The silver lining (for Europe) of Iceland’s ‘No’ to EU membership

The Icelandic vote against reopening negotiations on the country’s accession to the European Union has been interpreted by many commentators and politicians as a failure for Europe. According to the Financial Times, “The vote represents a setback for the EU and its ability to act as a magnet in an unstable world. The rejection is a severe blow to the EU’s ambitions to exert its influence in the Arctic”.

In a nutshell, the EU is not appealing. Neither as an economic entity – particularly for the wealthier countries, which would be net contributors – nor as a political entity, given the limited influence Europe manages to exert in the current geopolitical landscape.

At least two closely interlinked conclusions can be drawn from this. On the one hand, until the EU has resolved its problems regarding its appeal, it is unlikely to be able to expand, particularly to include more advanced countries. On the other hand, enlargement does not necessarily help to resolve Europe’s attractiveness issues; on the contrary, it risks exacerbating them. In other words, it may be for the best that Iceland does not join the European Union, at least for a while.

From an economic perspective, the accession of countries such as Iceland – which, along with Norway and Switzerland, is already part of the European Economic Area – would not change much, at least for the EU. The island already adopts European regulations and makes a financial contribution in order to gain access to the European market.

What would change, however, is the potential to strengthen integration in areas not covered by the single market, as suggested by the Letta and Draghi reports, particularly energy, telecommunications, finance and defence, as well as taxation. These are sectors in which integration is held back precisely by the member states’ desire to maintain distinct national rules and powers and to retain the right of veto in order to gain advantages at the expense of others. One example is the financial sector, where smaller states, with lower taxation and lighter regulation, tend to oppose integration measures so that they can use distortive measures to attract businesses and capital from the rest of the Union. Who can guarantee that Iceland, once it has joined the Union, will not use its veto to slow down or halt the hard work carried out in recent years to achieve greater financial integration and to strengthen the European market supervisory authority? Who can guarantee that Iceland will not use its veto to promote distortive tax conditions for multinational companies, perhaps in competition with other countries such as Ireland?

From a political perspective, Iceland’s membership of the EU could enhance its security guarantees, particularly in light of growing US aggression towards that region. The Icelandic government was forced to summon the US ambassador to complain about a map recently published on Truth, Trump’s social media platform, which depicted Iceland, alongside Canada and Greenland, as an integral part of the United States.

On the other hand, Europe is an under-represented political actor, often paralysed and ineffective on the international stage, with a limited capacity for action. What is the point of being part of the Union if it then fails to act in the interests of its members? Here too, the doubt is legitimate. Yet it is equally legitimate to ask whether, at a time when Europe is seeking to strengthen itself politically – on matters of foreign policy and common defence – it is useful to expand to include countries that have no intention of relinquishing their right of veto and whose interests are strongly shaped, in particular, by their geographical location. The accession of new countries, at a time when insufficient progress has yet been made to strengthen the Union’s decision-making capacity, risks slowing down the process of unification even further.

The debate over whether to deepen or expand the Union cannot be sidestepped, particularly in the new geopolitical context.

Admitting further countries at a time when the aim is to strengthen integration and overcome national resistance in order to foster the creation of European sovereignty risks being a serious mistake. The ‘no’ vote in the Icelandic referendum is therefore to be welcomed. Europe should have discouraged it. The only inexplicable aspect of the referendum result is the jubilation of the sovereigntists. Evidently, they have failed to realise that the more countries that join, the more difficult it is to federate Europe.