The example of dithering over Ireland contrasts sharply with Iceland
getting a grip on its own affairs and has made the Icelanders
think! The panic stage is over and rational thinking creeps in.
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FINANCIAL TIMES 4.3.09
Icelandic ardour for Europe's club cools
By David Ibison
When Iceland's banking system collapsed in October, even the most
independent-
Europe for salvation. If only Iceland had been a member of the
European Union and eurozone, the argument went, it would have escaped
the crisis and humiliation.
Four months later, as crisis-hit European countries such as Poland
and Hungary consider joining the eurozone as quickly as possible,
Icelanders are no longer looking overseas so rapturously.
The latest polls reveal less than 40 per cent now back an application
to join the bloc, compared with a mid-crisis high of nearly 80 per cent.
The reasons for the fall-off are mixed. Fissures inside the eurozone
between large members, such as Germany and France, and small ones,
such as Greece and Ireland, are undermining the zone's attractiveness
to a tiny country. Icelanders see little point in enduring one
currency crisis only to get embroiled in another.
"We are watching developments within the eurozone closely," said
Steingrimur Sigfusson, minister of finance, in an interview. "What
will happen to the euro? We will take that into the picture."
Others argue that, as Iceland has already undergone a crisis, there
is little protection to be derived from joining the eurozone.
"If we had had the euro it would have made the collapse less
spectacular,
"On the other hand, people point out that having a currency that has
collapsed will help recovery in terms of exports."
Politicians are also wary of public disquiet over implications for
the island's fishing industry, a valuable sector that is closely
associated with the national heritage - as testified by the "cod war"
against the UK in the 1970s.
Disquiet among the general public is matched on the political stage.
Iceland's new leftwing coalition government, comprising the Social
Democratic Alliance and the Left-Green party, is split on the issue
and its two most senior members, the premier and finance minister, do
not see eye-to-eye.
Johanna Sigurdardottir, prime minister and a Social Democrat, insists
that joining the EU trade bloc is the best option. However, she did
not sound too enthusiastic when addressing Nordic prime ministers
last week.
"Globalisation and the unlimited flow of capital have shown their
dark side. We must make sure the interest of the public . . . is not
sacrificed for globalisation,
Mr Sigfusson, meanwhile, is openly reluctant. "A decision on the euro
will not lead to a miracle. We have to prove we are tidying up our
own house first."
The confusion is unlikely to fade quickly. The new government was
appointed on February 1 after the former rightwing administration,
led by the Independence party, collapsed. It was given just 82 days
to rule before a general election on April 25.
A pre-election resolution of the EU issue is unlikely as it would
risk eroding parties' support. "We have agreed that this issue will
not be solved in the interim period," said Mr Sigfusson.
The government has indicated, however, that it will hold a referendum
on membership after the election, although this may also fail to
bring clarity.
But the dithering and electoral jockeying is not going down well with
the business community.
"Consensus on the issue is still lacking, but everyone agrees
uncertainty is detrimental,
Chamber of Commerce.
"There needs to be a vision for where policy is headed. For many, the
right course to pursue is the EU and adoption of the euro. The
current situation hampers the operation and growth of international
companies in Iceland."
Pro-EU lobbying by the business community is understood to be
intensifying. One observer said the government would have little
choice but to listen. "If 65 per cent of your GDP calls up and says
let's talk, you talk," he said.
Wednesday, 4 March 2009
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