Brussels – The announcement from Reykjavík marks a historic moment. Iceland’s new government is reconsidering the possibility of resuming EU accession talks, starting with a referendum to be held “no later than 2027.” This initiative is among the top priorities of the new centre-left coalition, comprising the Social Democratic Alliance, the Liberal Reform Party, and the People’s Party.
During the press conference introducing the new cabinet of ministers following the parliamentary elections on 30 November 2024, the leaders of the three governing parties confirmed their agreement to present a motion in Alþingi – the national Parliament – enabling Icelandic voters to decide on this sensitive issue. Reykjavík applied for EU membership in 2009 but withdrew its application in 2015.
“We will hold a referendum on the continuation of Iceland’s European Union accession talks,” declared new Foreign Minister and leader of the Liberal Reform Party, Þorgerður Katrín Gunnarsdóttir. The Liberal Reform Party, long the strongest proponent of Reykjavík’s EU integration, successfully persuaded the more sceptical Social Democrat leader and new Prime Minister Kristrún Frostadóttir, as well as centrist Inga Sæland of the People’s Party, to prioritise this issue within the coalition’s agenda.
A poll conducted by the market research company Maskína in June revealed that 54.3% of respondents supported Reykjavík joining the EU, while a significant majority – 74.2% – believed it was important to hold a referendum on resuming accession negotiations. Furthermore, 66.8% of respondents felt that adopting the Euro would benefit households, citing access to mortgages at more favourable rates.
Given that the Icelandic króna is one of the smallest currencies in the world, many businesses in the country already manage their accounts in Euros, benefiting from the currency’s stability and access to better loan terms. In light of these considerations, the new government plans to establish a panel of experts to assess the pros and cons of retaining the Icelandic króna versus adopting the Euro.
The state of EU-Iceland relations
Iceland applied for EU membership in 2009 and began accession negotiations the following year. However, following the 2013 general elections, Reykjavík froze the negotiations and, two years later, sent a letter requesting that the EU no longer consider Iceland an applicant country.
Despite this, it remains closely linked to the EU through its membership in the European Economic Area (EEA) Agreement, which unites all 27 EU Member States with the European Free Trade Association (EFTA) countries—Iceland, Liechtenstein, and Norway – in the Single Market.
Iceland is also a member of the Schengen Agreement, giving its citizens the right to travel without a passport within the area, and is a signatory to the Dublin Regulation on asylum policy. As a member of the Arctic Council, Reykjavík supports the EU’s bid for formal observer status. Additionally, Iceland participates in a wide range of EU policies, agencies, and programmes, covering areas such as enterprise, environment, education and research, competition policy, state aid, social policy, consumer protection, tourism, and culture.
Trade relations between Iceland and the EU are primarily governed by the 1972 free trade agreement and the EEA Agreement, which extends the Single Market to EFTA countries. As the EU’s Common Agricultural Policy and Common Fisheries Policy are not included under the EEA Agreement, Article 19 provides the legal basis for establishing rules to progressively liberalise agricultural trade on a mutually beneficial basis.
