Central Europe Activ

KB Bank in ReykyavikIceland may join the EU as a result of the world financial crisis. However, the member of the European Economic Area and NATO had to turn to Russia for an emergency loan. The EU is as much challenged in the West as in the East from Russia.

Iceland is one of the world’s most competitive country, meaning that it can very profitably participate in the world economy and global trade. However, the tiny nation’s own currency is prone to speculative attacks: the country behind the krone has a population of 320 thousand, or a small European town. The North Atlantic island has such a strategic location that it has been NATO’s member even though it does not even have a standing army.

On 7th October after the countries tiny financial markets have collapsed and its banks were nationalized, Iceland called for assistance. They tried IMF, but it looks that Russia was the quickest to offer a 4 billion euro emergency loan. Four billion is not peanut money, but I guess that Russia has never dreamt of gaining control over a NATO member for such a bargain. One of the weaknesses of the EU became apparent: it has no real funds available in Brussels, which redistributes only a mere 1% of the EU GDP, mostly in form of farm subsidies. But even considering this case, could not have the EU member states put together 4 billion counter-offer for Iceland, when they were considering to spend hundreds of billions on the financial crisis? Both the EU and its member states remained silent.

If anything, the EEA should count as European sphere of interest. We could have been more prepared. Iceland, which applies most of the EU law in the Eureopan Economic Area, had already pondered on filing an application to EU, despite its long-standing, and, from their point of view, vital differences over fishing rights. The week after talks began with Russia, DG Enlargement spokeswoman Krisztina Nagy already hinted that the EU would welcome an application from its economic (and military) ally. However, membership talks take years even with such rich countries as Austria, so the EU should offer something more.

Diana Wallis, a Vice President of the European Parliament and a former Chair of the Delegation to Iceland, has written to the Commissioner responsible for Enlargement, Olli Rehn, asking him that, if Iceland should be ready to apply to join the EU, they could be fast tracked towards full membership as a solution to the enormous economic difficulties the country is facing. Today a Hungarian new portal, Index has quoted Mr. Rehn’s AFP interview: He said that ‘membership talks could start soon’.

OK, Moldova may not be our zone of interest. But Iceland?

CC Image: lydrus. KB Bank was nationalized, too. Relate: Bailout Hungary.

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  1. Dear Antal Daniel,

    I mainly wish to congratulate for the quantity and quality of your blogging.
    Actually, I hope to meet you one day.

    This interview of Olli Rehn on EurActiv today may be relevant for your faithful readers:

    Yesterday, a first article based on that interview focused on a scoop: the Commission proposing a permanent exclusion of Turkey from the labour mobility freedom: what do you think?




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