The Mudcat Café TM
Thread #114937   Message #2459114
Posted By: Emma B
07-Oct-08 - 07:24 AM
Thread Name: BS: So it has come to this - Iceland
Subject: RE: BS: So it has come to this - Iceland
Iceland IS a member of the European Fee Trade Association (EFTA) and the European Economic Area (EEC).

The current prime minister, Geir H. Haarde, has long been skeptical of EU membership for Iceland.

When Iceland, back in the early 1990s, opted for the EEA as a long term basis for its relations with the Union, it was because EU membership presented serious problems. The single most important argument made against joining related to the Common Fisheries Policy.

The basic rule of the Common Fisheries Policy is that major fisheries management decisions are made not by member countries but by EU institutions a policy unacceptable to recent Icelandic governments as unacceptable to Iceland as the EU would most likely make demands for access to Icelandic waters for fishing vessels from Member States - Iceland's fishing zone covers as large an area as France and West Germany combined

Centre left parties maintained that the interest rates (higher in Iceland than in most of the EU) would go down with membership of the EU and the Euro but the government maintained that Iceland had also experienced stronger economic growth than most EU countries, with very little unemployment.

However only just 12 months ago the Iceland Review stated

'Joining the European Union is not at the center of the political debate in Iceland. Not many candidates addressed the issue during the run-up to last spring's elections, and of the country's five political parties, only the Social Democratic Alliance is in favor of becoming a member.

However, suddenly a related issue has cropped up: should Iceland be thinking of joining the European Monetary Union—the "euro club"?

This new debate is not led by politicians, but rather business leaders. In early September, Sigurdur Einarsson, chairman of Iceland's largest company Kaupthing bank, stunned the nation by claiming that the Icelandic currency, the krona, is no longer useful for the bank—nor for the Icelandic economy

Arguments aside, at the moment Iceland does not fulfill the criteria for joining the EMU. Inflation has been too high and interest rates are far too high. Until inflation is brought under control, Iceland will have to stay out.'