- World
- Mar 10
Iceland plans referendum to restart EU negotiations
• The government of Iceland has decided to put to Althingi, the Icelandic Parliament, a motion for resolution proposing to hold a referendum on August 29 on whether to resume accession negotiations with the European Union.
• Iceland, a small island in the North Atlantic Ocean, is home to about four lakh inhabitants.
• Driven by tourism, fishing, and aluminium smelting, its economy is robust.
• The Gross Domestic Product (GDP) per capita is the fifth highest globally.
• However, the country’s relations with the EU have remained positive.
• Reykjavik is the capital and largest city of Iceland.
Iceland’s relation with European Union
• Iceland is closely connected to other European countries in a historical, political, and a cultural sense.
• Although Iceland is not a member of the European Union (EU), its relation to the EU is mainly based on the European Economic Area (EEA) Agreement, which came into effect in 1994.
• The member states of the European Union (EU) are Iceland’s most important economic partners.
• The EEA Agreement unites the EU member states and the three EFTA states — Iceland, Liechtenstein and Norway — into one single market governed by the same basic rules.
• The European Free Trade Association (EFTA) is an inter-governmental organisation of Iceland, Liechtenstein, Norway and Switzerland.
• Switzerland is not an EU or EEA member but is part of the single market.
• The EEA Agreement ensures the “four freedoms” — free movement of goods, persons, services, and capital — across 30 countries.
• Iceland has fully implemented the Schengen Agreement since March 25, 2001, which ended internal border checkpoints and controls.
• Citizens of countries implementing the Schengen Agreement can cross the internal borders of the implementing countries at any point without checks.
• The EU is Iceland’s biggest trading partner.
• EU membership would give it a direct say in decision making via institutions such as the European Commission, the Council of Ministers and the European Parliament, as well as becoming part of the customs union and the option to adopt the euro.
Why Iceland plans to restart negotiations?
• A rise in the cost of living and the war in Ukraine in recent years rekindled the country’s interest in joining the European Union.
• The current coalition government of Iceland, made up of the Social Democratic Alliance, the Reform Party and the People’s Party, came into power after elections in December 2024.
• In its coalition platform, it is stated that a referendum will be held no later than the end of 2027 on whether to continue negotiations on Iceland’s membership of the European Union.
• Repeated threats by US President Donald Trump to annex Greenland, located near Iceland, also made the question of EU membership more pressing for the Nordic country.
• If the Icelandic public says no to the question posed in the referendum, there will be no return to EU accession talks.
• If the outcome of the referendum in August is positive, and negotiations are subsequently concluded, there will then be a second referendum putting the question to the Icelandic voter whether Iceland should, in fact, join the EU.