A ‘light’ EU is a risky idea. Iceland’s ‘no’ sends a signal to London and a (somber) one to Eastern Europe

Brussels. Iceland has said ‘no’ to resuming accession negotiations with the European Union and, despite the defeat in the referendum, there are those who wish to see the silver lining – even a model for the United Kingdom to follow as it seeks to rebuild ties following the damage caused by its exit, but without calling Brexit into question. “The result of the Icelandic referendum does not reject European integration,” explains Alberto Alemanno, a professor at HEC Paris: “It shows that the current arrangement within the European Economic Area – access to the single market, freedom of movement and participation in EU programmes without membership and without a say on EU rules – is attractive enough to maintain the status quo.” Iceland is, in effect, integrated into the EU economy and its free trade area through the four freedoms of movement: people, goods, services and capital. Iceland is also a member of the Schengen Area, the zone without internal border controls. Iceland participates fully in the Horizon research programme and the Erasmus student exchange programme. In March, it signed a defence and security partnership with the EU, which also grants it access to contracts funded by the SAFE rearmament programme.

The referendum may have been a betrayal of the EU and a severe blow to its narrative of being a bastion of stability in the era of Donald Trump and Vladimir Putin. But this is also the era of coalitions of the willing, and it could turn out to be an opportunity. “The vote highlights the shift currently taking place in the architecture of European integration,” explains Heather Grabbe, a researcher at the Bruegel think tank. Following the ‘no’ vote on accession negotiations, both the Icelandic Prime Minister, Kristrún Frostadóttir, and the President of the European Council, António Costa, have expressed a desire to strengthen ties between Iceland and the EU. According to Grabbe of Bruegel, Iceland demonstrates that “countries no longer face a binary choice: to join or not to join. There are many alternatives for formal and informal ties across Europe, many of which are anchored in special relationships with the EU. Geopolitics is pushing all Europeans to cooperate more closely. The weakness of the United States makes the European pillar of NATO more important” and “strategic autonomy (…) is now a shared political objective in many other areas”, Grabbe wrote in a paper. The European Economic Area could therefore become a form of “civil partnership with the EU”: a civil and regulated union, without having to go through formal marriage with its long and controversial accession process.

Some analysts point to Iceland as a model for the UK’s future relations with the EU. “Rejoining the EU remains politically unlikely,” says Professor Alemanno. “The European Economic Area could offer a path back to European integration without immediately reopening the question of membership.” Some voices in the British public debate regularly raise the prospect of a return to the single market and the customs union. It would be a way of putting an end to the economic barriers created by Theresa May and Boris Johnson’s decision to pursue a ‘hard Brexit’. Labour leader Andy Burnham, like his predecessor Keir Starmer, is seeking the right formula to rebuild post-Brexit relations without reopening the wounds of Brexit. Both have been held back by one of the consequences of a ‘Pacs’-style arrangement with the EU via the European Economic Area: member countries must align their national legislation with EU directives and regulations, without having any say in their adoption. Iceland and Norway have ceded a large part of their sovereignty to a supranational body of which they are not members. Keir Starmer has not had the courage to follow their lead, agreeing to regulatory alignment with the EU only in relation to plant health rules.

In reality, the EU had been hoping for an Icelandic ‘yes’ to give new impetus to the cause of enlargement. At last, a wealthy Western European country was ready to join the EU. Exactly ten years after Brexit, it would have been a political success story to sell to a public sceptical of enlargement towards the poorer countries of the East. The Commission was already envisaging a joint accession of Iceland and Montenegro in 2028. Instead, the ‘no’ vote in the Icelandic referendum reinforces the argument that the EU is a magnet only for the poorest countries, which see membership as the path to Western prosperity, generously funded by the EU budget. As for the ‘Pacs’ with the EU, coalitions of the willing are multiplying. With Switzerland, the Commission has made many concessions by agreeing to sign several sectoral agreements rather than a single agreement. But this is a dangerous path. In the Brexit negotiations, the EU had established a principle: ‘No cherry-picking’. The UK was not to be allowed to take only the best bits of the single market, without the obligations and costs associated with membership. It was a political imperative to discourage further exits. Because an ‘à la carte’ Europe risks leading to internal political disintegration. In the future, if elected to the Élysée Palace, Marine Le Pen could well invoke the Icelandic model to sell Frexit as a step towards a less costly ‘PACS’ with the EU.