BBC Europe editor Mark Mardell believes Iceland will be forced into the Eurozone — and perhaps even the EU — as a result of the financial crisis. The country has been particularly hard hit, with the krona plummeting in value as the home of some of the world’s largest bank failures.
And ordinary Icelanders are very much hurting.
Many think salvation lies in joining the euro. While some say the government should just go ahead and use the currency unilaterally, as Montenegro and Kosovo do, more think that their country should start urgent talks to join the European Union. Long before the crisis opinion polls indicated that a majority were in favour of beginning talks about joining the EU and thought that they and their country would be better off if they joined the euro.
At the back of the demonstration I talk to the former Iceland Foreign Minister, Jon Baldvin Hannibalsson, a Social Democrat. “People are losing their flats and homes because of the exorbitant levels of interest,” he says. “In terms of people’s lives it would mean stability rather than risk and volatility. Prices would get lower and the interest rate, instead of being 26% would come down to normal levels. In terms of people’s lives it would be a solution.”
But a major practical reason against joining the EU has been the mainstay of the nation: fish. Iceland fought, and in diplomatic terms won, the cod wars against Britain and there is a strong feeling that it would be wrong to give up this precious piscine resource to the tender mercies of the unlauded Common Fisheries Policy. Incidentally there is a fascinating article in the Economist arguing that Iceland has got it right, and the EU wrong, when it comes to conservation.
Jon Steindor of the employers’ federation SI is one of those putting pressure on the government to switch the policy of a generation and go into the EU. He thinks change is in the air. “The crisis has shown us the consequences of being outside the EU. We feel if we had been inside already things wouldn’t have been so bad. The main problem for Icelandic industry is the instability of the krona and never knowing how much what you are buying will cost you.”
Iceland may not be one of the world’s great powers, but it is one of the great casualties of the global financial crisis and the decision of its government and people will have an impact on the way the euro is seen.
Considering that Iceland was on the verge of bankruptcy and
to get them out of the mess created by the collapse of their major banks, the arguments for autonomy are certainly less salient at the moment. For a relatively small country, especially, there’s strength in numbers.
James Joyner is managing editor of the Atlantic Council.