Iceland said "no" to negotiations, but not the EU

Iceland's "no" to reopening negotiations on joining the European Union is a blow to Brussels, but it should not be interpreted as a victory for "national sovereignty" akin to Brexit, nor as a broader rejection of the EU, the Guardian assesses.

Such an interpretation does not correspond to the real nature of Iceland's relationship with the Union, as the country is already deeply integrated into European structures.

For the EU, Iceland was a dream candidate: a small, stable and prosperous country, strategically located in the Arctic, which is becoming an arena of increasing geopolitical competition. At a time when the Union is seeking to strengthen its geopolitical influence and revive the waning momentum of enlargement, winning the option to continue negotiations would be a very welcome boost for Brussels, the British newspaper says.

Instead, Iceland's rejection of further negotiations gave Eurosceptics another argument to criticize the Union. French politician Marine Le Pen said the result showed the appeal of a Europe of "free, sovereign nations" as opposed to deeper integration, while Nigel Farage of the UK's Reform party congratulated Icelanders for "voting to preserve their independence."

However, as the Guardian points out, Iceland is a very specific case. Its situation has very little in common with Brexit, or even with broader movements critical of the EU. Icelanders did not vote for isolation from the EU, breaking agreements or “taking back control” – they voted to maintain a close, largely successful relationship with the Union, tailored to their own needs.

Unlike candidate countries from the Western Balkans or Eastern Europe, Iceland does not need EU structural funds to build infrastructure or raise living standards, according to the Guardian. Its high level of per capita wealth largely protects citizens from economic pressures that can make EU membership attractive from a financial perspective.

As a member of the European Economic Area (EEA) and the Schengen area without border controls, Iceland is already firmly integrated into the European framework. It accepts the free movement of goods, capital, services and people. Its markets – including financial services, energy and transport – are governed by EU rules, and its social and environmental standards are aligned with those of the Union.

This means that Iceland has transposed around 75 percent of EU regulations and directives into domestic law, and there is no indication that this will change. Icelandic citizens already enjoy all the rights that come with the EU's single market, even though the country is not a full member of the Union, and a narrow majority of voters concluded that, all things considered, that was enough.

Unlike candidate countries from the Western Balkans or Eastern Europe, Iceland does not need EU structural funds to build infrastructure or raise living standards.

Although the official reaction from Brussels was restrained, some European politicians did not hide their disappointment. “The EU no longer inspires people,” said Belgian Green MEP Saskia Bricmont.

Centrist MEP Sandro Goci, who represents France, said the result was "a warning that Europe should take seriously," adding that the Union's "attractive power" should not be taken for granted.

Opposition to full membership has largely focused on the fishing industry, which accounts for 15 percent of Iceland's GDP and 40 percent of its export earnings. The anti-membership campaign argued that the sector would inevitably be threatened if Iceland joined the EU's common fisheries policy, recalling the "cod wars" with Britain in the 1960s and 1970s.

The Guardian writes that the vote also showed a deep division between residents of the capital Reykjavik, who largely saw membership as an additional security guarantee for the geographically isolated country in the era of Donald Trump and Vladimir Putin, and residents of the rest of the island, many of whom are fishermen and farmers, who overwhelmingly voted against.

Yet, if Iceland’s particular circumstances mean that the “no” vote was not an ideological rejection of the EU and all it stands for, the result does hold important lessons for Brussels, the Guardian’s analysis suggests. The first is that countries that are already members of the EEA and EFTA are harder to persuade to join the EU than those outside the single market.

For countries that are not members of the EEA, joining the EU brings benefits that can significantly change the position of citizens and economies – unlimited access to the largest trading bloc in the world, freedom of movement and significant financial assistance. Citizens of EEA countries, such as Iceland, and indeed Norway, already enjoy most of these benefits.

In Reykjavik, membership was largely seen as an additional security guarantee in the era of Trump and Putin, while the rest of the island, with many fishermen and farmers, voted overwhelmingly against.

When the existing arrangement delivers 80 percent of the benefits of membership, while posing no threat – real or imagined – to symbolically important national industries, it is difficult to convince voters that the additional benefits of full membership justify the move.

What should worry the EU more is the fact that Icelanders, despite growing doubts about the US and NATO security umbrella, have not been convinced by the argument that the Union could provide them with additional protection. Despite increasingly frequent messages that the EU is “taking a greater role” in the field of defense, its mutual defense clause, which provides for solidarity if a member state is attacked, has not been convincing enough, the Guardian points out.

He adds that there is clearly still work to be done in this area. However, as EU law professor Alberto Alemano points out, “the result of the Icelandic referendum does not represent a rejection of European integration... It shows that close integration without full membership can be stable, credible and politically attractive.”