Premier Wants Iceland to Join European Unnion

April 27, 2009
Premier Wants Iceland to Join European Unnion
By JOHN F. BURNS

REYKJAVIK, Iceland — Buoyed by an election victory that gave a strong popular mandate to her three-month-old caretaker government, Iceland’s prime minister, Johanna Sigurdardottir, told cheering supporters early Sunday that she would move to protect the country’s battered economy by applying for membership in the European Union as soon as possible.

Final results of the election on Saturday gave the two leftist parties in the caretaker government — ushered into power by street protests in January — 34 seats in the 63-seat Parliament. The conservatives of the Independence Party, the country’s traditional governing group, were punished for their role in the economic collapse by being reduced to 16 seats, the party’s worst performance since it was founded 80 years ago. As is usual here, turnout for the vote was high, at more than 85 percent.

Though the results gave Ms. Sigurdardottir’s Social Democrats and her coalition partner, the socialist Left-Green party, only a narrow parliamentary margin, the outcome was decisive in confirming the primacy of Ms. Sigurdardottir, the country’s first female prime minister and, Icelanders say with pride, the first openly gay politician to head any government in the modern world.

Her party’s dominant position in the coalition, with 20 seats to the Left-Green’s 14, appeared to give her a strong hand in resolving the parties’ differences over joining the European Union. Ms. Sigurdardottir, 66, argues that membership, together with abandoning Iceland’s currency, the krona, for the euro, would provide a shield for Iceland as it seeks to work its way out of the financial crisis.

With opinion polls showing views on European Union membership about equally divided among the 320,000 people in this remote land on the edge of the Arctic Circle, Ms. Sigurdardottir has linked her political future to gaining entry to the 27-nation union. She said Saturday at a news conference that applying for entry was an overriding priority for the Social Democrats, and that she hoped that terms for Iceland’s membership could be agreed to within 12 to 18 months.

“We want Iceland as soon as possible to join the European Union and adopt the euro,” she said. She added brusquely, “I should emphasize that this is a priority issue for the Social Democrats.”

That appeared to be a challenge to the Left-Greens and their leader, Steingrimur J. Sigfusson, a former truck driver and geologist with hard-left views who has served as finance minister since the caretaker coalition took office in January.

The Left-Greens’ reluctance to join the union is based on fears, widely shared in Iceland, that the country would lose control of its exclusive fishing waters off its coasts and of its other natural resources. It is an issue that has deep resonance in a country that has fashioned its national consciousness around a tradition of gritty independence and an ability to survive in one of the world’s toughest natural environments.

The party’s resistance to European Union membership has translated into an insistence on a drawn-out procedure that would have Icelanders approve any entry application in a referendum first, and then have a second referendum on entry terms agreed on with Brussels. The Social Democrats have insisted on a simpler and potentially much faster route, with an application for entry within weeks, and a single referendum on whatever terms are negotiated.

Mr. Sigfusson, the Left-Greens’ leader, has hinted that his party may compromise on the referendum issue to keep the coalition together, while retaining the option of campaigning against European Union entry when the issue comes to a vote.

As early election returns became known Saturday night, Ms. Sigurdardottir appeared to tighten the screws on Mr. Sigfusson by noting, in an interview on the state television network, that there would be “a parliamentary majority” in favor of European Union entry — a pointed reminder that the Social Democrats could turn to other pro-European Union parties for approval of the single-referendum formula if the Left-Greens tried to block it.

At the Saturday news conference, Ms. Sigurdardottir said her aim would be to seek to replace the battered krona with the euro within four years, the duration of the parliamentary term she secured in the election, assuming there was no new political crisis. The krona is currently trading at 40 percent and more below its value before the economic collapse, just one measure of a crisis that has seen Iceland plunge since last fall from giddying prosperity to widespread unemployment. Inflation is running above 15 percent, and mounting state debt in the wake of October’s banking collapse has left the government with foreign debts approaching $10 billion.

Ms. Sigurdardottir said that with European Union membership, Iceland, “the first country to have an economic crisis on this scale,” would also be the first to emerge. But she also said how “difficult” it would be to meet the demand from the International Monetary Fund for a one-third cut in the government’s annual budget within three years — one of the terms of a $2.1 billion emergency loan that helped keep Iceland afloat, together with $3.1 billion in loans from other Nordic countries, after the country’s three biggest banks collapsed and were nationalized last fall.

A cut of that severity in the government’s expenses, the prime minister said, would be hard to make while protecting the unemployed, pensioners and other underprivileged groups — precisely the constituency Ms. Sigurdardottir, the daughter of a prominent labor leader, made her own during her years as the country’s minister of social affairs. She hinted that the I.M.F. terms might be eased or offset by European Union assistance once Iceland was able to show it was committed to stabilizing its economy and paying its debts.

In the meantime, she said, the act of applying for European Union membership would create new confidence in Iceland abroad, helping to speed economic recovery.

Commentators in Iceland have given high ratings to Ms. Sigurdardottir’s performance in her 80 days in office, and in the election campaign, saying she has steadied the country’s faltering self-confidence in the wake of the banking collapse and turbulent January street protests, the first political violence in Iceland since protests over the country’s decision to join NATO in 1949.

Personal comment:

This article is about Iceland. The new prime minister wants the country to join the European Union. I have chosen this article for this weeks Current World Affair class because it shows a different result of the financial crisis.

During the first period of the financial crisis the situation in Iceland deteriorated on a fast speed, financially seen. Banks became bankrupt and a lot of the inhabitants lost their savings.

The people of Iceland blamed it on the government. During the new elections they choose for a different party. New insights and new ideas compared to the old government.

The new prime minister however wants to join the EU since it could stimulate the economy of Iceland. The locals feel that joining the EU could worsend their natural resources. Fishing waters have to be shared with different European influences.

For me as a European, i believe that it is a good thing if Iceland joins the EU. Ofcourse they have to meet all the standerds that the EU requires first. Iceland is different then a country like Turkey. There are less problems on the side of human rights. Therefore I believe that the new Iceland prime minster had the right ideas.