When everyone is turning their eyes toward the global economic crisis unfolding with epicentre in the US, a little earthquake is shaking things up on Iceland. A warned earthquake, though. I’ve been interested in the euro/EU discussion on Iceland for quite some time, and now, new Euro events are getting attention on the saga island. Norway should pay attention.
To make the long money story short: Iceland has it’s own currency, the Icelandic kroná, which is unstable and shaky, for several reasons. Iceland has the highest interest rate in Europe, 15,5 percent(!), and is longing for the euro. But since the little island way up north is not an EU member (but member of EFTA, an exclusive club consisting of Norway, Switzerland and Lichtenstein), EU is opposing Iceland to start using the euro. Still, the euro has already been introduced into several parts of the economy.
However, today I got this very interesting translation from an Icelandic article (via the daily press review from EFTA):
Membership negotiations could take “less than a year”; no euro through the EEA
Negotiations for Icelandic membership of the European Union could take less than a year, according to information provided by Olli Rehn, European commissioner for enlargement, at a meeting with Icelandic MPs in Brussels. Mr Rehn said that the idea that Iceland could adopt the euro through the EEA Agreement was “unrealistic”, since there was no political backing for such a solution. The commissioner confirmed that Iceland would be able to complete membership negotiations in a much shorter time than any of the current candidate countries, principally because Iceland is already part of the EEA and has incorporated a large part of existing EU legislation (source RUV)
Add also this info: According to a poll conducted by Capacent Gallup for the Federation of Industries, over 55 per cent of Icelanders are in favour of replacing the króna with the euro.
Norway needs to pay attention to these Icelandic debates, because if Iceland decided to take the big EU step, and join the union of 27, I can hardly imagine EFTA remain unchanged.
To dig deeper into the euro issue, but from an EU perspective, here is a video from the new EuroparlTV on “Why don’t all countries in the EU use the euro?”
Update: A story from the EUobserver about Iceland unions push government to join euro.