Iceland under pressure to stop EU accession bid


Political pressure is growing on Iceland's Parliament to halt accession talks with the EU, or at least review the negotiation procedure, because of the European Commission's involvement in the legal dispute between Reykjavik and British and Dutch authorities over the Icesave case.

Icelandic media reported that the European Commission is trying to get involved in the legal proceedings launched by the EFTA Surveillance Authority (ESA) against Iceland because of the Icesave dispute with Britain and the Netherlands (see background).

EFTA, the European Free Trade Area, is the main framework of relations between Iceland and the EU.

Icelandic media reported that this is the first time the European Commission would be given direct access to a case before the EFTA Court.

The move has provoked harsh reactions among politicians in Iceland, Iceland Review Online reported.

Members of the Progressive party, the second-largest opposition party in Parliament, have requested a meeting with the parliament’s Foreign Affairs Committee and the EU ambassador to Iceland to express their objections.

MP Gunnar Bragi Sveinsson, a Progressive representative on the Foreign Affairs Committee, reportedly said that he couldn’t believe the European Commission would make such a move while the EU-Iceland accession talks are ongoing.

The Progressive party states that it would be incredible if the government planned to continue accession talks with the EU as if nothing happened.

Magnús Orri Schram, chairman of the parliamentary party of the Social Democrats, one of the two coalition parties, insisted that the EU membership application and the Icesave case before the EFTA Court are two separate matters that shouldn’t be mixed up.

EU diplomats told EURACTIV that in spite of the comments in the Icelandic press, the Commission was not siding with Britain, the Netherlands or anyone else against Iceland.

As the guardian of EU treaties, the Commission simply wanted to obtain legal clarification in the issue since there was a link with Directive 94/19/EC on deposit-guarantee schemes and other relevant EU rules, the diplomat added.

"The actual case in front of the EFTA Court has no direct link to Iceland's EU application, but concerns a separate legal process," he said.

Norway and Switzerland were among the founding members of EFTA in 1960. Iceland joined in 1970, followed by Liechtenstein in 1991.

Iceland formally applied for EU membership on 16 July 2009, in the midst of the economic crisis which hit the small Nordic island hard. The country has a well-developed relationship with the EU as a member of the European Economic Area (see EURACTIV LinksDossier).

On 18 October 2009 Iceland agreed a new deal to repay Britain and the Netherlands billions in deposits lost during the collapse of Icesave, an online bank of Iceland's Landsbanki. The deal was seen as lifting a hurdle to Iceland's accession bid.

But on 9 April 2011, Iceland held a referendum, with almost 60% of voters opposing a repayment deal with Britain and the Netherlands. Consequently, London and The Hague announced they would sue Iceland on the Icesave case, in a bid to recover $5 billion (3.46 billion euro).

The European Commission has said it believes the Icesave issue should not affect the country's EU accession prospects.

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