Further Icelandic support for EU membership

eurosThe debate over Iceland’s possible application for membership of the European Union took another important turn over recent days as the ruling Independence Party finally showed signs of a split over the issue.

The Independence Party is the bigger partner in the current coalition government with the Social Democrats; but despite being the bigger party, opinion poll results published in Sunday Morgunbladid show the pro-Europe Social Democrats would comfortably become the biggest party in parliament if an election were held now.

Opinion polls last week in both Frettabladid and Morgunbladid also showed that as many as 80 percent of respondents now support Icelandic EU membership and future use of the euro currency. Furthermore, a significant majority of those respondents consider themselves either quite enthusiastic or very enthusiastic on the idea.

Despite changes in public opinion and even greater EU support among the business community, the Independence Party remains officially opposed to EU membership: the benefits of joining are outweighed by the drawbacks, including the likely reduction of control over the country’s fishing grounds.

Independence Party Vice Chairman and Icelandic Minister of Education, Katrin Gunnarsdottir recently broke ranks to say that the country should seriously discuss applying for membership, “Within weeks, rather than months”.

The party leader and Prime Minister, Geir H. Haarde maintains that now is not the time; saying that the dust should be allowed to settle on the economic crisis before any decisions are made. Even this stance, however, seems to show an openness to the EU never before shown by an Icelandic PM.

European Union supporters in Iceland argue that the country is not big enough to weather this and future economic downturns alone. Some even argue that the euro and the security of having the ECB as lender of last resort would have saved the Icelandic banks if the country was already a part of the eurozone. Even today, the banks maintain that their long term liquidity was enviable; but that no bank could withstand the total collapse of investor confidence brought about partly by lack of confidence in the ability of the Icelandic Central Bank to act as an effective lender of last resort.

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