- - Thursday, February 23, 2017

REYKJAVIK, Iceland — Britain may want out of the exclusive club that is the European Union, and far-right politicians in France and the Netherlands are hoping their countries will soon follow. Even some top Trump administration officials say they have little use for the 28-nation bloc.

But here in Iceland, some powerful voices in the tiny country want in.

In fact, after a period of chronic instability and uncertainty, some politicians here are banking on the embattled bloc to bring a measure of normality back to their island nation: Iceland’s coalition government in the so-called “Land of Ice and Fire” — an allusion to the volcanoes that dot the island in the cold North Atlantic — have reached a deal that could see Iceland vote on EU membership in the next few years.

Iceland would be only the second addition to the EU since the major expansion into Eastern Europe in 2004. Croatia joined the bloc in 2013.

“We need control over our currency, which is very volatile,” said Jona Solveig Elinadottir, chairwoman of the country’s Foreign Affairs Committee and a member of Reform, one of three political parties that make up the island’s coalition government since last month.

Proponents like Ms. Elinadottir say EU membership would give Iceland a greater voice in international affairs and financial stability — especially over the crown, Iceland’s currency. As a result, under the coalition pact agreed to in January, pro-EU parties will ask parliament to vote on negotiating a deal with the EU that would then be subject to a national referendum.

The current center-right government is headed by the Independence Party with two junior partners, Regeneration and Bright Future, which together hold a slim majority in the 63-seat Parliament. The two smaller parties have backed a national vote on the EU.*

The vote has not yet been scheduled.

Currently, EU backers say, Iceland has access to EU markets for trade but finds its voice muted in Brussels when making the rules that govern that commerce. Skeptics of the EU idea say Iceland, like Norway and some other countries, does have its economic rights protected through membership in the European Free Trade Association.

EFTA, said Ms. Elinadottir, is not enough.

“Right now our voice is not heard, and we do not have a seat at the table when the final decisions are made,” she insisted, referring to EU regulations that are only drawn up by member-states.

Given the shock vote by British voters last year to opt out of the EU and the rise of far-right parties in France and elsewhere whose leaders are skeptical of the union, the sentiment in favor of the EU here is a testament to the turbulence of Iceland’s recent history, pundits say.

The nation of just 320,000 people, once considered among the most prosperous and stable in the world, suffered the biggest market crash in its history in 2008. The country effectively declared bankruptcy as its top banks toppled toward insolvency.

There have been other crises. Last April Iceland was rocked by revelations that Prime Minister Sigmundur David Gunnlaugsson was implicated in the Panama Papers scandal involving secret offshore accounts. Thousands blockaded parliament, forcing the prime minister’s resignation and forcing the need for new elections.

The economy has bounced back strongly from the global financial meltdown of the mid-2000s, with the latest forecast putting the growth rate at an annual pace of 10.2 percent. Wages and home prices are up, and unemployment has fallen to below 3 percent.

But that has put renewed upward pressure on the currency, which would hurt critical exports industries. Joining the much larger EU, supporters say, would allow the country to grow quickly while avoiding the currency appreciation that jeopardizes that growth.

Voter fatigue

One of those protesting was Vidrar Hreinsson, a literature scholar and environmental activist close to the opposition Pirate and Green parties. Like many Icelanders, he was tired of government mismanagement and corruption.

“We had a prime minister who was very nationalistic — there are some similarities between Trump and him, actually, blaming journalists and the like,” said Mr. Hreinsson. “After the crash in 2008, some people hoped it would create an opportunity for some kind of more balanced politics, which of course obviously has not happened.”

Mr. Gunnlaugsson had promised to rebuild the Icelandic economy, taking a nationalistic stance against the country’s foreign creditors and attacking his enemies in the press before his abrupt downfall. Emergency elections in 2016 led to extended talks trying to put together a government. Lawmakers took more than two months* to form a government in mid-January, with EU membership being part of the deal.

The EU headquarters in Brussels may see itself facing constant challenges from internal and external critics, but according to Huginn Thorsteinsson, an academic and former government adviser, the EU may be the only thing that can give Iceland long-term financial stability.

“Right now the currency is getting stronger because the economy is doing better, but as it gets stronger, our export sector weakens, creating future problems,” he said.

Part of that is due to a huge boom in tourism since Iceland’s financial system collapsed, which has sent the Icelandic crown skyrocketing. In the past year its value has gone up 25 percent against the dollar, a rise that could destabilize the country again.

Even so, a vote to join the EU is no slam dunk either.

Polls from the last five years by the Icelandic MMR agency show opposition consistently above 60 percent. A big factor is fishing, upon which almost 30 percent of the economy depends, according to data from the Iceland Ocean Cluster research agency. Being in the EU means sharing the profitable Atlantic fishing waters, according to a formula developed in Brussels.

“Iceland has not been independent for that long, and fisheries are often cited as the most important issue in not joining the EU,” said Hjortur Gudmundsson, a columnist at the conservative newspaper Morgunbladid. “Fishing is important, but that often functions as a symbol of that independence.”

Memories remain fresh here of trade and fishing wars with the EU and its members, including a nasty clash over mackerel fishing rights in 2012-2013* — a dispute that was eventually resolved.

Down on the docks, old fishermen gather in the pier cafes for breakfast each morning before the sun comes up. The waterfront is littered with boats, seafood shacks and the fish markets that supply Reykjavik’s profitable restaurants.

For these skeptical old seamen, the EU, like everything else in Icelandic politics, was all empty promises.

“No, no, I don’t like it,” said Birger Bjorginsson, a retired boat mechanic, “because I know there will never be an agreement with the Europeans about the fishing. The politicians lie. You cannot trust them.”

*Due to an editing error, the parties in the new ruling coalition and the length of time needed to form a new government in late 2016 were misstated in the original version of this story. The date of the dispute over mackerel fishing rights was also incorrect. All have been corrected in the online edition.


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