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Will Norway and Iceland finally make it into the EU?

Article by Dick Leonard

September 15, 2006

By contrast, the three-party left-wing bloc, led by former Labour Prime Minister Jens Stoltenberg, but also including the Socialist Left and Centre parties, scored 51.1 per cent, enough to give them an absolute majority in the Storting, Norway’s lower house, with 90 out of 169 seats. The far right Progress Party, which had been informally supporting the government but recently fell out with it, is slated to win an impressive 19.1 per cent.

The question of a third Norwegian application to join the EU is not an issue in the election. Nevertheless, Stoltenberg is far more enthusiastic than Bondevik, and has told friends that if the level of support for membership, which has risen to more than 50 per cent in recent polls, continues to grow he would favour calling a third referendum on the issue.

A cautious man, Stoltenberg will not act precipitately, and is only too aware that the two previous referenda were deeply divisive, not least in his own party. He is, however, thought to have set a bench-mark of around 60 per cent of popular support before taking the risk of another appeal to Norwegian voters.

Meanwhile, along with Iceland and Liechtenstein, Norway benefits from its membership of the European Economic Area, which enables it, in particular, to gain free access to the single market, except for fish and agricultural products, which were excluded from the agreement. On the whole, the EEA has worked surprisingly well, and has led to very few disputes.

These have been adjudicated by the Brussels-based Efta Surveillance Authority, currently presided over by the senior Norwegian diplomat, Einar Bull. Its authority, in relation to the Efta members, is equivalent to that of the European Commission within the EU.

Nevertheless, many Norwegians regard the EEA as an unsatisfactory half-way house to full EU membership. Norway, they feel is essentially marginalized. It has no say in the formation of EU policies on, for example competition and state aids, but is legally bound to implement them. It resents the application of anti-dumping duties on its salmon exports to the EU, claiming that its lower prices were a consequence of the greater efficiency of its fish farms than in those of its competitors in Ireland and Scotland (where some 60 per cent of the farms are, in any case, Norwegian owned).

Iceland undoubtedly feels more comfortable within the EEA than Norway, and has never previously sought membership of the EU. For many years it was an article of faith for most Icelanders that their unique dependence on the fishing industry would preclude their entry into the Union.

Yet this dependence is no longer as great as it used to be. Other industries, attracted by the abundance of natural energy resources have established themselves, including a large aluminium plant, now owned by Alcan. These new industrial concerns now account for more than half of Iceland’s exports, compared to 41 per cent for fish and other marine products.

Pressure has been building up for some time from the non-fisheries sector for Iceland to join the EU. Partly in response to this, the Prime Minister, Halldór Ásgrímsson, has appointed a high level committee, chaired by Justice Minister Björn Bjarnason to examine afresh the whole question of Iceland’s relations with Europe. The Committee on Europe, as it is called, came to Brussels in May, and had long discussions with EU enlargement Commissioner Olli Rehn.

The committee members have differing views on the desirability of EU membership, and Bjarnason made it clear in Brussels that he personally prefers the existing relationship through the EEA. The presentation of the committee’s report seems likely to provide the occasion for the first serious debate on the issue in the Icelandic Parliament.

Of the three main parties represented in Parliament, only one – the opposition Social Democrats – has an official policy. It is strongly in favour of EU membership. Both parties in the governing coalition are split on the issue, with the Progressive Party, of the Prime Minister, being marginally in favour, and the larger Independence Party predominantly against.

Ásgrímsson was the first senior politician in Iceland to argue that fishing would not be an insuperable obstacle to Icelandic membership. As Foreign Minister, he made a well publicized speech, suggesting that under the EU ‘subsidiarity’ provisions, Iceland should be left free to manage fishery control in its own waters. Since becoming Prime Minister, in September 2004, however, he has not repeated this argument.

All Icelandic parties are agreed on one thing: no membership application could be launched unless it had been approved in advance by a referendum. It is extremely unlikely that any decision will be taken before the next general election, due in 2007. That, incidentally, was the date mentioned to me by a senior Norwegian official, as his personal estimate of when a Norwegian referendum might be held.

There is no direct link between the positions of the two countries. It is, however, unlikely that Iceland would apply if the Norwegians had once again said “no” to the EU. Conversely, a Norwegian majority in favour would greatly encourage Iceland’s pro-EU supporters to press ahead.

One thing neither country has to worry about is a negative reaction from the EU side. As highly prosperous countries, with long established democracies they would be most welcome recruits – despite the ‘enlargement fatigue’ currently prevailing, and most probably would easily leap-frog past existing candidates, including Croatia and the Former Yugoslav Republic of Macedonia, whose application Greece has just threatened to veto.

Dick Leonard, an FPC Senior Associate, is the author of ‘The Economist Guide to the European Union’, whose 9th edition has just appeared.

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