From Iceland — The Negotiator

The Negotiator

Published June 19, 2012

The Negotiator

A hulking home computer produced in 1982 sits on Stefán Haukur Jóhannesson’s desk at the Ministry for Foreign Affairs in place of what is usually his sleek government-issued desktop. The switch that morning is the work of office pranksters, he says. The graphics of an old spaceship-shooting video game fills the screen of the Spectravideo-328. “On the screen it had ‘game over,’” Stefán jokes. “Hopefully that doesn’t mean game over for me.”
The game is about to reach its peak, actually. As the chief negotiator for Iceland’s talks to join the European Union, Stefán will take part in the fourth formal meeting between ministers and diplomats from Iceland and the EU on June 22 in Brussels—an orchestrated affair to check off steps on Iceland’s road to become the 28th member of the EU.
Between these intergovernmental conferences, diplomats and policy experts are abuzz, debating Icelandic fishery policies and EU budgetary provisions to try to cut Iceland the best deal in the name of international cooperation. Stefán, who works under Minister for Foreign Affairs Össur Skarphéðinsson, leads the accession talks under a 2009 mandate from Parliament to negotiate to join the club of bigger countries.
What’s on the line? Stefán, wearing a neon tie splashed with purple, pink and orange, says joining the EU would “mean more stability, lower interest rates, greater competition and also investment.” In other words, a style makeover to help an island struggling with high inflation and interest rates get its economic mojo back.
“It’s still a long and bumpy road ahead. It’s not going to be easy,” Stefán says.
United we stand, divided we stall
The two sides must come together on a dozen chapters, or policy areas like energy and regional policy, to hash out how Iceland will align its legislation with EU laws. Fifteen chapters have been opened, and 10 closed since negotiations began in July 2010, and Stefán says all eight remaining chapters could be opened this year with a national referendum by late 2013.  
The remaining chapters include tough talks over the sacred cows (or cod) of Iceland’s economy: fish and agriculture. Not to mention, the two sides haven’t touched monetary policy and replacing Iceland’s suffocating króna with the euro, a currency that itself has faced scrutiny with the economic slip-‘n’-slide of core eurozone members like Greece, Ireland and Spain.
But Stefán is not interested in talking about that at first. Instead, he rattles off about what unites Iceland and the EU. There’s NATO, the Schengen Agreement on border controls and the European Economic Area, which allows Iceland to participate in the EU’s internal trade market without actually being an EU state. The EEA enables free flow of goods, people and capital. It does not, however, cover fish or agriculture, even though Stefán says Iceland maintains good EU market access for its fish products with low tariffs.
“What surprises many when I explain this to them in Brussels, in the member states and also here in Iceland, is how involved Iceland already is in the European project,” Stefán says. “We have aligned our legislation to the lion’s share of the EU legislation.”
Fish: An Icelandic diplomat’s favourite four-letter word
But that good start is meaningless without headway on fishing, which Stefán calls the toughest challenge standing in the way of Iceland’s accession to the EU. “We’ve been very clear to the EU that this will make or break the deal,” he says.
Negotiations with a country whose economy relies so strongly on fish—12% of gross domestic product and 5% of the labour force—is a first for the EU, Stefán says. But he sees room for compromise in the EU’s common fisheries policy that would guide part of the industry’s future without opening up waters to foreign competition.
“We are confident that our concerns can be accommodated without upsetting the principles of the EU,” he says. “Obviously people are concerned in Iceland what implications membership would have on fisheries because the EU’s track record on fisheries could be better,” referring to rampant criticism of EU states’ overfishing and mismanagement.
Foreign boats won’t overrun Iceland’s fishermen, he maintains. The principle of “relative stability” that allocates fishing quotas based on historical catch will keep Iceland’s waters above the fray of foreign competition. No other nation borders the exclusive economic zone Iceland’s citizens have fished in for 30 years, Stefán says, pushing back against fears that the country’s waters—rich with cod and haddock—could be overrun by other fishing powerhouses like Spain. 
Power to the people
The other daunting hurdle is the erosion of public support for joining the EU, as the idea is often used as a political punch line.
A majority of Icelanders—54%—are against joining the 27-country European Union, according to a poll conducted last month by University of Iceland’s Social Science Research Institute. The recent public opposition casts an awkward net of defeatism around the negotiations that will ultimately face a national referendum.
The country’s top presidential candidates also talked cautiously about joining the EU at a June 4 debate. Þóra Arnórsdóttir, the leading opposition candidate in the June 30 election, spoke out strongest, saying that to join the EU now would be “like renting a room in a burning house.”
Stefán says that some misinformation poured out onto the airwaves by EU opponents gets under his skin. “The average person tends to simplify things to black and white, and it isn’t like that. There are so many aspects, so many shades of grey to the issues. Some hard-line sceptics have used arguments like [Icelanders will be in a] European Army and the EU is going to take away our fish,” he says. “It’s absolute nonsense.”
But he also says these differences are what make Iceland a “thriving democracy,” a well-crafted diplomatic remark by the diplomat. He agrees that the eurozone crisis is provoking hard questions about the future of the EU, but also maintains, “Potential EU membership is a long term issue. It’s about the future. This is certainly a very serious crisis that the EU countries are going through. We’ll obviously have to monitor the developments very well, but we certainly hope that the EU will manage its way through this crisis.”
 Let’s make a deal
Stefán is optimistic not only about fisheries, but also about what he’ll be able to swing on agriculture policy, which could lower some food prices, and regional policy, which could funnel structural aid into poor and sparsely populated parts of the country. The amount of subsidies Iceland receives from the EU hinges heavily on Stefán and the negotiating team’s abilities to make a deal.
Negotiations, he says, involve a dialogue with dozens of different ministers and policy experts from each different country: “It’s not one Mr. EU who sits here and talks to me.”
“[EU countries] say themselves that they are ‘united in diversity,’ he adds. “They have all different opinions, but they all agree on one thing: Iceland is more than welcome to join, but there are principles you will have to observe and respect. When you join, they say, ‘You join a club and we have a certain rule book.’”
Stefán’s job, he says, is to present Iceland’s perspective – telling other countries that some rules shouldn’t undo the country’s progress on fishing and farming.
“Obviously there are difficult issues ahead, but the willingness is there to find solutions,” he says. 


