Iceland kicks off EU talks

Only a short time ago, Iceland, like Switzerland and Norway, dismissed the idea of joining the EU. However, after being crushed by the global economic crisis with its financial system essentially collapsing, Iceland’s policy towards the EU was turned on its head with its leadership deciding membership might not be such a bad idea after all. Joining the EU should give Iceland a better sovereign credit rating and secure it better access to capital markets, which is crucial because of Iceland’s shaky economy and financial system.

But while Iceland may be more advanced than other candidates its journey will still not be trouble-free. Each country always has its own special characteristics and certain things they are loath to give up. Iceland is no exception. Icelanders are passionate about whale hunting and Iceland along with Norway continue to be the only two countries in the world that officially authorize commercial whaling, (although Japan issues scientific permits to its whalers), despite an ongoing ban imposed by the International Whaling Commission and opposition from several countries. Iceland has a quota of 150 fin whales (the second largest mammals on earth) for 2009-2013 and does not appreciate being told it is cruel and should be stopped. However, under EU law all cetaceans including whales, dolphins and porpoises are protected so the whaling will have to come to an end.

There are also issued linked to the environment including Iceland’s dirty aluminum smelters, the most power-intensive industry in Iceland, which continue to horribly pollute the atmosphere. There are currently three plants in operation, with one under construction and two in the planning stage. The industry is damaging Iceland’s precious resources -- and in particular its geothermal energy -- because so much of that energy is being used so quickly to produce the metal. Iceland became a hub for the aluminum industry because it was allowed under the Kyoto treaty to increase greenhouse gas emissions by 10 percent from 1990 levels, instead of being required to decrease emissions like other signatories. The result being that until recently 17 tons of greenhouse gases have been emitted each year for the average Icelander, while in the EU, the average was 11 tons. Obviously, an EU crackdown will have an impact on the Icelandic economy.

Additionally problems remain with the financial sector and the ongoing discussion on Icesave. During the financial crisis, Icesave, one of the biggest banks in Iceland, collapsed and could not back pay its depositors from the UK and the Netherlands. The UK and the Netherlands are now owed some 3.8 billion euros, but the Icelandic government is refusing to guarantee that obligation, with Icelanders voting against a payout in a recent referendum. The Icesave dispute is seen as a big element in the populations continuing Euroskepticism -- with many Icelanders blaming faulty regulations on banking supervision in the EEA. Hardly surprisingly, UK and Dutch officials have warned that if the people of Iceland do not want to guarantee that obligation, then they would effectively be saying that Iceland doesn’t want to be part of the international financial system. The issues will need to be resolved once and for all before Iceland can have any chance of joining.

Then there is the “fish question” -- the lifeblood of the Icelandic economy. It represents 70 percent of its export income and employs 6 percent of the workforce, with per capita income from fishing in Iceland 100 times higher than the EU average. Reykjavik does not want the rest of the EU to get its hands on the island’s fish and Iceland’s foreign minister, Ossur Skarphedinsson, recently said that despite the EU’s Common Fisheries Policy, his country must keep control of its vast, exclusive economic zone in the Arctic which covers some 760,000 square kilometers. Good luck to him!