The 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.
Special circumstances are treated specially. If Iceland was situated just where UK is, I promise you this country would get straight away in the EU, just because of being able of supply EU with lots of energy. But Iceland is toooo far for making that supply something viable, and if viable it would´t be cheap at all. EU is developing many projects in alternative energy resources. Actually there is a join project between mediterranean countries (south european and north african) to build solar stations that would provide energy (cheap and clean) to the whole europe and north africa.
Believe me, we have the strongest and cheapest energy resource available, THE SUN (something that you don´t see in Iceland for a great part of the year) We have it all year around.
Believe me, we don’t need to let Iceland in the EU, especially now that we are going to get the fish at laughing prices… and it seems that we have CHEAP FISH assured for a long time to come. So I thing that big mother EUROPE is just resting calm, I don’t think EU politicians will get too much implicate into making iceland´s entry in the EU to happen before than other countries. Like countries of Eastern Europe. Any Eastern European country is in a better situation than Iceland today. Lets recognize it, Iceland is a total mess… there are many many problems together, very complicated situation. In a global crisis going on you are happy some countries decided to give you something of “their lefts-overs” so you could keep surviving here.
Then thousands of people going away, almost all the foreign workforce. Half of the companies have closed or considerably reduced production and personal. Even thousands of Icelanders are going away.
NO, this is not funny to tell, but this is a real tragedy. And I don’t like this people sitting in the power playing stupid games with the citizens and telling lies. They are doing everything but the right thing. And really, I don’t really know what is going to be the solution, but still many people in this country don’t even want to accept the situation. They don’t want to believe it, but is happening. I can assure you that by the end of 2009 there will be no more than 100.000 people in this country. You will see lots of houses ( well, you can start seeing them now) just empty and closed as their owners have moved over to other countries. This is a tragedy and I am sure that the EU and the international community will have to set a plan for RECONSTRUCTING this country, because this incompetent govern is not going to save us, they are not going to…
Due to treaty (by american), in East timor we use USD and not our currency. Falling value of dollar means we are not doing well and we will get poverty.
(see bbc news article for more info:http://news.bbc.co.uk/1/hi/world/asia-pacific/7525184.stm)
Michael say that Iceland should join dollar and amazis me that a european contry could do a dumb thing like that. Europe is very clever! Don;t let be part of american economy empire. Us timorese now wish we can join an asian currency…
small countries have individual currencies but iceland could not because of its over leverage, small fishing nation cannot be so rich.
The USD is artificially high now.
It has strengthened because the money supply has dwindled thus forcing up the value of the dollar. If it was because the USD was the so called safe port in a storm then we would expect gold prices to rise as well. Credit access is severely reduced in the US. Debtors are selling assets to raise money to pay debts.The USD money supply has reduced forcing up the dollar value. There is a high demand now to buy USD
Many other countries actually use the USD. For instance the Caribbean dollar is used far less than the USD. Most Gulf states have a fix to the dollar that makes them effectively use the USD – its caused terrible inflation.
Sorry, that earlier response was to Peter not orchafine.
(He knew that – he was listing all “dollar” currency countries and then drew out that there were only 3 that used USD).
Yeh Peter, that’s what I said, the FOURTH country…
The list before is to have things clear between USD and other kind of dollars.
Personally, I don’t think either is a good solution. Knowing Icelanders, they will prefer keep following the rest of Scandinavians.
orchafine:
Please… you’re embarrassing.
Only these three you listed
États-Unis (dollar US, USD) ;
Équateur (dollar US, USD) ;
El Salvador (dollar US, USD)
Use the United States Dollar.
The other currencies (Zimbabwe !!!!) have nothing to do with the US dollar.
Iceland’s problems can’t simply be fixed by converting to another currency because the ISK has been massively devalued against all of them (USD, Euro etc).
Choosing another currency is not simply a personal preference.
Caraïbes (dollar de la Caraïbe orientale, XCD).
Australie (dollar australien, AUD) ;
Canada (dollar canadien, CAD) ;
États-Unis (dollar US, USD) ;
Équateur (dollar US, USD) ;
El Salvador (dollar US, USD)
Fidji (dollar fidjien, FJD) ;
Hong-Kong (dollar hong-kongais, HKD) ;
Namibie (dollar namibien, NAD) ;
Nouvelle-Zélande (dollar néo-zélandais, NZD) ;
Singapour (dollar singapourien, SGD) ;
Suriname (dollar surinamien, SRD) ;
Taïwan (dollar taiwanais);
Zimbabwe (dollar zimbabwéen)
Will Iceland be the fourth country wit USD?
Bromley86, you are right it seemed from my article that Iceland could “send ” the power via transmission lines to other countries, and you are right, the losses over the lines woul dmake it impossible. The good news is that I work for a very large energy company and we are partnering with other companies to develop technology that would reduce these losses significantly. Iceland however does have extraordinary experience harnessing geothermal energy and also hydro-power. With the proper funding, these technologies could be adopted in many areas of the US and play a role in reducing the world’s dependence on fossil fuels. Anyway, I’ve got to run and vote for our next president…let’s look at the bright side…we have no place to go from here but up!
