Unexpected Side Effect of Financial Crisis: Iceland Joining EU?
The Wall Street Journal has the story:
After six days of grueling debate, Iceland’s parliament voted narrowly Thursday to apply to join the European Union — an institution from which the country long stood proudly apart.
But a binge of overseas expansion by Iceland’s buccaneering banks led to a towering stack of bills that couldn’t be paid when the credit crunch cut off funding last fall, leaving Iceland with few options. Alone, with a currency that no one wanted to buy, Iceland’s banking system went under.
The measure passed 33-28, with two abstentions, and followed vigorous discussion on farms, fish and finance that reflects Icelanders’ lingering misgivings about the regulations that come with EU membership.
The country’s new prime minister, Jóhanna Sigurdardóttir, elected after the financial crisis, made joining the EU — and, eventually, the stable euro currency — a priority. With Thursday’s vote, she wrangled her own center-left party into line and cajoled support from parts of her usually euro-skeptic left-wing coalition partner and a handful of smaller parties.
This would leap-frog other coutntires, such as Albania, Turkey, and Croatia who are seeking EU membership. The WSJ adds:
Iceland is likely to have an easier time with EU accession than other aspirants, such as Albania, which wrestles with poverty and corruption, and Turkey, whose large population of Muslims has caused consternation in France and Germany. Thursday, the EU commissioner in charge of enlargement praised Iceland’s “deep democratic traditions.”
But hurdles remain, among them an expected popular referendum on the matter and substantial concerns over the economic hit to the fishing industry from adopting EU quota and catch rules. Fish and seafood accounted for 37% of Iceland’s exports in 2008.
Even if all goes smoothly, accession is at least 18 months away, and likely more. After joining, Iceland would still need to meet stringent economic and currency-stability criteria — which it is far from reaching — before adopting the euro.
I wonder if Iceland’s accession may spur other European Free Trade Area members, such as Norway, to join the EU. It will also be interesting to watch how the news of Iceland’s probably accession will play in Turkey, in particular. Note that the EU enlargement commissioner made a comment about Iceland’s “deep democratic traditions.” I wonder if that was meant to deflect any complaints from Turkey?
Check out the whole story at the WSJ.
Hat tip: Foreign Policy Passport