Iceland rejects EU-accession talks in close-fought referendum

Iceland has voted to stay out of the European Union, referendum results show, as Icelanders reject a government push to reopen membership talks and side with those who said Iceland’s fishing waters were too important to risk.

The Arctic island of 400,000 people has debated whether to join the EU for well over a decade and had initially been narrowly expected to back holding membership talks, but opinion polls this month showed views had changed.

In Saturday’s referendum, 52.8 per cent of ballots cast were against the government’s proposal to hold negotiations with Brussels, 47.2 per cent were in favour, and 82.5 per cent of eligible voters took part, public broadcaster RUV and other Icelandic media reported.

The vote count through the night had the nation on edge as the “Yes” vote took an early lead before eventually swinging in favour of the opposition.

By dawn, a margin of only a few hundred votes separated the two camps before the gap grew as more ballots were tallied in areas of the country where opposition was greater.

The government framed membership as a shield against trade wars and Arctic rivalry and presented the referendum as a “now or never” moment. Prime Minister Kristrun Frostadottir said a “no” would end the debate for as long as her centre-left coalition was in power.

The government is set to hold a press conference at 1pm local time on Sunday.

Decades of membership debate

In Brussels, some officials had voiced hopes a vote to join from Iceland could ease scepticism toward EU enlargement and strategically strengthen the bloc when Arctic security is in focus.

US President Donald Trump has repeatedly said he wants to do a deal to acquire another Arctic island, Greenland.

More broadly, geopolitical turmoil, including war in the Middle East, has stoked inflation and increased the vulnerability of smaller economies.

Iceland first applied to join the EU in 2009 when a financial crisis hit the country’s small, exposed economy.

A Eurosceptic government ended talks in 2013.

Interest rates and cost of living

Debates inside Iceland have focused on interest rates, fishing rights and the cost of living rather than on security.

Iceland has grappled with high inflation and interest rates that have made mortgages expensive.

Supporters of a “yes” vote have said EU membership, and possibly adopting the euro, could bring relief.

Iceland’s central bank interest rate is 8 per cent, compared with 2.25 per cent at the European Central Bank.

“It would not solve Iceland’s structural faults, but it could become a catalyst to a more healthy economy,” said chief economist Vilhjalmur Hilmarsson at Viska, one of Iceland’s largest labour unions.

Opposition leader Gudrun Hafsteinsdottir, who led the “no” campaign, said the economic case is overstated.

“These are not problems that Brussels will solve for us. These are problems that Icelandic politicians must solve,” she said.

Voter Ragnhildur Skarphedinsdottir, 70, said Iceland was managing well on its own and that she was voting “no”.

“By staying independent as we are, we look brightly to the future,” she said before casting her ballot in Reykjavik.

Under EU rules, fishing quotas are based on historical fishing patterns, among other factors.

Some Icelandic officials have said Iceland would therefore retain control of its waters, since no EU country has fished there for decades.

Ms Hafsteinsdottir disputes that.

“I know that the European Union will come up with some promises of some flexibility, especially in the beginning, but we know that it will not be for good,” she said.

Reuters/AP