Iceland won’t talk with Brussels about EU accession

European Parliament. 7th meeting of the EU-Iceland Joint Parliamentary Committee. (EP Audiovisual Services, 28/11/2013).

European Parliament. 7th meeting of the EU-Iceland Joint Parliamentary Committee. (EP Audiovisual Services, 28/11/2013).

Iceland has two very good reasons to freeze its EU accession talks until the tiny country holds a referendum on it. Icelanders think twice when it comes to money and fish. On money their views differ widely from what the EU thinks about it and when it comes to fish, Iceland also has quite diverging opinions about mackerel. Let’s take one thing at a time.

Money and banks

Speaking of money, the first thing that comes to mind is banks. European Sting writer Maria Milouv on 13 December reminded us all what Iceland did with its three imprudent banks: “Kaupthing Bank along with Landsbanki and Glitnir, the three major Icelandic banks, went bankrupt in 2008, affected by the spillovers of the great financial crunch that first erupted in the US. Unlike the rest of the western countries, however, Iceland’s taxpayers didn’t cover the losses of those careless banks neither did they compensate their equally careless creditors. The three banks had borrowed many times the GDP of Iceland and the country’s government decided to let them rot along with their creditors and high yield seeking depositors”.

On the contrary, Ireland was forced by Brussels, Berlin and Paris to fully undertake the obligations its bankrupt banks left behind. Dublin was obliged by the EU authorities to compensate without discussion one hundred per cent everybody, who had imprudently lent money to Irish bankers. In this way the German and the French bankers, which had carelessly ‘invested’ money to Irish banks, got back 100% their risky bets on the Irish real estate bubble. Now the Irish taxpayers are burdened by a sovereign debt that reached 125% of the GDP, in comparison to 25% in 2008. In short the poor Irish undertook to fully compensate the German and French bankers who had bet on the real estate bubble.

Not the Icelanders

On the other side of the fence, at the time of the crisis the Reykjavik government chose to protect the people and not the bankers. However this decision led to the collapse of the country’s currency, the króna, and triggered a major social crisis. Food and fuel became scarce and their prices skyrocketed. The government responded quite effectively though and applied a meticulously planned programme to support the part of the population in need. It didn’t spend not one dollar or euro of its foreign currency reserves to support the three bankrupt banks. Within two years the country’s economy returned to normality. The bankers were brought to justice and one after the other are now finding their places in Icelandic prisons.

Britain and Holland were forced by the European institutions to compensate their citizens, who had lost their deposits in the three Icelandic banks. Reykjavik refused to compensate foreign depositors. Later on the European Free Trade Association (EFTA) Court, where Britain and Holland took their case, decided that Iceland doesn’t owe them not one euro.

About fishing

Then Brussels found that the Icelanders are depleting the North Atlantic mackerel stocks and threatened to ban them from all EU ports. This prospect could sentence the tiny country to economic death, given that its commercial relations are mainly directed to the EU. Brussels did that despite the fact that Iceland is a candidate country, which satisfies all accession criteria except what the Icelanders think about fishing…

Now that Iceland decided to freeze the EU accession talks until holding a referendum, the EU bureaucracy laments the Reykjavik’s decision. In any case the prospects are negative and very probably Icelanders will say no to the EU. In such an event any accession talks will be abandoned and Iceland will continue to sail free in the North Atlantic Ocean.

 

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