EU to recommend start of Iceland talks, says official

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The European Commission will recommend next week that the European Union begins accession talks with Iceland, an EU official said yesterday (16 February), launching a process that Reykjavik hopes will lead to EU membership by 2012.

Iceland, an island of 320,000 people in the far north of Europe, had been reluctant to join the bloc for decades and only applied last year when the global financial crisis devastated its banking system.

"On 24 February, the European Commission will issue its opinion recommending the start of accession negotiations," the official told Reuters.

It is hoping for speedy accession talks, since it is far better prepared than other EU hopefuls and already belongs to the EU's single market and its Schengen borderless zone.

But its aspirations are now tied partially to a dispute with the Netherlands and Britain over $5 billion in debts lost in the country's banking collapse in late 2008.

Officials from the three countries are holding talks this week to try to agree a deal on how Iceland should repay the money. Any progress will be key to pushing EU talks quickly.

Iceland's finance ministry said yesterday the discussions would continue in the coming days.

Britain and the Netherlands say Iceland owes them for repaying savers who lost money in online accounts during the financial crisis.

In addition to the Icesave issue, Iceland may face tough negotiations on giving EU member states access to its rich fishing zones, a key driver of its economy.

The decision to start accession talks is due to be validated by the college of 27 European commissioners on Wednesday.

(EURACTIV with Reuters.)

Iceland handed over its official application to join the European Union on 17 July 2009 at ambassador level (EURACTIV 20/07/09) after the parliament backed the government's plan to begin accession talks, an all but unthinkable prospect until the global financial crisis wrecked the island's economy in 2008 (EURACTIV 17/07/09).

Responding to political pressure from Britain and the Netherlands, Reykjavik agreed to reimburse the two countries for compensating people holding so-called Icesave accounts at Landsbanki, one of three top Icelandic banks which failed under the weight of massive debts (EURACTIV 18/08/08). 

Earlier this year, Iceland's president rejected a bill to repay Britain and the Netherlands more than $5 billion owed to their savers, forcing a referendum on the issue. President Olafur Grimsson's refusal to sign the unpopular Icesave bill into law on 5 January threw the country into a political crisis and, observers said, jeopardised its hopes of joining the European Union (EURACTIV 06/01/10).

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