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In 2015, Iceland’s former Prime Minister breathed a sigh of relief that his country never joined the EU. Sigmundur Davíð Gunnlaugsson said: “I am pretty sure our recovery couldn’t have happened if we had been part of the EU.” Mr Gunnlaugsson argued that if his country’s application, made in the midst of an economic collapse in 2009, had succeeded, then Iceland might have suffered the fate of Greece, with its long-running economic collapse, or Ireland, which saw its public debt skyrocket as the government took on the bad debts of the banking sector.
He added: “We might have even gone the other way and become a bankrupt country.
“If all these debts had been in euros, and we had been forced to do the same as Ireland or Greece, and take responsibility for the debts of the failed banks.
“That would have been catastrophic for us economically.”
Iceland today is a world away from the fraught days of 2009, when Mr Gunnlaugsson’s predecessor, Jóhanna Sigurðardóttir, saw EU membership as a way of rescuing the country.
Yet the country’s EU application subsequently floundered.
Reluctance in both Brussels and Reykjavik to broach the awkward subject of fishing quotas slowed negotiations, while at home popular feeling changed as the North Atlantic island slowly dug its way out of trouble.
EU shamed after Iceland called out bloc for viewing country’s independence as ‘nuisance’
Iceland’s former Prime Minister Sigmundur Davíð Gunnlaugsson
Iceland suspended its EU bid in 2013, and Mr Gunnlaugsson withdrew the country’s application two years later.
According to the country’s Finance Minister Bjarni Benediktsson, though, in 2018, the EU started viewing the Nordic country’s independence as a “nuisance.”
Mr Benediktsson said the bloc’s desire for “deeper integration” was making it more difficult for Iceland to have special exemptions in areas which risked harming national interests.
His comments highlighted the difficulties Britain would have faced if it adopted the “soft Brexit” model pushed by some campaigners and Labour MPs.
Mr Benediktsson told The Telegraph that there was growing concern in Reykjavik that the EU “did not understand” why Iceland was so reluctant to be swept up into the European project.
He said: “They are almost showing disregard, it’s like a nuisance to them.
Iceland’s Finance Minister finance minister Bjarni Benediktsson
“‘When will we get rid of that?’
“‘Why can’t everybody just become full members?’
“I can understand that from a political standpoint but the fact of the matter is that if you have an international agreement you should respect it, and that’s that.”
His comments came after the Icelandic Parliament vowed to reexamine the European Economic Area (EEA) agreement, amid mounting concerns that Brussels was exerting too much influence over their domestic affairs.
Iceland‘s membership of the EEA allows full access to the single market, its largest trading partner, but requires the country to accept EU rules such as free movement.
Legal issues are handled by the European Free Trade Area (Efta) court, which is independent and although its decisions are often informed by case law established by European Court of Justice (ECJ) rulings.
Norway and Liechtenstein are also members of the EEA and Efta.
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Iceland’s prime minister Johanna Sigurdardottir talks with Chinese President Xi Jinping
One particularly controversial issue was the EU’s so-called “third energy package,” which some feared would have weakened Iceland’s control over natural resources and grant more powers to EU regulators.
Referring to the legal framework that ensures Iceland is governed by Efta, rather than accepting direct rule from Brussels, Mr Benediktsson insisted his country’s participation in the EU’s internal market is founded on a “two-pillar system”.
The Finance Minister added: “The fact that the European Union has the idea that we would accept anything else is to us just outrageous. But these attempts are being made.”
Despite this, Icelandic membership of the EEA had been “tremendously successful,” Mr Benediktsson said, pointing to the fact that Iceland was still able to sign free trade agreements as it was not part of the EU’s customs union.
In 2013, Reykjavik became the first European nation to conclude a trade agreement with China.