Kárason warns EU talks could bring years of lost opportunities

In an opinion article published by Morgunblaðið, Óli Björn Kárason argues that Iceland’s referendum on August 29 concerns far more than whether officials should be sent to Brussels to assess the situation and examine what the European Union has to offer.

He says the vote is about whether Icelanders have the confidence to continue as an independent nation in close cooperation with Europe while remaining free to pursue opportunities around the world.

Kárason argues that the consequences of joining the European Union are clear and that the bloc has never concealed what membership entails. He says the government’s decision to hold a referendum is a request for a political mandate to restart negotiations with the aim of Iceland joining the union and transferring extensive powers of its sovereignty.

No one applies to join an organisation before examining the terms and gathering the necessary information about what is on offer, he writes. A vote in favour would instead be an expression of support for Iceland becoming a member of a union of states facing deep economic problems, declining competitiveness, burdensome public debt and unfunded pension liabilities.

Uncertainty and years of lost opportunities

If the decision is made to restart negotiations, a period of constitutional and economic uncertainty will begin, Kárason writes. He says there is a real risk that the increased political risk inevitably accompanying accession negotiations would undermine investment by businesses and households.

Companies invest when they have a reasonably clear view of the future. In uncertain conditions, people hold back, he writes, adding that the same applies to individuals and households.

The cost of uncertainty will not appear as a separate item in the national budget or in Statistics Iceland’s figures on gross domestic product or wage purchasing power. Instead, it will be hidden in investments that are postponed or abandoned, businesses that are never established, ships that are never built, cowsheds that are never constructed and homes that never rise.

The public will bear the cost through lower economic growth, lower disposable incomes than would otherwise be possible and fewer opportunities in the labour market. The longer the period of uncertainty, the heavier the cost will be, he writes.

“I fear that Icelandic society will enter a period that will later be remembered as the years of lost opportunities,” Kárason writes.

More than resources are at stake

Kárason says there is no dispute that membership would require Icelanders to transfer a large part of their sovereignty to EU institutions, including important elements of legislative and judicial authority.

Those who believe Iceland’s future would be best secured within the EU may hope that negotiations could guarantee full control over Iceland’s marine resources, he writes. But that would require not only the approval of all 27 EU member states, but also trust that the European Court of Justice would never interfere with a special provision that conflicted with the union’s fundamental rules.

No one can provide that guarantee, he says.

Control over Iceland’s resources at sea and on land, which sovereignty secures, is not the only thing at stake.

Icelanders’ living standards and economic wellbeing depend on reliable access to foreign markets and fair access for foreign parties to the Icelandic market, Kárason writes. Freedom to trade with other countries is a prerequisite for good living standards, and the European Economic Area agreement has therefore proved important to Iceland, despite its advantages and disadvantages.

He says good and open relations with the European Union are important to Iceland, but argues that a nation dependent on open trade with other countries should not aim to hand control of its foreign trade to officials in Brussels.