Iceland Needs the EU as a Political Project, Not a Market

Iceland, like Norway, is for all practical purposes already an EU member. So why should it seek formal membership? As it turns out, for quite a lot of reasons. Donald Trump has now unveiled a map on which Iceland is incorporated into the United States.

Referendums have an unfortunate tendency to divide a population in two. That has also been the case with Iceland’s vote on whether to resume negotiations on EU membership. After the referendum of 30 August 2026, resulting in 52.8 % against, and 47.2 % in favour, the Icelandic prime minster confirmed that the government will not resume membership negotiations this period.

Once again, the debate has been dominated by economic arguments — in other words, by what Iceland might gain from EU membership. This time, however, the question is not access to the EU market, as it was when the European Economic Area (EEA) Agreement was concluded in the early 1990s. The question is whether Iceland should become a full member of the EU, with all the obligations that entails. The economic calculus has therefore changed: fear of losses outweighs the prospect of gains. Concerns about losing control over fisheries appear to have been decisive. Yet the debate was distorted and poorly informed. Self-interested misinformation went hand in hand with outright propaganda.

In truth, there are few purely economic arguments for Icelandic EU membership, apart from the prospect of adopting the euro as a stable currency. Like Norway, Iceland enjoys access to the lucrative single market through the EEA Agreement and is, for all practical purposes, already part of the Union. Like Norway, Iceland has outsourced much of its legislation to Brussels. Once again, Icelanders have chosen not to influence the policies by which they are nevertheless bound, and not to share responsibility for shaping the order that governs Europe. But as the saying goes: if you are not at the table, you are on the menu. Trump’s new map of the United States, which includes Iceland, has understandably caused concern among Icelanders.

The EU was not created primarily to generate growth and prosperity, but to prevent war and safeguard democracy in Europe. In that respect, it has succeeded within its borders. The EU is a success story. The Union has produced a range of collective goods — shared institutions, peace and stability, the world’s largest market, free movement, infrastructure, necessary regulation, and binding legal enforcement — from which everyone benefits, including those who do not contribute to them. One may ask what the situation in Iceland and Norway would be without these collective goods. One may also ask how long these countries can continue to free-ride on the efforts of others.

It is one thing to benefit from collective goods without contributing to them. But there is also the question of what company one chooses to keep. In Norway, congratulations are pouring in from supporters of “No to the EU” movement; in France, from Marine Le Pen; in Britain, from Nigel Farage. Vladimir Putin and Trump, meanwhile, are rubbing their hands with glee. No to supranationalism; yes to nationalism.

In a world where the rules-based order is undermined daily by the great powers, the EU stands out as a beacon. It is Europe’s principal instrument for standing together against injustice and acting collectively in response to threats and challenges. As the United States stirs up uncertainty about its commitment to NATO, defence and security policy have moved to the top of the EU agenda. Who, one may ask, is to act on behalf of Iceland and Norway in meeting global challenges related to defence and security, artificial intelligence, human rights, refugees, climate, and the environment, if not the EU?

In this sense, Iceland needs EU membership. Yet, as in Norway, the Icelandic debate has been driven largely by narrow self-interest. This raises the question of whether either country is truly ready for membership. EU membership brings not only benefits but also new duties and political costs. Members must be prepared to accept occasional defeats in political negotiations and votes. They must also be willing to comply with supranational legal rulings.

The EU, for its part, may ask what it stands to gain from members interested only in feathering their own nests. This concern was evident when Iceland applied for EU membership in 2009. Economic motives predominated, and questions about Iceland’s commitment were raised.

The EU’s values are firmly expressed in Article 2 of the Treaty on European Union.  They reflect the founders’ ambition to build a united and democratic Europe in which war would become impossible. It is in pursuit of this higher goal that the constitutions of member states permit transfers of sovereignty to EU institutions.

The process began in 1951 with the decision to place control over the means of war production in the hands of a supranational authority. The European Coal and Steel Community was intended to ensure “never again”, and it was followed by a far-reaching process of integration. New legal and political bonds were forged. The result was a supranational Commission, a Court of Justice, and a directly elected Parliament.

For a long time, economic cooperation was the principal focus. The aim was to reach agreement where possible and to build trust over time. The market was regarded as a means, not an end in itself. This was particularly clear during the Brexit negotiations. In the Lisbon Treaty’s hierarchy of objectives, the market has now been relegated to third place.

European integration has domesticated international relations . EU member states cannot take the law into their own hands, as the United States and Russia repeatedly do. The current geopolitical turn marks a break with the painstaking development of an international legal order under the auspices of the United Nations. What is clear, however, is that the actions of the United States and Russia constitute violations of international law. Most countries around the world nevertheless continue to regard international law as legitimate and binding.

After the Second World War, the conviction that nationalism leads to war was widespread and deeply felt. The aim was to prevent states from acting unilaterally by subjecting them to supranational jurisdiction. Such limits on national self-determination hold little appeal in many circles on Europe’s periphery. Nor do they appeal to the extremist forces — indeed, the outright fascism — now gaining ground once again in several places, including Europe.

It is as a political project that the EU needs support — including support from Iceland.