Iceland could change the EU enlargement calculus

European Union officials hope a referendum in Iceland on whether to renew membership talks could help build support in Europe for other, less wealthy countries to join the bloc, diplomats told Reuters ahead of a vote this month.

Iceland, a NATO member that already has access to the EU single market through the European Economic Area, will vote on August 29 on whether to reopen negotiations.

The referendum comes as Europe faces important decisions on enlargement, with Montenegro hoping to join the EU in 2028 and Albania, Ukraine and Moldova, all aspiring to membership, seeking to make progress in their accession processes, Reuters writes.

Connecting Iceland with Montenegro would probably be more successful - that is the perception, at least at the moment - than if Montenegro went it alone.

The referendum in Iceland is not a vote on membership itself, and any eventual agreement would have to be confirmed in another referendum. Supporters of membership say joining the EU could help the island nation cope with the high cost of living, take a stronger stance towards major trading partners and respond more easily to geopolitical changes in the Arctic, such as US President Donald Trump's claims to Greenland.

The outcome in favor of continuing the negotiations is uncertain. A Gallup poll conducted this month found voters divided on whether to restart it: 46 percent said they would vote for it, the same number against it, while eight percent were undecided. Polls, however, show that a majority opposes joining the EU itself.

Boosting the "attractiveness of the EU"

However, EU diplomats say that resuming negotiations with a wealthy country that would be easy to integrate - despite having a population of only about 400.000 - could help improve the perception of enlargement among European citizens who are wary of accepting new members.

A positive outcome in Iceland's vote "would show the attractiveness of the EU as a whole and thus lift the mood within the union," a senior EU diplomat told Reuters, adding that it would "make it easier for skeptical countries to accept Montenegro's accession" - also a small country with a much lower GDP per capita.

If Iceland were to join the bloc, it would have "a positive impact on enlargement as a political instrument," another EU diplomat told Reuters. "There is some hesitation when it comes to the Western Balkans, Moldova and Ukraine, while I see only positive sides with Iceland ... it has a modern economy, it is dynamic and it is small," he said.

The tandem of the two countries - Iceland and Montenegro - could help overcome possible obstacles in EU member states where some voters fear the potential impact of the Union's enlargement on their economies, officials say.

"Connecting Iceland with Montenegro would probably be more successful - that's the perception, at least at the moment - than if Montenegro went it alone," said Steven Blokmans, deputy director of the Tallinn-based International Center for Defense and Security.

A 2025 Eurobarometer survey showed that 56 percent of EU citizens support further enlargement of the Union, but the level of support varies from country to country.

Changed geopolitics

Reykjavik abandoned earlier negotiations in 2013 after a Eurosceptic government came to power, but Russia's war in Ukraine and Trump's statements about Greenland have once again drawn attention to Iceland's geostrategic position.

"The erosion of international law and the rules-based international order is a cause for concern for us. The same goes for security and defense issues - no one was talking about that in 2009 or 2013," a source familiar with Iceland's position told Reuters.

EU officials are trying not to interfere in Iceland's internal debate. However, if Icelanders vote to resume negotiations, they expect the country to move forward quickly.

"It speaks to the growing attractiveness of the EU in a rapidly changing world," EU Enlargement Commissioner Marta Cos told Reuters, responding to a question about the significance of the referendum in Iceland.

"We see that practically all European countries are striving for membership or closer integration with the EU. This would undoubtedly further strengthen the momentum for admitting new members to the Union."

Fisheries would be the most difficult issue in the negotiations

If the "yes" option wins, Kos said she expects accession negotiations to last one to two years, while the timing of eventual entry would depend on a second referendum in Iceland and ratification in all 27 EU member states.

Officials say that fisheries - one of the pillars of Iceland's economy and national identity - would likely be the most difficult issue in the negotiations if they were to be renewed.

"The EU needs to ask itself whether it wants fisheries to be the issue that would break down Iceland's possible accession - a sector that has a very small share of EU GDP compared to the geopolitical importance of a country like Iceland's entry," a source familiar with Iceland's position told Reuters.

Brussels has signaled a willingness to compromise, and Kos stated: "Iceland's specificities when it comes to fisheries and agriculture are well known."

"I am confident that, together with EU member states, we would find creative solutions that would take into account the sensitivities of both Iceland and our member states," she said.