UNCLAS SECTION 01 OF 02 REYKJAVIK 000123

SIPDIS

SENSITIVE

STATE FOR EUR DAS GARBER, EUR/NB, INR/B
NSC FOR HOVENIER

E.O. 12958: N/A
TAGS: PGOV PREL PINR EUN IC
SUBJECT: ICELAND: PARLIAMENT PASSES RESOLUTION TO APPLY FOR
EUROPEAN UNION MEMBERSHIP


1. (U) Summary: The Icelandic parliament passed a resolution on July
16 to enable the government to start accession negotiations with the
European Union (EU). The parliament approved the controversial
legislation with a slightly larger majority than expected, and
fulfills the Social Democratic Alliance's number one campaign
promise. The second reading of the resolution took almost a week and
was at times tumultuous. The GOI will very soon submit a formal
application for EU membership to Brussels, after which the Council
of Ministers will refer the application to the EU Commission. The
process of negotiations could take up to three years. But before
Iceland joins the EU, the final negotiated agreement must be
approved in a national referendum, which is by no means certain at
this date. End Summary.


2. (U) Iceland's parliament voted on July 16 to authorize the
government to begin accession talks with the EU. Members of
parliament voted 33 to 27 in favor of an EU application following a
final round of debates that lasted for almost a week. The margin of
victory was a bit larger than had been expected, with three MPs
abstaining from the vote. Notably, one Independence Party (IP)
Member of Parliament (MP) voted in favor, and the IP deputy chair
abstained. Pundits had expected the IP to present a unified
opposition to the EU resolution. The vote paves the way for an
application to be sent to Brussels later in July and gives PM
Johanna Sigurdardottir a major achievement - one which she has
campaigned for vigorously since becoming PM in February. If the
application is approved by EU member states, Iceland would put the
question on actual EU membership to voters in a referendum.


3. (U) When the Social Democratic Alliance (SDA) and the Left-Green
Movement (LG) formed a majority coalition government on May 10, they
announced in their policy statement that the Foreign Minister would
submit a parliamentary resolution on Iceland's application for EU
membership in the first days of the new parliament, which convened
for its summer session on May 15. The SDA had made EU membership a

key issue in their electoral campaign. The two parties agreed that
if the resolution passed and accession negotiations would ensue,
then the negotiated accession treaty would be put to a national
referendum, possibly as early as 2010.


4. (U) Soon after the Foreign Minister submitted the draft
resolution in parliament, the IP and the Progressive Party (PP)
submitted a counterproposal on EU membership, claiming that the
government's resolution presented insubstantial arguments in favor
of membership. The IP-PP resolution called for a more detailed
explication of Iceland's most important interests in accession talks
with the EU, a road map on the arrangement of accession talks, and
an explanation of what needs to be done to ratify an accession
treaty. The parliamentary Foreign Affairs Committee discussed both
resolutions and tried to merge them into one, which the parliament
passed today. Later, the IP proposed an amendment requiring a double
referendum, (i.e., one on whether to start accession negotiations
and one on the negotiated accession treaty), but this amendment was
voted down today.


5. (U) Today's resolution had to pass two readings before the vote.
The first reading continued for two days, but the second lasted for
more than six. Speaking time was doubled by the Speaker of the
Parliament to give everyone a chance to have their say. The second
round of debate was chaotic, and often interrupted by the emergence
of secret documents that the MPs said had to be reviewed before
continuing the debate. When the Parliamentarians took the floor,
some MPs towed the party line, while others said they thought it was
in Iceland's best interest to see what kind of an accession treaty
could be negotiated. A few talked about the positive history and
impact of the EU, while some likened it to the Soviet Union. Several
Althing members, especially from the Citizens' Movement, tried to
engage in horse trading by threatening not to support the resolution
unless the government dropped its controversial Icesave bill, which
is also being debated in parliament. The media had a heyday
speculating on how those MPs who had not yet made up their mind were
going to vote.


6. (U) The application for EU accession will first go to the Council
of Ministers which will then refer the application to the EU
Commission, a process that will likely take up to six months. After
that, the actual accession talks will commence and they can take up
to three years. This time could be shortened because of Iceland's
prior participation in many areas of the EU through its membership
in the European Economic Area. Without a doubt, the most challenging
subjects will be the fisheries sector and agriculture. As of now,
Iceland does not fulfill the Maastricht criteria for adopting the
euro as its currency.


7. (SBU) Comment - This was a big victory for Prime Minister Johanna

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Sigurdardottir and her SDA party - both have had difficult sledding
over the last couple of weeks. The Prime Minister summed up the
situation nicely in a radio interview immediately after the vote,
"This is the result we were hoping for... It's a great day for us."
Sigurdardottir's enthusiasm may not be shared by a majority of
Icelanders. Recent polls show that an accession treaty would be
turned down in a national referendum if a vote were held today.
Clearly, the economic situation in Iceland in two to three years'
time will have a major impact on the final decision. End Comment.

KLOPFENSTEIN