If a solution is not found for the Icesave issue soon, Iceland’s European Economic Area membership could be cancelled, according to an Icelandic European political analyst.
Iceland does not fulfil the terms of the EEA contract and has not done so since the emergency finance laws were passed last autumn, says Eirikur Bergmann, professor and head of the European Studies Centre at Bifrost University.
The European Union should by rights have cancelled the EEA deal already but has not because Iceland is applying to join the EU, Bergmann told Frettabladid. If Iceland chooses not to proceed with its EU application before coming to a mutually agreeable Icesave conclusion, then the EU executive will have little choice but to end Iceland’s EEA membership.
“Iceland has two main options. One is to confirm the Icesave law, take a full part in international co-operation and enjoy the support of the free market. The other is to withdraw ourselves from the international financial system, not pay Icesave and keep our currency exchange restrictions. I cannot say which option is best,” Bergmann said.
Kristjan Vigfusson, adjunct and head of European Studies at the University of Reykjavik would not disagree with Bergmann’s point of view. He said it is difficult to predict what will happen, but that Iceland’s currency controls are indeed causing headaches in Brussels, as can be seen in the questions being asked of the Icelandic government with regard to its EU application. Vigfusson said it is possible that no deal on Icesave could plunge the EEA into a crisis.