Fri Jan 30th, 2009 at 03:14:12 PM EST
With the collapse of its banking system and currency, Iceland is quickly running out of options. After months of protest, Icelanders ended the rule by the nation's rightwing government of 18 years that was responsible for the economic downfall.
The krona has now somewhat stabilized, but still some in Iceland seek a more stable currency. But what foreign currency will Iceland adopt?
Suggested options have been to adopt the Norwegian krone, the Canadian loonie, the American dollar, or the EU's euro. Before the currency collapse, Icelanders were divided roughly equally over the adoption of the euro, but changing circumstances may mean changing positions on the euro and Icelandic EU membership.
According to The Guardian, Iceland is to be fast-tracked into the European Union.
"The krona is dead. We need a new currency. The only serious option is the euro," said a senior Icelandic official.
The temptation of euro may be strong for this quoted Icelander, but there's no indication if this "senior Icelandic official" is one of the same officials that got their country into their mess in the first place. This seems more like wishful thinking on some officials in Iceland and Brussels more than anything else. According to the article:
The European commission is preparing itself for a membership bid, depending on the outcome of a snap general election expected in May. An application would be viewed very favourably in Brussels and the negotiations, which normally take many years, would be fast-forwarded to make Iceland the EU's 29th member in record time, probably in 2011.
The article goes on to quote Olli Rehn, "the European commissioner in charge of enlargement", suggesting Icelandic membership would coincide with Croatian membership because "The EU prefers two countries joining at the same time rather than individually." Rehn wants Iceland to join the EU.
The news that Iceland is now on the EU fast track is surprising to The Reykjavík Grapevine, a free magazine in English and distributed all over Iceland. In disagreement with The Guardian article, the Grapevine notes:
The article also cites "riots" in Iceland - news which would come as a surprise to anyone living here. In addition, while the article contends that there are "rising expectations" that Iceland will apply for membership, this is contrary to the latest opinion poll on the subject which shows nearly 60% of the country against joining the EU - a figure that has been rising since last October. A referendum on joining the EU is expected some time after elections this spring. If public sentiment against joining the EU continues its current trajectory or even just stays the same, application for membership will be unlikely.
According to the CS Monitor, the Social Democrats want a referendum on EU membership to happen concurrently with the May elections. The paper wrote yesterday that Icelanders are now giving the European Union another look and reports "Public opinion polls suggest two-thirds of Icelanders will vote yes, up from a little over half before October's banking sector collapse."
But Icelandic "fishermen now fear that their nation's financial meltdown will bring about their worst nightmare: that Iceland will join the European Union, surrendering management of its oceans to a distant bureaucracy with a poor conservation record."
Icelanders point to the depleted fisheries of the EU as what will happen to Iceland if the country becomes an EU member. So far, according to the BBC, the matter of applying for EU still undecided. "The Left-Green Party, favoured to win early elections in May, has so far campaigned against joining the EU, mainly because of concerns about fisheries policy."
The CS Monitor notes that while "Iceland has managed its fisheries relatively successfully, in stark contrast to the EU's Common Fisheries Policy, which experts say has often failed to control overfishing and the government subsidies that fuel it. Much of the cod eaten in the US and Europe is now caught by the profitable, unsubsidized Icelandic fleet."
Some in Iceland see their country's return to the sea as their possible salvation. Fishing in Iceland may be the best way available to rebuild the Icelandic economy. Icelandic fishing led the country to independence in 1944 and led to the "Cod Wars" against Britain in the 1950s and 1970s.
Iceland could conceivably adopt the euro as its de facto currency without joining the EU, or it could adopt another country's currency as well. However, discussion about EU membership fast tracking seems to me to be premature.