Says it's time to reconsider Iceland's EEA membership

Ragnar Árnason, professor of economics at the University of Iceland, says in an interview with the Icelandic newspaper Viðskiptablaðið January 7 that it is time to reconsider whether is serves the interests of Iceland at present to be a member of the European Economic Area (EEA). The EEA Agreement is an agreement between the EFTA countries Iceland, Norway and Liechtenstein and the European Union which allows them to participate in the Union's Single Market but obliges them at the same time to adopt those of the EU's regulations and directives which concerns it and to pay a certain amount yearly to the Union's construction and development funds.

Mr Árnason says the situation has changed very much since the EEA Agreement was accepted by the Icelandic government a decade ago. He says it was probably the right decision to join the EEA at that time but now the EEA Agreement doesn't have the same importance for the interests of Iceland as back then. The Agreement is even in some ways starting to be harmful to Icelandic interests because of the regulations and directives attached to it (Still this is only a part of the total EU regulation burden). Tariffs have been lowered significantly in the world in the last decade and a special international institution, the World Trade Organisation (WTO), has been established to ensure this. Members of it have committed themselves not to raise tariffs. So even if Iceland would dismiss the EEA Agreement the Icelandic government could demand that tariffs on Icelandic export to the EU would not be raised on these grounds. At the same time the regulation burden attached to the EEA Agreement increased every year. Therefore it was time to rethink the situation and see if other options would perhaps secure the interests of Iceland better than the EEA or EU membership.

Mr Árnason doesn't think EU membership would serve the interests of Iceland. "What is the European Union?" he asks and answers his own question: "It's a customs union. It protects itself from outsiders with walls of tariffs. It is in many ways very reactionary. Those who control everything, the Central European states France, Germany, Spain and Italy, are not the countries of the free market and have never been. Those are countries which have cetralised their economy very much. Their economy is in many ways incomplete with much rigidity in the labour market. They have a very complex and wide-ranging system of subsidies and grants. State interference in the economy is vast. And in many ways the European Union is driven by dreams of past greatness; dreams of keeping Europe as a superpower. The result of all this is that growth in the EU is rather small compared to America and Asia."

Mr Árnason says the question is why Iceland, which has more growth than the EU, higher average income and enjoys certain independence and freedom, should want to join this company? What is to gain? To him the only argument would be that Iceland would have a little more influence on the regulations and directives it has to adopt through the EEA Agreement. He nevertheless says he has always found those arguments quite naive since it is not likely that much would change concerning that. The influence of Iceland would hardly be much within the EU. Mr Árnason points out that it ought to be remembered that the influence of each memberstate of the EU as such was in decrease but the impact of population and size was on the other hand increasing. This tendency was very much present today in the proposed EU Constitution and it was clear that this evolution would continue.

The interview with Mr Árnason has resulted in widespread discussions in Iceland. The common attitute is nevertheless that the EEA Agreement is serving the interests of Iceland and working fine. The response by the pro-EU movement was that Mr Árnason's speculations were stupid. The Eurosceptic side said this was a typical reaction for the pro-EU movement not wanting to discuss any other possibilities for Iceland than closer ties with the EU. Davíð Oddsson, the Icelandic Foreign Minister, said Mr Árnason's speculations were unexpected but certainly worth looking into as all other possibilities.

Mr Árnason's personal homepage: