Iceland Votes on Restarting EU Membership Talks Amid Arctic Security and Economic Concerns

Icelanders head to the polls on Saturday to decide whether their country should reopen negotiations to join the European Union, a referendum that carries significant economic and security implications for the small Arctic nation.

The vote comes 13 years after a Eurosceptic government paused Iceland’s previous accession talks, convinced the country would fare better outside the bloc. Since then, however, the strategic landscape has shifted dramatically.

Arctic security concerns have intensified amid Russia’s war in Ukraine and former U.S. President Donald Trump’s threats to seize neighboring Greenland. Simultaneously, the cost of living has surged and Iceland’s currency has remained volatile.

Prime Minister Kristrún Frostadóttir, whose Social Democratic Party supports EU membership, has pledged to respect the outcome. A “yes” vote would launch years of negotiations with Brussels on membership terms, followed by a second referendum on the final agreement. Frostadóttir has stated that a “yes” result would see the nation “enter negotiations with our heads held high and stand together in seeking a good agreement,” while a “no” would set aside all speculation about membership.

Knife-edge vote

Recent polls show the electorate almost evenly divided. A Gallup survey conducted this week found 51.6 percent of respondents opposed to new talks, with 48.4 percent in favor. An earlier Maskina poll showed a narrow 51.3 percent majority backing renewed negotiations.

Gabriella Gricius, associate professor of strategy at the Norwegian Military Academy, noted that Iceland’s lack of a standing military has historically left it “reliant on NATO and specifically the US for its security.”

“As the US has grown more unpredictable, and specifically, its rhetoric around Greenland has grown more concerning, it is not surprising that Iceland is seeking additional security guarantees through the EU,” Gricius told Al Jazeera.

Adam Fishwick, a lecturer in international relations at the University of Iceland, said the expected benefits include reduced inflation, a more stable currency, and fewer customs barriers for consumers. “There may also be opportunities for regional development in Iceland, which is an important issue here, with access to dedicated EU funds,” he added.

However, Fishwick cautioned that the debate remains “quite polarised.” Opponents fear the nation of 395,000 people would “lose control over everyday policy decisions” and wield limited influence in a bloc dominated by larger powers.

Voters weigh impact on inflation and currency

The advantages of EU membership are less obvious for Iceland than for other candidate countries. As a member of the Schengen Area and the European Economic Area, Iceland already enjoys much of the single-market access that full membership would provide.

Yet the country has faced growing economic strains, particularly regarding the cost of living. Consumer prices in 2025 exceeded those of any EU state and stood 87 percent above the EU average. The Icelandic króna has been prone to exchange-rate swings that critics say undermine investment confidence and raise borrowing costs. A report from the Ministry of Finance and Economic Affairs earlier this year concluded that the costs of maintaining an independent currency likely outweigh the benefits, suggesting that adopting the euro could lower interest rates and transaction costs.

EU accession could address both issues. Iceland would join the bloc’s customs union, allowing goods to move freely between members under a common external tariff, and could adopt the more stable euro.

Fishing industry concerns: ‘Backbone of the economy’

A major sticking point is the potential impact on Iceland’s fishing sector, an economic pillar that directly contributed roughly 8 percent of GDP in 2024 and significantly more indirectly.

EU membership would subject Iceland to the Common Fisheries Policy, which manages European fleets and fish stocks. The industry fears this could bring new catch quotas, increased foreign competition, and reduced control over domestic fishing policy.

“The fundamental objection to EU membership is that Iceland would not retain full control over its fisheries – the traditional backbone of the economy,” said Valur Ingimundarson, professor of contemporary history at the University of Iceland.

Even if voters approve negotiations, Ingimundarson said Iceland is unlikely to proceed to full membership without “ironclad” exemptions for its fishing industry.

‘Additional security guarantees’

Mounting security pressures in the Arctic, coupled with uncertainty over U.S. commitments to its European allies, are also driving renewed interest in the EU, analysts say.

Though Iceland is a founding NATO member with a 75-year defense treaty with the U.S., it possesses no standing armed forces and sits in a geopolitical hotspot where both Russia and the U.S. have sought to project power.

While Russia has expanded its military presence in the Arctic, President Trump repeatedly threatened to use force to acquire Greenland.

Ingimundarson said pro-EU Icelanders view the bloc as “a source of political and economic protection for a small state confronted by coercive great-power politics and uncertainty about the US as a reliable security partner.”

Foreign Minister Þorgerður Katrín Gunnarsdóttir has called membership “a valuable addition” for Iceland, even though NATO and the U.S. would remain its core security partners. In comments to Reuters, she said Iceland has been “disappointed” by the U.S. “pressure campaign waged against both Greenlanders and Denmark.”

Russia, she added, poses a security threat “in our waters and nearby, in the North Atlantic.”

For the EU, Iceland’s accession would extend its territory deeper into the North Atlantic, potentially sharpening its strategic focus there, according to Gricius.

“Icelandic membership in the EU wouldn’t necessarily change Arctic security dynamics, as Iceland is and will continue to be an Arctic state,” she said. “However, it may influence how the EU behaves in the Arctic, as the EU would then include four of the eight Arctic states – Iceland, Finland, Sweden and Denmark.”

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