland’s accession process on EU funds

No longer having the status of “candidate countries”, the withdrawal of Iceland’s accession process has indeed affected its eligibility for some European funds. It is no longer part of countries eligible for the Instrument for Pre-Accession (IPA). The instrument aims to provide transition assistance and institution building, cross-border cooperation, regional development, human resources and rural. Nevertheless, Island EEA membership allows anyway eligibility for a multitude of intra-Community programmes and external cooperation programmes.