From Withdrawal to Reconsideration: The Referendum Reviving Iceland’s EU Question

A Renewed Debate on Europe

More than a decade after terminating negotiations with the European Union, Iceland is once again reconsidering its entry. In early 2026 the Icelandic Prime Minister Kristrún Frostadóttir announced plans to hold a national referendum (expected on August 29, 2026) on whether the country should reopen negotiations (Starcevic, ‘Iceland to hold referendum on EU membership talks on 29 August’). The initiative reflects a broader political shift following the 2024 parliamentary elections, which brought a centre-left coalition to power and revived debate about Iceland’s European future.

Iceland, with about 400,000 inhabitants, has long maintained close ties with the EU through the European Economic Area (EEA) and the Schengen Area, despite remaining formally outside the Union. The referendum represents more than a procedural step; it reopens a long-standing question: whether deeper integration with the European Union would enhance economic stability and international influence, or undermine Iceland’s sovereignty and control over key resources.

Iceland’s Previous attempt at EU Membership

For decades, Iceland remained outside the European project, pursuing a strategy of selective integration. The country joined the European Free Trade Association (EFTA) in 1970, it became part of the European Economic Area (EEA) in 1994 and joined Schengen in 2004 (Thorhallsson, ‘A Reluctant European: Iceland and European Integration’).

In the post-World War II period, some political and economic elites showed limited enthusiasm for EU membership. Scholars such as Baldur Thorhallsson argued that Iceland’s hesitation reflects the characteristics of a small state seeking ‘shelter’ through flexible international arrangements rather than supranational integration. Through NATO, the United States provided security guarantees, while the EEA ensured economic integration without the loss of sovereignty associated with EU membership (Thorhallsson, Iceland and European Integration: On the Edge).

This approach changed after the 2008 global financial crisis, which had severe consequences for the Icelandic economy. The collapse of the country’s banking sector prompted politicians to reconsider the benefits of closer integration with the European Union. In July 2009, Iceland formally applied for membership. Negotiations progressed rapidly because Iceland already adopted a large portion of EU legislation through the EEA agreement. The country was considered one of the most advanced candidates in the process: by 2013, 27 of the 35 negotiation chapters had been opened, of which 11 had been provisionally closed (European Parliament Research Service, Iceland and the European Union: Relations and Prospects). In 2013 the process stalled after a more Eurosceptic coalition came to power. Negotiations were suspended and eventually discontinued in 2015, leaving Iceland’s membership application dormant but not formally withdrawn (ibid.).

One of the most contentious issues was fisheries policy. Fishing is a central pillar of Iceland’s economy and identity, and many critics feared that EU membership would require the country to share access to its valuable waters under the EU’s Common Fisheries Policy. That contributed to persistent scepticism toward European integration.

The EU Accession Process

To understand what a renewed negotiation process would entail, it is necessary to examine how countries join the European Union. Under Article 49 of the Treaty on European Union: ‘Any European State which respects the values referred to in Article 2 (Ed. human dignity, freedom, democracy, equality, the rule of law and respect for human rights) and is committed to promoting them may apply to become a member of the Union…’.

The accession process, that starts with the submission of the application to the Council, involves negotiations structured around the so called ‘Acquis Communautaire’: thirty-five policy chapters covering areas such as competition policy, agriculture, environmental regulation, and judicial cooperation. Candidate countries must align their domestic legislation with the EU acquis and demonstrate the capacity to implement it effectively. The final accession treaty requires unanimous approval by the EU council, after consulting the European Commission and obtaining the consent of the European Parliament (Article 49(1) TEU) and ratification by Member States in accordance with their constitutional procedures.

The most recent country to accede to the European Union was Croatia, which became the EU’s 28th member on July 1st, 2013.

Why the Issue Has Re-emerged

The revival of Iceland’s EU debate reflects a combination of domestic political developments and shifting international conditions.

Firstly, the outcome of the 2024 parliamentary elections produced a government coalition more open to reconsidering EU membership. The Social Democratic Alliance and the liberal Reform Party both support reopening accession talks, although coalition partners (People’s Party) remain divided on the issue.

