Iceland at the EU’s doorstep

On Iceland’s elections and the question of European Union membership.
On Saturday 30 November 2024, amid a serious snowstorm, the Icelandic people went to the polls to elect a new parliament. The weather is precisely why elections normally take place in the warmer summer months in the North Atlantic country. However, the elections were much needed as Prime Minister Bjarni Benediktsson pulled the plug on his coalition in October. With the pro-European Social Democrats’ win, Iceland’s EU membership is also back on the table. Plenty of issues to discuss about this country of less than 400,000 inhabitants, which is one of the oldest democracies in the world with its parliament – the Althingi, founded by the Vikings in 930.
The 2024 elections
Let’s start with the recent elections. In October 2024, the Althingi was dissolved by Prime Minister Benediktsson. The coalition parties – the Independence Party, the Progressive Party and the Green Left – could not agree on issues related to the economy, immigration and energy policy. In recent years, Iceland has experienced sky-high inflation rates, peaking at 10.4% in February 2023. Although inflation eased to 5.1% last October, this is still well above the European average of 2.3%. Public finances are under pressure due to repeated volcanic eruptions in south-west Iceland, which have caused thousands of people to lose their homes. Migration also played an important role in the government’s fall, as Iceland is struggling to accommodate asylum seekers. In the past three years, around four thousand migrants came to Iceland every year – a fourfold increase from before.
Icelanders are known to be highly critical of their government. Not being able to solve problems is punished severely, with the result that other parties almost always walk away with the win after elections. Katrin Jakobsdottir of the Green Left was an exception in this regard: she managed to remain prime minister in 2021. Benediktsson became prime minister in April 2024 after Jakobsdottir resigned to run for president (in which she failed). Unfortunately for Benediktsson, his career as prime minister was only short-lived.
Despite the blizzard, the turnout rate was huge; 80 per cent of those entitled to vote cast their ballot. The critical Icelanders clearly did not let a little snow stop them and gave the coalition parties a hard time. All three parties lost seats and Prime Minister Benediktsson’s Green Left even lost all their eight seats. The Social Democratic Alliance emerged victorious with 20.8% of the vote, accounting for 15 out of 63 seats. This almost tripled the Social Democrats’ seat count compared to the previous elections. The Independence Party, which was part of the government, lost only 2 seats and is the second party with 14 seats. The Liberal Reform Party also won substantially and now has 11 seats. Three other small parties also won seats. Kristrún Mjöll Frostadóttir, leader of the Social Democrats, is expected to start looking for coalition partners.
The relationship between Iceland and the EU
The Social Democratic Alliance is known as a pro-European party. This also raises the question again about the possibility of Iceland joining the EU, but what is the current relationship between the EU and Iceland really like? Although Iceland is not part of the EU, it has close ties with the Union through the European Economic Area (EEA) agreement that came into force in 1994. The EEA consists of 27 EU member states, including Iceland, Norway, and Liechtenstein. Together with Switzerland, these three individual countries make up the European Free Trade Association (EFTA). The EEA Agreement unites the EU Member States and the three EFTA EEA states (Iceland, Norway and Liechtenstein) in a single internal market with the same basic rules, allowing free movement of goods, services and people. For the average European, this means that you do not need a passport to travel to Iceland and do not have to pay import duties on items you buy from Icelandic webshops. In addition, Iceland has been a member of the Schengen Area since 25 March 2001, meaning no border controls are carried out for people from EU countries.
For a while, it looked like Iceland would join the EU. In 2009, the country applied for EU membership after the global financial crisis almost caused Iceland to go bankrupt. At the time, the then Social Democratic government believed that joining the EU would ensure greater financial stability. In addition, the euro was seen as a better means of payment than the small and unstable Icelandic krone. The European Commission issued a favourable opinion in February 2010. Subsequently, the European Council decided in June 2010 that accession negotiations would be opened.
Although the EU accession process is known to be very long, this is not why Iceland is not a member of the EU. In fact, the accession negotiations went quite smoothly. The country itself, which was then governed by the Independence Party and the Progressive Party, decided in 2013 to stop negotiations. This was in line with public opinion at the time. A survey by Capacent Gallup, a Scandinavian consultancy firm, showed that only 26.3% of Iceland’s population was in favour of EU membership, compared to 56.3% against it. The changing opinion can partly be explained by the fact that the EU itself was also badly affected by the financial crisis and thus did not exude the stability that prompted the membership application. In addition, Icelanders feared that EU membership would mean increasing restrictions on Icelandic fishing. In March 2015, the Icelandic government stated, “Iceland should not be considered an EU candidate country”.
How close is Iceland to membership?
The possibility of Iceland joining the EU thus seemed to be off the table after 2015. In recent years, however, there has been a visible change in public opinion on EU accession. A key reason for this is the Russian invasion of Ukraine, which has shown that our security in Europe cannot be taken for granted. For a country like Iceland, which has no army of its own, it is crucial to have allies with military capabilities. A poll after the war began in 2022 showed that a slim majority of 59% of Icelanders were now in favour of joining the EU.
The last elections have further fueled the debate on EU membership. The victorious Social Democratic Alliance and the strong-growing Liberal Reform Party are both in favour of joining the EU. If the pro-European parties succeed in forming a coalition, there is a good chance that a referendum on the EU will be held among the Icelandic people. The question is whether the renewed interest in EU membership, as in 2009, is mainly economically motivated and will fade out again when the Icelandic economy rebounds, or whether the appeal of the EU now extends further. Global geopolitical tensions and conflicts have further emphasised the importance of security cooperation. The question is whether this will push Icelanders over the line towards the EU or whether they will continue preferring to keep an appropriate distance.
Sabine Herder has a master’s degree in Crisis and Security Management from Leiden University and a master’s in European Policy from the University of Amsterdam. Before this, she earned a bachelor’s degree in Liberal Arts and Sciences with a major in International Relations.
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