Published in Newsroom.co.nz (Wellington), 25 August 2026
I have always liked Iceland. My first visit was on a cruise ship in the mid-1990s. Reykjavík felt like a city that had grown from a fishing village, and the country behind was mostly empty.
A few years later, I returned for a proper holiday. It confirmed that earlier impression and added more peculiar observations like tiny but ridiculously priced hotel rooms or spotting puffin on the menu of a restaurant in the capital. In the end, I passed on that and had the most expensive pizza in my life instead.
Icelanders were super-friendly, but really, there are not too many of them. About 400,000 which makes the population smaller than the Greater Wellington region. Except Iceland is a member of the United Nations, Nato and the Universal Postal Union, whereas Wellington barely governs itself.
Still, Iceland’s set of international memberships is one entry short. Yes, it is a member of the European Economic Area, the passport-free Schengen Area, the European Free Trade Association, the Nordic Council and the Council of Europe.
But crucially, Iceland is not a member of the European Union.
And whether that should change is the question that will be put to Icelanders in a referendum on Saturday.
Actually, that is not quite the right way of putting it. Because the question is not whether Iceland should join the European Union. It is whether Iceland should resume talking about joining.
Even if Icelanders say ‘já’ (pronounced ‘yow’) to talking on Saturday, that would still settle nothing. It would just re-open the talks with the EU, which have been suspended since 2013. And if those talks ever led to a formal proposal to join the EU, that would, of course, require yet another referendum.
Iceland’s history with the EU is long and complicated, so all this requires a bit of unpacking.
To understand Iceland’s mentality when it comes to dealing with Europe, it helps to remind oneself of what Iceland is at heart: a nation of fishers, surrounded by vast swathes of ocean. The island is about 450km from the Faroe Islands, 800km from the Shetland Islands and Scotland, and 950km from Norway in a straight line. That is a lot of water, and a lot of fish.
While the world was in the Cold War, Iceland fought three Cod Wars against the United Kingdom between the 1950s and the 1970s. They were all about fishing grounds, and Iceland won all three.
Back then, the small Icelandic Coast Guard used specially designed cable cutters to slice the trawl nets of British fishing vessels. They also deliberately rammed larger Royal Navy frigates.
Then Iceland also threatened to withdraw from Nato and evict a crucial US military base at Keflavík airport, which forced Washington to pressure London into giving up its attempts to raid Iceland’s fishing grounds. In the end, the UK withdrew its warships and ultimately recognised Iceland’s 200-mile exclusive economic zone.
If there is one lesson from those Cod War days, it is that you do not want to mess with Iceland. And if there is a second lesson, it is that Iceland is prepared to defend its national interests and its independence fiercely if needed.
No wonder that Iceland never joined the EU or its predecessors over the decades. Especially not with the EU pursuing its own agenda through its Common Fisheries Policy. And surely, a nation that faced down the Royal Navy over cod was never going to hand its quotas to a committee in Brussels.
But all this Icelandic stubbornness took a hit in the financial crisis of 2008. Iceland’s banks, which had become bizarrely oversized and collapsed spectacularly, pushed the country close to bankruptcy. And suddenly, that made the EU look like a safe harbour.
So, talks began to explore Iceland joining the EU. Even though Iceland already has most of what the EU offers. Through the European Economic Area, it has been inside the single market since 1994, and its citizens can travel passport-free to other Schengen countries.
In practice, Iceland is behaving like an EU member in all but name. It adopts practically all the EU’s economic rules without having any say when it comes to making them.
Norway, by the way, has the same arrangement with Brussels, and the Norwegians call it a “fax democracy”. Because that is how it feels from their perspective: Brussels makes a new rule, it used to arrive via fax, and all the local parliament has to do is implement it.
However, in a minor economic miracle, Iceland recovered much faster from its banking collapse than anyone had predicted, and with that recovery, the prospect of joining the EU looked less attractive again.
When Iceland then also elected an EU-sceptical government, the talks were put on ice in 2013. Although it is not even entirely agreed between Reykjavík and Brussels whether those negotiations were properly ended, suspended or whether they just stopped. Either way, they did not continue, that much was clear.
By now, you will probably ask yourself what Saturday’s referendum is really all about. After all, Iceland’s economy is doing fine, Iceland has access to the EU market, and it does not have to bow to Brussels over fishing grounds. So why on earth would Icelanders suddenly feel the urge to revisit the issue of EU membership?
There are two answers to this question. One is about economics.
With the memory of the 2008 crisis still fresh, Icelanders pay much higher interest rates than the rest of Europe. The Icelandic króna is also notoriously volatile, and so life in Iceland is expensive. Maybe, supporters of joining the EU believe, becoming a member of the eurozone could help with that.
But the real reason for Reykjavík’s renewed interest in the EU has little to do with the economy. It is rather driven by fear: fear of Donald Trump.
The US President not only briefly imposed tariffs on Iceland’s fish (and later changed his mind), he also repeatedly mused about annexing Greenland, Iceland’s neighbour, which dominated Iceland’s news for months.
Meanwhile, the Arctic has become a hotly contested space between America, Russia and China, and Iceland, so to speak, feels the heat of the great powers’ rivalry in its backyard.
The latest surveys give a solid majority for restarting talks. But this being Iceland, the same surveys also show a majority opposed to actually joining.
As Iceland is queuing for a club it does not want to enter, perhaps this also tells us something about the EU. It is less a group of countries that aim for ever closer union and more a self-help group of countries facing a more and more dangerous world.
On Saturday, we will find out if Iceland wants to keep talking about it.
