EU's Window of Opportunity Closed on Iceland?

On Sunday, Iceland's new social-democrat Prime Minister Jóhanna Sigurðardóttir was sworn in after eighteen years of conservative government on the island. She is the first female Prime Minister on Iceland, the world's first lesbian government leader and will lead a leftist minority cabinet at least until the elections of 25 April. She announced that a special parliamentary commission will be set up to consider EU membership, with the delivery date for its report set to 15 April, ten days before the next elections. She reassured at the same time that Iceland won't join the union without a referendum first.

It is amazing how the EU has been able to ruin its golden opportunity to let Iceland become a member of the union over the past few weeks. As I reported earlier, before Christmas the island found itself in such a dreadful situation that it probably would have joined the European Union on the spot if it had been offered the euro at the same time. In a video conference, the European Commissioner for Enlargement Olli Rehn even offered a fast-track handling of an Icelandic membership application, but remained rather unclear about when the island would be allowed to adopt the European common currency. It has become clear by now, however, that the European Union will not accept any exceptions to its own rules, and Iceland will have to wait for at least two years after its admission to the EU before it can join the Eurozone, just like any other country, that is, if it is financially stable by then. Of course, this makes EU membership a completely pointless option for Iceland, since the island is desperately looking for a solution to its awful monetary financial situation, and not exactly to, say, such an overpopulation of fish in its coastal waters that it needs Spanish and Portuguese fisherman to come to the rescue immediately. One could say that basically, the European Union is offering Iceland a swimming vest if it first gives up everything it owns and then can prove that it doesn't need the swimming vest in the first place by swimming to the shore on its own for at least a couple of times.

Many of the islanders are therefore realizing that the European Union isn't the solution to their problem, and recent opinion polls suggest that support for EU membership has dropped again to the levels from the times before the current financial crisis hit Iceland. They also indicate more support for the left, which makes Iceland in fact somewhat unique in a European context. The far-left anti-EU Green-Left Movement (Vinstrihreyfingin-grænt framboð) in particular has seen a dramatic uprise in its support among the population, and this is clearly one of the reasons why the party entered the government last week.

But while the EU seems to be doing almost everything wrong to win the minds of the Icelanders, other solutions are being discussed, and some even offered from abroad. One solution would be to tie the Icelandic krone not to the euro, but to the US dollar or the Swiss franc. At best, these two countries would be flattered – at worst, they probably couldn't care less. A more interesting option would be, as proposed by the Green-Left Movement's leader and new Minister of Finance Steingrímur J. Sigfússon, to use the Norwegian krone on Iceland. In fact, Norway's Minister of Communication Liv Signe Navarsete from the Center Party (Senterpartiet, Sp) said in a reaction that she was very positive to the proposal, and added that it's Norway's duty to help Iceland in a difficult situation. In fact, she was quoted saying that «nobody should be forced into the EU and the Eurozone because of economical problems,» but as the Norwegian financial paper Dagens Næringsliv remarked, it was unclear whether her offer was available to countries like the Ukraine, Croatia, Serbia or Turkey too. Norwegian Minister of Finance Kristin Halvorsen, from Green-Left Movement's Norwegian sister-party Socialist Left Party (Sosialistisk Venstreparti, SV), rejected the idea fiercely only one year ago, but seems to have changed her mind now.

Norway's offer for a monetary cooperation between Norway and Iceland is to be taken serious. The advantages for Iceland are clear: this would be an easy way out of the current financial problems for the island without losing its national bank, even though some services would be taken over by Norway's Central Bank. In addition, Iceland would not be forced into the EU. But let's not forget the advantages such a solution would bring to Norway: first of all, it would keep Iceland out of the EU, thus keeping the EEA alive. And it would also strengthen Norway's position in the Arctic and Barents Sea, something not only the EU but also the US, Canada and maybe most of all Russia should worry about.

It's already clear that the coming months and weeks will be deciding not only for the future of Iceland, but also for Norway and the other countries around the Arctic circle. Let's hope the people of Iceland can keep their heads clear and make the right decision when they go to the ballot boxes on 25 April.