orchafine. I am certain that a country does not have to become part of the U.S. to adopt the U.S. Dollar. There are countries in Central America that are completely soverign such as El Salvador, that have adopted the U.S. Dollar VERY SUCCESSFULLY and their economies have prospered since adopting the USD. I think it is important for Icelanders to understand that currency is just a piece of paper, and paper does not reflect the intelligence and culture of the people or the beauty of the land. Icelanders should do what is best for Iceland, and right now, one of Iceland’s biggest liabilities is that it does not have an effective currency to interact financially with the rest of the world. It’s like taking a bright child and locking him or her in a room with no ability to interact with others. The child’s potential will not be realized. Icelanders are well educated and unfortunately, just like in America and almost everywhere else, the people running their banks became too greedy and corrupt and the government failed to regulate properly. They did not manage risk effectively and what has exacerbated the problem in Iceland, is that the ISK is too small a currency to withstand the shock of the collapse of the three main banks. Iclenaders need to communicate in a positive way to their government and stick together to make certain the government corrects the bad decisions that have been made with regard to inadequate foreign currency reserves, and poor regulation of the banking system. We need to do exactly the same in America. Today in America, we will vote for a new president, and regardless of the outcome, we will finally be free of a “leader” who has had a very negative effect on our country and our relationships with the rest of the world. I believe Iceland will recover from this crisis. I just hope that the Icelanders (and Americans and everyone else) don’t become complacent in the future ande let greed and poor governemnt once again create a world-wide financial meltdown. The only reason I suggested the USD is because it seems to give Iceland more freedom than the Euro.
Other solutions are fine. But Michael’s one, I am bit skeptic.
To have USD you have to be part of US.
They lost their interest on Iceland since the end of the cold war. Otherwise they will never had left from the American base in Keflavik.
Michael, I’m afraid for you, that
Iceland neverytime will use US$. Better € or conserve
the ISK.
Michael. One thing you might be overplaying is Iceland’s energy supply. It’s not easily transportable. If it was it’d be being sold in Europe – it’s 1000km to Norway and 2000km to Canada.
That’s why Iceland does aluminium smelting.
That aside, go for it. Oh, and even the most ardent US-haters are probably backing down from that position after we’ve all caught the cold :) . Well, except for the real nutters.
I wish Icelanders would just CONDSIDER the possibility of adopting the U.S. Dollar instead of the Euro. Iceland is a very special country with beautiful land and great energy opportunities. Adopting the US Dollar would enable you to preserve some of your exclusive rights to territorial waters,n protect the fishing industry, and your air routes while siumulateously eliminating the uncertainty and risk of having the world’s smallest traded currency. Everybody wants and predicts the end of America, but if you look at this objectively, this is not going to happen for at least another generation or two. Yes we totally screw lots of things up, but we also do alot of things right, and our currency is an asset, not a liability. Iceland’s culture and highly educated and hard working population would compliment American ingenuity and help to solve many problems together. A stable energy rich Iceland could help to free the U.S. from it’s sick addiction to oil, and our economic resources would help Iceland to develop these energy resources in ways that would benefit the population and provide a more sustainable growth for Iceland’s future. Together, Iceland and the U.S. could help solve the planet’s energy problems. It is highly likely the U S Dollar will outperform the Euro in the coming years, it would be both politically and economically beneficial for the two countries to form an alliance and grow from eachother’s strenghts. OK, I’m ready to be blasted…hit me with your best shot…fire away.
YES to EU!!!
My dearest homeland Iceland we will never allow you to go to EU!
The Independance Party make a great mistake put against the 80% of Icelanders. Iceland will have only
convenience joing the EU. YES at Iceland in EU!
from SPAIN said: :Iceland is a tiny country, and ‘rich’: there would not be special difficulties in acceding to Euro
Not so, Iceland is no longer rich, its massively in debt and has a very unstable currency and economy. There is no way it would be suitable for Euro membership, you have to have a stable exchange rate for two years or so before entry.
It is good that iceland was not in the process of joining EU. If it were, EU would be blamed in iceland for the collapse of the banks.
I imagine that before joining the eurozone, EU would demand usual harsh measures from Iceland (inflation under 2% for example), that this “viking hedge fund” would collapse the moment the government would try to fulfill eurozone criteria.
And I think that is partly the reason why the ruling party has been opposing EU and eurozone: if they would accept joining to the EU, the whole overleveraged structure of iceland’s financial system would be exposed, perhaps collapsing the economy even before the financial crisis struck. By keeping EU at bay, the establishment was able to pull this trick (borrowing, borrowing, leveraging, borrowing) for much longer time.
Reminds me of England fifty or sixty years ago, who claimed that they have the best football team in the world, and they refused to participate in the world (or euro?) football cup (they didn’t want to play against, in their minds, inferior teams). Until one day they did – and lost, spectacularly, multiple times.
Yeah, offcourse Icelanders are now in favour of EU-membership. That will give them another opportunity to get money from Europe, which they than don’t want to pay back. Another chance to live off the money of other people without having to do anything for it.
NO to Iceland in the EU
Exactly peter!
Iceland has been adapting legislation to the E.U.; it would be member in a year, if Icelanders do want it. Iceland is a tiny country, and ‘rich’: there would not be special difficulties in acceding to Euro.
If Iceland had been member of the E.U., many problems now the island does have, it would have been avoided. Not membership to the E.U. worsens terrible macroeconomic data, these days.
Euro is a protective umbrella; in this uncertain and rampant world, without an umbrella of good quality, you get wet. Even with it, also you can be wet, less; LESS!
Problem would be historical Icelandic inflation: will be able Iceland to approximate inflanción to the European? After Euro, devaluation is not possible, and loss of competitiveness would be present.
YES TO EU.
I think the Norwegian Foreign Minister, who is an outspoken EU membership supporter, will also be trying to influence this debate while he is visiting Iceland. Maybe this could be the cost for a Norwegian rescue?
Talking and applying for membership is one thing. Becoming a member is another – it takes years to join and there is some doubt whether Iceland would qualify to join the Euro with the state of its economy
oh im sure the people of Reykjavik will all vote to join, they want there lifestyle back and they dont rely on fishing as a living. whereas the people in the country do and we never had the ‘lifestyle’.
NO TO EU
ÁFRAM ÍSLAND!