What you can pick up in Iceland

16 September 2006

British Eurosceptics would love us to leave the EU and join Iceland in Efta. But, David Rennie reports, it is not clear that we would be welcome

Now Icelandic businesses trade inside Fortress Europe, without paying the full entry fee. ‘We are not paying our share,’ Oddsson admits cheerfully. ‘We would pay ten or 20 times more if we were in the European Union.’ Small wonder that shortly after Margaret Thatcher left office, she told Oddsson that Britain, in an ideal world, would have taken the same path as Iceland. But there is the hitch: Oddsson does not believe that path was ever open to Britain.

He recalls a conversation with the then German leader, Gerhard Schröder. ‘Schröder said to me, “[Iceland] shouldn’t try to become a member of the European Union; it’s good for you to be a member of the EEA agreement, and you are allowed to be there, because you are so small.’’’

So far, so friendly. But Schröder had a warning too, Oddsson recalls. ‘He said, “We would never tolerate a large country to be in that system.”’

Oddsson has no doubt about what the German meant. Britain leaving the EU would be a major affront, the political equivalent of a bitter divorce. ‘[The EU] would try their best to make sure it would not work, because if a country left, and it did work, it would be a humiliating example for them.’

That sort of fight between Brussels and Britain could threaten the Efta–EEA agreement itself — and thus Iceland. ‘Maybe, if [EU leaders] saw major players trying to get through [the EEA’s] small, open window, they would say, “Let’s close that window”,’ Oddsson worries.

The present prime minister, Geir Haarde, is no less robust a Eurosceptic. He simply does not believe Britain will make it into Efta. Asked if he would welcome Efta expansion, Haarde says, ‘I think Efta could be expanded, I don’t know about dramatically.’ He mentions promising talks with the Faroes (population 47,000).

‘As far as Britain is concerned, I don’t think this is a very likely prospect that you suggest, even though some people in the Eurosceptic community in Britain talk about this,’ Haarde says. Discussion over.