19th Feb 2019

Iceland drafts plan for 2011 EU entry

  • Some 2% of the population protested the government's handling of the crisis on the weekend (Photo: Johannes Jansson /norden.org)

Iceland's prime minister has announced the set-up of a commission to investigate joining the European Union.

An initial plan has already been drafted by the country's foreign ministry that would see a membership application made in early 2009, aiming for entry some time in 2011, according to a report in the Financial Times which appeared at the weekend.

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The prime minister, Geir Haarde, also said that his centre-right Independence Party would hold its 2009 conference in January instead of October as scheduled, to consider EU membership.

In announcing the move on Friday (14 November), Mr Haarde said "We have always said that we will assess at any given time how we co-operate with Europe."

"This process will help us make our future decisions."

Until now, Iceland has never applied for EU membership, and the population has historically been strongly opposed to the idea.

After the bottom falling out of the Icelandic banking sector and a run on the currency in recent weeks, many are now convinced of the need to adopt the euro, but EU officials have repeatedly told the north Atlantic nation that the euro cannot be adopted without joining the union first.

The crisis has sharply boosted support for EU membership in Iceland, climbing to a current 70 percent up from around 50 percent ahead of the crisis.

On Saturday, some 6,000 people - two percent of the population - protested outside the Icelandic parliament, attacking the government for its handling of the crisis. According to local reports, several people carried EU flags.

Icesave deposits guaranteed

In separate news, a bitter row between Iceland and EU member states the UK and the Netherlands over savers' deposits in local subsidiaries of Icelandic banks appears to have been resolved.

On Sunday, the Icelandic government announced it is to refund the deposits of those banking with Icesave, the collapsed internet bank owned by the now nationalised Landsbanki.

Iceland's attempts to access IMF funding were threatened in recent weeks as London and the Hague - as well as Berlin - insisted that Reykjavik guarantee foreign deposits before the taps were opened.

According to a statement from the Icelandic Ministry of Foreign Affairs: "Talks between Iceland and several EU member states, initiated by the French EU Presidency, led to a common understanding that will form the basis for further negotiations."

The EU-chaperoned deal will see the government covering the "deposits of insured depositors in the Icesave accounts in accordance with EEA law."

In return, "the EU, under the French Presidency, will continue to participate in finding arrangements that will allow Iceland to restore its financial system and economy."

European Commission President Jose Manuel Barroso had said on Wednesday that aid could only be delivered "after Iceland and some EU member states reach an agreement on ...issues related to deposit guarantee schemes and protection of foreign depositors."

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