Secondly, geopolitical changes have played an increasingly important role in shaping Iceland’s strategy. As a small state with no standing army, Iceland relies heavily on NATO and its Western allies for defence. In recent years, however, uncertainty surrounding security arrangements (exacerbated by statements from former US President Donald Trump questioning the reliability of US commitments to European allies) and tensions in the Arctic region have renewed discussion about the benefits of closer European cooperation.

Public opinion also appears to be shifting, with surveys indicating that support for reopening negotiations has increased in recent years: from 59,1% opposing it in February 2016 to 52% in favour in February 2026 according to polls by Gallup.

What EU Membership Would Change for Iceland

If Iceland joined the European Union, it would become one of the smallest member states by population. Its representation in EU institutions would resemble that of other small states such as Malta or Luxembourg. In the European Parliament, Iceland would probably hold the minimum number of seats prescribed by Article 14(2) TUE: six seats. It would also gain representation in the Council of the European Union and participate in EU decision-making processes.

Economically the immediate changes might be less significant than past accessions because of Iceland’s participation in the single market through the EEA. Nevertheless, full membership would grant formal influence over EU legislation, something it currently lacks despite adopting many EU rules.

Monetary policy would be another major question. Iceland uses its own Icelandic krona, and EU membership would entail mandatory adoption of the Euro (Council of the European Union, ‘Joining the euro area’). EU treaties establish that all Member States, except for those holding a formal opt-out, shall commit to adopting the euro as their currency. However, adopting the euro is conditional on meeting a set of economic and financial requirements, the so-called Maastricht criteria, and some countries are indefinitely delaying joining the Eurozone by not fully meeting them. This is the case for countries such as Sweden (that joined in 1995) and Poland (that joined in 2004). By doing so, also Iceland could retain the Icelandic króna after joining.

Finally, EU membership could reshape Iceland’s international position: participation in a large political and economic union, for a small state, can enhance diplomatic influence and provide stability in international affairs. But at the same time, it would require sharing sovereignty with supranational institutions: a trade-off that has shaped Iceland’s cautious approach to European integration.

Towards the 2026 Referendum

The announcement of a referendum on reopening EU accession negotiations marks the first step in a potentially multi-stage process. The referendum is expected to be authorised through a parliamentary resolution of the Alþingi (Icelandic Parliament), as the Icelandic government has committed to submitting such a motion to Parliament. The Icelandic Constitution provides only a limited framework for referendums: under Article 26, a referendum is required if the President refuses to sign a law passed by Parliament. However, there is no constitutional requirement for referendums on international treaties or EU membership. In practice, such referendums are authorized on an ad hoc basis by the Alþingi through parliamentary resolutions or ordinary legislation.

The vote is therefore consultative rather than legally binding, serving primarily to provide a democratic mandate for the government to proceed. Should the outcome be favourable, Iceland would apply to resume accession negotiations with the European Union under Article 49 TEU, with talks potentially restarting shortly thereafter. These negotiations could culminate in an accession treaty. In line with current government statements and established political practice, any final agreement would almost certainly be submitted to a second national referendum for approval before ratification (Thorhallsson, Iceland and European Integration: On the Edge).

Bibliography

• Baldur Thorhallsson, ‘A Reluctant European: Iceland and European Integration’ in Baldur Thorhallsson (ed), Iceland and European Integration: On the Edge (Routledge 2004).

• Baldur Thorhallsson (ed), Iceland and European Integration: On the Edge (Routledge 2004).

• Consolidated Version of the Treaty on European Union [2016] OJ C202/13.

• Constitution of the Republic of Iceland 1944.

• Council of the European Union, ‘Joining the euro area’ https://www.consilium.europa.eu/en/policies/join-the-euro-area/ accessed 18 March 2026.

• European Parliament Research Service, Iceland and the European Union: Relations and Prospects (Briefing Paper).

• Sebastian Starcevic, ‘Iceland to hold referendum on EU membership talks on 29 August’ (Politico, 2026) https://www.politico.eu/article/iceland-kristrun-frostadottir-august-29-referendum-eu-membership-talks/ accessed 18 March 2026.

• Protocol (No 16) on certain provisions relating to Denmark [2016] OJ C202/283.