Why the rules already say nobody is going to steal Iceland´s fish
Seventy percent of fish stocks around our waters is local, and has only been caught by Icelanders for the last 30 years. This is very important, and I’ll explain why. If you look at the Baltics, for example, you have many countries surrounding the same sea and share common stocks so they need a common management system for that. That’s why there is a common fisheries policy. Even the rules on common fisheries in the EU are flexible because circumstances are different in the North Sea and the Baltic and in the Mediterranean. As Iceland is different in this respect, we also need some different rules there.

Why finding a solution to agriculture policy might not be far off
The challenge will be that agriculture in Iceland does not have overall very competitive prices, but in terms of quality, Icelandic agriculture is competitive. We have sustained agriculture through subsidies and high tariffs, while the EU agricultural policy is run in a quite different way. The way their subsidies are handed out is different. Also climate conditions are different in most of the EU. So it’s very clear that we’ll need specific solutions for Iceland so we can sustain a strong agricultural sector. There’s a good level of understanding in the EU on that.

Why the euro would be better than the króna
We know what a challenge it is to sustain an independent currency, a very small currency, which means it’s very volatile. If interest rates, which are always quite higher here, are lower in the Eurozone, this will mean a lot for the average households who are trying to buy a house with mortgages. Lower interest rates means that credit would be much cheaper.

What would happen to the króna right after EU membership
All new members are obliged to seek membership of the Eurozone, but it will not be imposed on any members. Sweden is a member and obliged to adopt the Euro but they still have the Swedish króna. But this is what the mandate from Parliament says, that we should seek membership to the Eurozone and [fix the króna with the] exchange rate mechanism as soon as possible.

How negative public opinion on the EU is affecting negotiations
It’s not my role to tell people whether we should join or not, but it’s my role to explain what we are doing and what our interests are so people can make an informed decision at the end of the day when we have a referendum, and obviously for those of us involved in negotiations on the Icelandic side, it is our overriding goal to achieve as good of an agreement as humanly possible for our interests.

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