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rfmcdonaldIceland is negotiating its accession to the European Union, moving through the talks with remarkable swiftness
That, continued popular skepticism, and disputes with Britain and the Netherlands over its banks, are the only keeping Iceland out of the European Union--a small 2012 expansion including it and Croatia, I assume?
Writing at the Globe and Mail, Eric Reguly doesn't think Iceland needs to join the European Union, suggesting the country benefitted from maintaining its independence from foreign financial dictates.
Iceland is set to launch detailed European Union accession talks at the end of June, EU diplomats said on Wednesday, setting off a process that could take several years and hit snags over fishing rules and debt.
The early phase of talks should proceed smoothly, because unlike other EU hopefuls in the western Balkans, Iceland comes to the negotiating table well prepared in many areas thanks to its membership in Europe’s economic and travel cooperation zones, diplomats say.
On June 27, the island state will start talks in four out of more than 30 policy areas that will be covered in the process designed to bring national laws in line with EU rules.
It will close two – covering science issues and education and culture – while discussions on public procurement rules and media laws will continue in the coming months.
“This is quite a sensational start, since we not only open but also close chapters the same day,” said Gergely Polner, a spokesman for the Hungarian government, which holds the EU’s six-month rotating presidency until the end of June.
But the nation of 320,000 people faces difficult issues later in the process, when it will likely have to address EU opposition to its whaling traditions and share control over its lucrative fishing industry. Disputes over fishing quotas between the EU and Iceland have escalated in recent months, with Brussels deciding in January to block Icelandic fishing vessels carrying mackerel from landing in its ports.
That, continued popular skepticism, and disputes with Britain and the Netherlands over its banks, are the only keeping Iceland out of the European Union--a small 2012 expansion including it and Croatia, I assume?
Writing at the Globe and Mail, Eric Reguly doesn't think Iceland needs to join the European Union, suggesting the country benefitted from maintaining its independence from foreign financial dictates.
Iceland determined that it was under no legal or moral obligation to underwrite the reckless behaviour of its commercial banks, whose assets soared to 10 times gross domestic product, making them grenades ready to explode. Ireland took the opposite view and guaranteed its banks, much to the rage of the taxpayers. As a result, Ireland’s debt-to-GDP has climbed four-fold since the financial crisis.
Iceland also refused to compensate Britain and the Netherlands for reimbursing the more than 300,000 depositors of Icesave, one of Iceland’s dud banks. The depositors should have received the money from the Icelandic government’s depositor protection scheme, but the country did not have a kronor to spare (proceeds from the liquidation of Landsbanki are expected to meet much of the liability, which explains why Britain and the Netherlands, though angry, have not gone berserk).
[. . .]
Compare this Greece, where the European Union, the IMF and the European Central Bank are in open warfare about the best way to equip Athens with the next rescue package. Germany wants Greek bondholders to contribute to the painful effort; the ECB condemns the idea, insisting that any tweaking of the bonds’ maturities or yields would amount to a default with potentially catastrophic consequences. No wonder Greek bond yields are north of 20 per cent.
Iceland’s other clever move was to keep its own currency. The kronor depreciated about 50 per cent against the euro during the crisis. As a result, exports took off, contributing greatly to the improvement in the trade balance. GDP growth should be 2.2 per cent this year, and 2.9 per cent in 2012, and the budget deficit is narrowing considerably.
[. . .]
Here’s the big question: Given Iceland’s progress, why oh why does it want to join the EU? It applied for membership in 2009 and expects to become a member in 2013 or 2014. Of course, EU membership does not mean adopting the euro, but most EU countries eventually scrap their own currencies. Given the horror show in the three bailed out euro zone countries, you have to wonder whether Iceland would be making a big mistake giving up its fiscal independence.
