Iceland's Economic Crash and Integration Takeoff: An End to European Union Scepticism?

Abstract

Iceland's application for European Union (EU) membership in summer 2009 suggests that the country's political parties had reconsidered their longstanding scepticism towards European integration and opted for closer engagement with the EU after the financial crisis. Applying Moravcsik's liberal theory of preference formation, this article investigates the European policies of Iceland's political parties from 2007 to 2010, focusing on four related European issues which have been prominent in the Icelandic EU debate: an application to join the EU with no reservations; the unilateral adoption of the euro; the inclusion of a clause in the constitution allowing a transfer of sovereignty; and the holding of a referendum on an EU application. It analyses whether the economic crash actually led to a change in the political parties' economic preferences and to a subsequent reformulation and adaptation of their long‐term European policy goals and, if not, then how Iceland's decision to apply for EU membership is to be understood. The article concludes that the parties' European policies have remained remarkably stable despite the EU application. This indicates that Iceland's EU membership application can only be understood through a thorough examination of domestic politics, to which liberal intergovernmentalism pays insufficient attention.

Different Varieties of Euroscepticism? Conceptualizing and Explaining Euroscepticism in Western European Non‐Member States

“…In Iceland, the situation has been somewhat different. Until July 2009, the country had never applied for EU membership, and it has been suggested that the political elite has generally been more sceptical about European integration than the general population (Thorhallsson, , p. 5; Thorhallsson and Rebhan, , p. 53).…”

“…Since 1994, Norway and Iceland's relationship with the EU has been based on their participation in the EEA, while Switzerland's has been based on bilateral agreements that were ratified in the Swiss parliament in May 2000 (Church, , p. 12). Past differences and divergent EU relationships notwithstanding, all three countries currently display stable popular majorities against accession to the EU: in Switzerland 63 per cent say they would vote ‘no’ to membership (WRS, ), in Norway 75.3 say ‘no’ ( Nationen , ), and in Iceland 60 per cent say they are against membership (Capacent Gallup, 2010, cited in Thorhallsson and Rebhan, , p. 59).…”

“…Today, however, the picture looks different. Recent Icelandic public opinion polls reveal increasing opposition to EU membership (Thorhallsson and Rebhan, , p. 59; Hauksdóttir, ). So, now the Icelanders display reluctance despite the potential economic benefits.…”

Practicing Geographical Uniqueness: The Geopolitics of Prenegotiation and Icelandic Accession to the European Union

“…Despite long-standing opposition from Icelandic farmers and fishermen and their powerful lobby organizations (Thorhallsson 2001), the growing attraction of full EU membership as a means to stabilize the Icelandic economy and protect it from further financial shocks was a direct consequence of the economic crisis (Thorhallsson and Rebhan 2011). Driven by the proEuropean SDA, the new SDA-LGM coalition submitted to the Althingi in May 2009 a resolution proposing an application for EU membership, with the LGM's backing conditional on a referendum being held at the end of the formal negotiation process; this was their price for supporting a political move that they had fiercely resisted historically.…”

Should Iceland Seek Europen Union and Euro Area Membership?

“…The Icesave dispute has undoubtedly had a very negative effect on many Icelanders' attitudes to other European nations and the EU and has fuelled nationalism and isolationism" (Magnusson, 2010). Thorhallsson and Rebhan comment as follows: "...while Iceland struggled to obtain assistance from the International Monetary Fund (IMF), Britain and the Netherlands allegedly blocked such assistance on a number of occasions, with the formal and informal approval of other European states" (Thorhallsson and Rebhan, 2011).…”