Margrét Einarsdóttir explores the prospect of Iceland joining the EU now that the government has promised a membership referendum in the next two years. She argues that it will be a close call since public opinion is split in Iceland on EU membership, but also that geopolitical challenges may influence the result in favour of joining the EU.
Iceland has got a very close relationship with the European Union; however, relations might become closer still as the current government has promised a membership referendum for 2027. Whether this will succeed remains to be seen.
In 1992 together with Norway, Liechtenstein, Sweden, Austria and Finland, Iceland signed the EEA Agreement with the European Union. Shortly after (in 1995) Sweden, Austria and Finland joined the EU leaving only Iceland, Norway and Liechtenstein in the EEA Agreement. The primary objective of the Agreement is to extend the EU’s internal market, ensuring that the four freedoms — the free movement of goods, workers, capital and services — apply not only to EU Member States but also to the EEA/EFTA States: Iceland, Norway, and Liechtenstein. That means the EU’s internal market rules apply in Iceland. Furthermore, secondary legislation adopted by EU institutions in areas covered by the EEA Agreement must be incorporated into the EEA Agreement and subsequently implemented into the Icelandic legal system. Iceland has also chosen to participate in the EU’s climate legislation and is a member of the Schengen Area. Certain aspects of the EU, however, fall outside the scope of the EEA Agreement, including the EU’s common customs and trade policy and its common agricultural and fisheries policy. Furthermore, the Agreement does not cover the EU’s Economic and Monetary Union nor its Common Foreign and Security Policy.
The EEA Agreement enjoys broad support in Iceland, and all political parties represented in Parliament support Iceland’s participation in it. However, opinions are far more divided when it comes to the question of full EU membership. The issue did not become a serious topic of political debate until the 2008 financial crisis. Iceland was severely affected by the crisis, with all systemically important banks — Glitnir, Landsbanki, and Kaupthing — collapsing. The government at the time was forced to resign, and a new left-wing government took office, deciding to apply for EU membership. One of the aims behind the proposed accession was to stabilise the country’s economy and secure monetary stability through the adoption of the euro.
Formal accession negotiations began with the EU in July 2010. However, these were suspended in December 2013 following the election of a new right-wing government. Since then, EU accession has played a minor role in Icelandic politics, and parties that have continued to support membership — primarily the centre-left, social democratic party ‘Samfylkingin’ and the centre-right liberal party ‘Viðreisn’ — have generally received limited electoral support.
This changed in the most recent parliamentary elections in November 2024 when the centre-left and the centre-right liberal party achieved a major victory. A new government led by Kristrún Frostadóttir, leader of Samfylkingin, took office on 21 December 2024. Although EU membership was not a central theme of the election campaign, it was well understood by the public that both parties were in favour of accession. It therefore came as no surprise that the new coalition’s government agreement states that a national referendum on whether to open EU accession talks will be held no later than 2027. The aim is to allow the public to express their will before any further steps are taken toward negotiations.
According to recent opinion polls, a majority of the public supports accession talks, though it might be a close call. If the majority votes ‘yes’ in such a referendum, negotiations could begin. However, this doesn’t mean the membership bid will be successful — the final decision would likely be subject to a separate referendum following the conclusion of negotiations. In January 2025 two opinion polls were published regarding public attitudes toward joining the European Union. One, conducted by Maskína, showed more people opposed to EU membership than were for it (42,7% versus 37,5%), while the other, carried out by Prósent, showed more people in favour of joining (45% versus 35%). In other words, a referendum could go either way
There are various factors that the public is likely to consider when deciding whether they want to join the EU. The fishing industry, a powerful economic and political actor, has been a vocal opponent, arguing that membership would result in the loss of control over Iceland’s fishing grounds. In 1958-1976 Icelanders waged ‘wars’ (the Cod Wars) with the UK to have their exclusive rights to fishing, within a 200-mile economic zone. It would be politically sensitive for Icelanders to give that right back, both within the 200-mile zone but also in other areas where Icelanders currently have exclusive rights to fish. Agricultural interest groups also worry about the potential impacts on farming and some opposition stems from concerns about sovereignty.
However, many powerful actors in the business sector seem to support EU membership and the adoption of the euro. The same applies to the Icelandic Confederation of Labour (ASÍ) which considers joining the EU and adopting the euro ‘to be the only way for the nation’.
It is likely that many homeowners, tired of paying extremely high interest on their mortgage loans – a long-standing feature of the Icelandic króna- will agree.
Until recently the question of whether to join the EU has only been an economic one. Following Russia’s invasion of Ukraine on 24 February 2022 and the return of Trump to power in the United States, it seems likely that Icelanders’ views on EU membership will also reflect concerns about national security and common values.
Iceland has had a very close relationship with the United States since the Second World War, and its security and defence is based on membership in NATO (since 1949) and a bilateral defence agreement with the United States (since 1951). Trump’s return, along with his statements and behaviour, is deeply unsettling for most Icelanders. The unpredictability of Iceland’s closest ally over the past decades, combined with the desire to stand with countries that share democratic values, is likely to affect the outcome of the referendum. Other factors might shape the debate in the coming years; for example, if Norway were to join the EU, the EEA Agreement would hardly survive, meaning that Iceland would not really be left with any other choice than to join too.
In today’s increasingly unpredictable global environment, it is difficult to know what the future holds. Only time will tell whether Iceland remains only halfway in or decides to fully join the EU.
By Dr. Margrét Einarsdóttir, Professor at Reykjavik University and Chair of the Board of RU Institute of International and European Law.