Iceland seen to drop bid for EU seat as election looms

The European Union is an exclusive club many countries are vying to join. But Iceland, as it goes to the polls, is having severe second thoughts.

The bid by the North Atlantic island nation to join the EU, launched in 2009, could be abandoned after Saturday's general election if parties opposed to membership win, as opinion surveys suggest they will.

Reykjavik has been making quiet progress in negotiations with Brussels by avoiding sensitive issues, among which fishing is the most important.

But the two main opposition parties, the conservative Independence Party and the agrarian centrist Progress Party, are ahead in the polls after a campaign focused on putting an end to the mating dance with the EU.

The Independence Party states it wants good trade relations with the EU, but without actually becoming a member.

The Progress Party maintains that Icelandic interests are better served "outside the European Union", further diminishing the likelihood of Iceland becoming the EU's 29th member.

"I don't think Iceland is going to join the European Union," said Hannes Holmsteinn Gissurarson, a political scientist at the University of Iceland.

"There is now a ... majority against it in the opinion polls. The only party for it is the Social Democrats, and they seem to be headed to a crushing defeat in the coming elections," he said.

Gissurarson, the liberal author of a book widely seen as an inspiration for the financial deregulation in Iceland, is critical of the way the island nation went about applying for EU membership. A divided opinion was ignored, he said.

For many Icelanders the benefits that come from losing some of their sovereignty to Brussels are hard to see. The nation already has a free trade agreement with the EU, and is part of the European Free Trade Association (EFTA) and Europe's visa-free Schengen zone.

Its candidacy gained momentum in the wake of the financial meltdown in 2008, when many in Iceland saw the euro as an element of stability. Even so, it was with a narrow majority, 33 for and 28 against, that Iceland's parliament decided in July 2009 to formally file its application.

Since then, there has been no consensus about pushing through the EU membership bid, not even within the Social Democratic-led coalition government itself. Iceland could end up repeating the example of Norway and Switzerland, countries that both initiated talks with EU, only to give them up later.

Adalsteinn Leifsson, an international economics scholar at Reykjavik University, says the main obstacle is fishing.

Iceland's fishing fleet caught 1.15 million tonnes of fish in 2011, or more than a fifth of the total catch of all the 27 EU member countries combined. It is also engaged in a "mackerel war" with Brussels, accusing the EU of overfishing the species.

"Fisheries are a sustainable industry for Iceland. The public doesn't see the logic in changing a policy that has been successful," Leifsson said.