Security through Integration: Iceland’s Return to the EU Debate

By Alexandra Scherrer

When the debate over Iceland's possible accession to the European Union was revived after the country's parliamentary elections in 2024, it signalled a comeback of an issue widely thought to have been settled - and subsequently buried. Discussions around a possible EU membership had died down after well-advanced accession negotiations were paused in 2015 due to a standoff over fishing rights. But now, a referendum on whether to re-enter negotiations for full EU accession is scheduled for August 29, 2026. How did this change of heart come about? And why the need to change the status quo?

The current state of Iceland’s integration into the European Union

Iceland is already deeply integrated into the EU. By creating the European Economic Area (EEA) in 1994, the EU member states extended the European Union’s common market to three of the so-called EFTA states—European countries without EU membership. As a result, the free movement of persons, goods, services and capital also applies to Liechtenstein, Norway, and Iceland. Apart from EU members being Iceland’s most important economic partners, Iceland also cooperates closely with other European states under NATO. Hence, Iceland already adopts a lot of European legislation, but still lacks the formal influence associated with membership. The country has already transferred partial sovereignty, but without proper representation.

Concerns and obstacles 

Despite this large degree of integration, the EU remains controversial, and some of the issues that complicated accession negotiations in the past persist to this day. Recent polls indicated 47 per cent of the population oppose Iceland joining the European Union, with fisheries as the decisive issue. Entering the Union would mean joining the Common Fisheries Policy (CFP) with its quotas and mechanisms, and thus requiring a departure from Iceland’s fisheries management system, which has been hailed internationally for its efficiency and scientific backing. With the fishing industry as a major employer, fish as Iceland’s most important export and the ocean cluster contributing an estimated 25% to the country’s GDP, changes to this sector, which would then be decided by the majority of member states rather than by individual need, could threaten Iceland’s economic independence.

Concerns about independence are also visible in debates about other obstacles to EU membership. Since Iceland’s long struggle for independence from Denmark is engraved into Icelandic identity, handing over sovereignty may be seen as at odds with parts of this cultural aspect. Concerns regarding migration policy and monetary sovereignty also play an important role in the debate. The government has announced a panel to look into the advantages and disadvantages of switching from the Icelandic krona to the Euro, which may provide some answers to questions about economic stability following potential accession.

Did geopolitics change the equation?

Prime Minister Kristrún Frostadóttir, whose government announced the referendum on a resumption of EU negotiations, stated that she believed geopolitical shifts would affect the outcome of the referendum. While she urged for a balanced discussion, major geopolitical concerns are now shaping a debate that was once dominated by economic considerations.

The 2022 Russian invasion of Ukraine significantly changed the conversation about security in Europe, particularly regarding small states. Iceland’s security has long stood on two pillars: NATO and the United States. Despite not having a standing army, Iceland is a founding member of NATO and contributes to air defence and surveillance, as well as through financial means and civilian personnel. The second pillar of Iceland’s security is the 1951 bilateral Defence Agreement with the United States. But both Trump’s rhetoric towards NATO and uncertainty about US defence commitments make these two pillars seem less reliable.

In particular, Trump’s recent threats regarding a potential takeover of Greenland by force, including several instances where he seemed to mix up Greenland and Iceland, rattled many Icelandic officials and amplified previous security concerns. In this new era of uncertain US commitments, the interest in closer EU-Iceland cooperation may be mutual, with the EU trying to bring its neighbours closer and Iceland trying to diversify its security architecture beyond US protection.

A third factor, closely related to concerns about Greenland’s security, is the issue of Arctic security, since climate change is making the region more accessible—amplifying existing geopolitical tensions and opening it up to potential military uses. Growing concerns regarding Arctic security have strengthened the EU’s interest in Iceland joining the Union, and they have also recently convinced Canada to strengthen defence ties with Nordic countries. As Arctic competition intensifies, the EU increasingly views enlargement through a strategic lens.

These new geopolitical concerns have fundamentally shifted the debate: Rather than discussing just the economics, be that regarding the fisheries or the advantages and disadvantages of adopting the Euro as currency, questions surrounding EU membership are now tied to security and the role of small states in an unstable international order.

What Iceland’s membership would mean for the European Union

The implications of Icelandic accession to the European Union would be manifold. From an institutional standpoint, by joining the Union, Iceland would become the smallest EU member state, with about 400,000 inhabitants, compared to 574,000 inhabitants in Malta. Regarding its institutional power, the degressive proportionality rule in the EU would result in a large number of members in the European Parliament in comparison to inhabitants, with one Icelandic MEP representing around 67,000 inhabitants, while a German MEP represents around 860,000 inhabitants. 

From a geopolitical standpoint, having Iceland as a member would strengthen European presence and cooperation in the Arctic. Just how pressing this issue is can also be seen by the readiness of several important EU figures to discuss carve-outs for the Common Fisheries Policy. Costas Kadis, the EU Commissioner for Fishing, has announced 'room for flexibility' regarding the Common Fisheries Policy, which has also long been a dealbreaker for a Norwegian EU membership. Similarly supportive of Iceland joining the Union, Marta Kos, the EU enlargement chief, stated that the accession could 'really go quick', since most of the requirements have already been fulfilled. Since public opinion on the EU is almost evenly divided among Icelanders, a carve-out for Iceland on fishing policy may be necessary to sway public opinion decisively in favour of the European Union. 

But the discussion surrounding Iceland, a NATO founding member, joining the European Union for security reasons, rather than for economic reasons, also signals a transformation in how the European Union is perceived. As European states come together to establish a security infrastructure independent of the United States, the debate in Iceland is part of a broader shift towards the European Union becoming a security actor on the world stage. For small states like Iceland, the question is therefore no longer simply how much sovereignty European integration might cost, but whether sovereignty can still be effectively protected outside larger political and security structures.