From Iceland — Is it Time for Iceland to Join the EU and/or Adapt the Euro?

Is it Time for Iceland to Join the EU and/or Adapt the Euro?

Published January 12, 2007

Is it Time for Iceland to Join the EU and/or Adapt the Euro?

Sæunn Stefánsdóttir Candidate for the Progressive Party
The Progressive Party has emphasised open and honest debate regarding European matters. At our last national convention, we decided to continue gathering information and working to define our aims in preparation for a possible membership talks with the EU. The outcome will be presented at the next party convention, where the party’s policy for the spring elections will be mapped out.

European Union issues are most certainly in the party’s limelight, just like in the society. Our stance has been characterised by our belief that it is important to have an open discussion about the pros and cons of the EU. But before we address the question of membership we should focus on reaching a long-term balance in our economy. We should discuss the pros and cons regarding membership on the basis of our strengths but not be driven by our economic weaknesses.
Membership is not timely in our opinion since it demands such long and thorough preparation. We belief that we are fulfilling the obligations of a responsible political party by watching the Union’s development .

We need a straightforward discussion regarding the future of the Icelandic króna and the influences of globalisation and open financial markets in general. There is a certain development in the business sector regardless of political will or the party’s policy. We can’t close our eyes to the fact that the króna is a small currency and the development, we have seen among Icelandic companies and in the Iceland Stock Exchange, shows that the question of adapting or connecting us with the Euro or other currencies is relevant. We must watch the progress and have the interests of wage earners and the economy as guidance.

The discussion regarding the European Union and the Euro is an inherent continuance of the European Economic Area membership, which has proven to be good for Iceland. I predict we are closer to a decision in this field than many foresee today.

Ármann Kr. Ólafsson Candidate for the Independence Party
At one time, Icelanders carefully studied whether it was in the nation’s best interests to become members of the European Union. The conclusion was that it was not. The main reason was that Icelanders couldn’t submit to the EU’s joint fishing policy as the nation would lose authority over its fishing grounds. In light of that, it was decided that Iceland would become a member of the EEA treaty and at the same time a part of the Union’s inner market. There is no doubt about the fact that the EEA treaty has been an important part of the country’s transition in economic and business life in recent years. It also allows us to cooperate in the fields of education, culture and science within the European Union. The contract’s influences have therefore been manifold in developing the Icelandic society and economy and proven its importance. It includes most of what we need and there is nothing that really calls for membership here and now.

Nonetheless, we can’t ignore that the rate of the Icelandic Króna now is totally different from what it was when the EEA contract was made and the same can be said about the fishing industry. The Króna and the fishing industry have in common that their share in the Icelandic economy have decreased in the wake of globalisation. The króna no longer reflects the economy as it used to. Trading with it now mostly regards betting on its interest rate and foreign exchange listing. Such trading, where there is nothing else underlying than speculation, has great effects on micro-currencies like the Icelandic Króna and causes great currency fluctuations. It is therefore normal to reconsider our status in a changed environment. Whether this means that we adopt the Euro or join the European Union, only time can tell. It is certainly one possibility and probably the most likely one, as long as the Union shows understanding regarding our special position in the fishing industry.

Sigurlín Margrét Sigurðardóttir Candidate for the Liberal Party
No, I don’t think it is time to apply for EU membership. I think it is a matter of whether we need to and if the benefits are enough to warrant applying. As the situation is now, we are members of the European Economic Area, and we have done quite well there. We are also a young nation and have had quite a period of growth in recent years, we have done so without being dependent on EU membership. We can easily participate in European affairs without being EU members and do fairly well.

To adopt the Euro is a matter that deserves a closer look. Companies have started to present their financial reports in Euros and that, I think, is sort of a way for us to see if it is profitable or not. If it is, we will just have to see as time passes. I can well understand that companies began to present their financial reports in Euros when the Icelandic króna is not highly esteemed and the state treasury’s credit rating is rapidly decreasing. Many companies are now branching out into foreign markets and need the Euro, since the Euro is apparently the name of the game in trading with other countries at the moment, in Europe at least.

To adopt the Euro as our main currency has to be well considered. We can also learn from other nations who have adopted the Euro. Is everyone satisfied? For example ordinary people: do they have more money than with their previous currency?

Guðmundur Steingrímsson Candidate for the Social Democratic Alliance
Yes, it is time to apply for a membership. By all means, such an application would be to drag the discussion in this country away from stereotyped propaganda between two blocks – the European-minded ones and the others – where the conflict has often been battled with too many emotions in my view and is stuck in a rut.

In the meantime, the majority of the nation has stood by and scratched their heads in confusion. This nation is in great need to decide its view on the European Union and the Euro. The balance of the Icelandic Króna is the newest example of the need to seriously study, and without prejudice, whether we would be better off within the EU. High prices and enormous interest rates are another example. The question is simple: What are the real pros and cons? We need this out in the open. The Social Democratic Alliance believes that the benefits of an EU membership and adopting the Euro are far greater than the flaws. We, among other things, point to a good experience with the EEA treaty, despite the opposition it faced at that time. With that, we have gone a good way towards joining the EU. The Social Democratic Alliance alone will not drag the nation into the EU and adopt the Euro though. The subject needs to be discussed. The nation needs to decide.

But to prove the Social Democratic Alliance view that EU membership and the Euro currency is worth it – and to give the others an opportunity to argue their logic against membership – by all means, we need to put the matter on our agenda and apply.

Katrín Jakobsdóttir Candidate for the Left-Green Movement
In the Leftist-Green Party, we have real doubts regarding the European Union. We continue to develop our relations with contracts regarding business and cooperation, among other things in the field of education, labour market and environmental issues. It is clear that Icelanders can have more influence on the European Union than they do now and we can take Norwegians as our role models in those matters.

An EU membership of course means for the most part, relinquishing our self-determination to Brussels and possible benefits from the membership doesn’t justify that. At present, about 20 percent of Icelandic legislation can trace its roots to the European Economic Area’s legislation so it is clear that an EU membership is a big step, as with it, we would take up all of the Union’s legislation. It is therefore not justifiable to argue that as members of EEA we are almost members of the EU.

Finally, we have had doubts regarding the EU’s inner organisation, where too much centralisation and bureaucracy are characteristic while democracy is lacking in decision-making. The power lies at the executive and even though the European Union has gained increased power recently, the executive is all the same the most powerful battery in the union. Therefore, it is not surprising that participation in EU elections is sparse, people just don’t see a reason to vote for MPs who work far away and have a blurry domain. This doesn’t go hand in hand with our idea of democracy, which is to bring decision-making closer to the people.

Regarding the Euro, I think it is clear that adopting the Euro must be closely related to EU membership if we want to get its benefits. By doing so, the currency control would move out of the country, which some think is good considering existing governance. But we don’t think that the blame for irresponsible expansion policy of local authorities in economic matters can be put on the Icelandic Króna!

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