Iceland turns away from the European Union

Iceland has closed the door, for now, on reopening talks with the European Union. In Saturday’s referendum, 52.5% voted against restarting negotiations, while 47.5% supported doing so.

The narrow result is a political defeat for the coalition government led by Social Democratic Prime Minister Kristrún Frostadóttir, which had expedited the vote after Donald Trump’s threats concerning Greenland. The government says it will respect the consultative outcome. The decision only concerned whether talks should resume, meaning a second referendum would still have been required after any negotiations before Iceland could join.

The vote split geographically. Eurosceptics won across rural areas, while supporters of renewed talks prevailed in Reykjavík. The closeness of the result reflected a divided country, even though Iceland has only about 400,000 residents.

Economic questions dominated the campaign. Supporters of reopening negotiations argued that EU membership could eventually allow Iceland to adopt the euro and gain greater price and monetary stability. Opponents focused especially on fishing, which generates nearly 40% of exports and 8% of gross domestic product. They feared membership would take control of the country’s rich fishing grounds away from Iceland and cause irreversible damage to the sector.

Iceland already belongs to the European Economic Area, giving it access to the single market, and to the Schengen area, which provides free movement of people and goods. The result indicates that this arrangement, which links Iceland closely to Europe without EU membership, remains preferable to reopening the accession process. For Brussels, the rejection means losing the possibility of a small but strategically placed Arctic partner, as well as a prosperous country that could have been a net financial contributor and brought a strong democratic tradition.