Iceland no longer willing to join EU, referendum canceled – Icelandic MPs
Baku, February 24 (AZERTAC). Iceland's government supported a proposal by its Foreign Minister, Gunnar Bragi Sveinsson, to drop plans to join the EU. The Progressive and Independence Parties both reached an agreement to withdraw Iceland's application for accession to the European Union, Icelandic State TV and Radio Broadcasting Service reports.
The government also decided to cancel the referendum on whether to continue negotiations with the EU.
"In 2009, our former Foreign Minister suggested to submit a formal application for EU membership, so it was done. Quite naturally, I made a proposal to withdraw this statement," Sveinsson said to Icelandic reporters.
There is little surprise in this outcome. Negotiations between Iceland and the European Union were suspended more than a year ago. The center-right government that came to power in April has openly stated that it did not support the idea of joining the European community, which their socialistic predecessors had tried to realize.
In September, the Icelandic Foreign Ministry dismissed 10 negotiating groups, an advisory committee and national delegation, which had for the last four years been working on issues related to the possible entry into the EU.
A few days ago the local Institute of Economic Research presented the government with an 800-page report which assessed the current situation in the EU and the potential consequences for Iceland if it joined the union.
Most experts suggest that euro integration is currently not profitable for the country and could cause a severe blow to the Icelandic fishing industry and farming enterprises.
The so-called “Mackerel war” played a significant role in aggravating contradictions between Brussels and Reykjavik. Due to recent ocean warming, fish shoals are moving north, to the shores of Iceland and the Faroe Islands. This works in favor of local fishermen, whose profits multiplied. Brussels imposed sanctions on the Faroe Islands, prohibiting the import of local herring the EU and threatened to do the same for the Icelandic mackerel. It is worth noting that fishing amounts to 90% of Iceland's economy.
According to public-opinion polls, more than 60% of the 320 thousand Icelanders currently oppose European integration however, Icelandic EU supporters argue that adoption of the euro as the main currency would help stabilize the national economy.
Iceland's financial problems began in 2008, when the three pillars of Iceland 's banking system crashed, leaving creditors to face €3.5 billion in debts. The government initially agreed to follow the requirements of the IMF and to pay off the bank debts but then rejected them, motivating by public uproar. The IMF froze credit, and the European Union threatened to impose sanctions on the “revolutionaries”.
Disagreeing with the the IMF's demands, Iceland struggled with the financial crisis by its own methods. Depreciation of the national currency (króna) against the euro increased Icland's economic competitiveness and improved the external payments position. Iceland later managed to patch up it's relationship with the IMF by making minor concessions such as introducing minor cuts in public spending and tax raises.
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