Dynamics Behind the EU Referendum in Iceland

Introduction
The geopolitical relevance of the North Atlantic has significantly increased, driven by renewed US interest in Greenland and the Arctic, as well as the concern among many Europeans over US interest in Greenland, signalling potential frictions within NATO. At the same time, global powers such as China and Russia are monitoring the region and seeking opportunities to expand their spheres of influence. In this context, Iceland faces various potential threats and opportunities that will inevitably change the country’s future and strategic independence. The current global shift towards multipolarity and unilateralism represents a serious threat to the autonomy of small states. A valuable option is signing treaties with more powerful states or joining larger international organisations. Even though EU membership talks were abandoned in 2013, the current geopolitical context has pushed Reykjavík to reconsider its relationship with the EU. A Referendum on resuming EU membership talks with Brussels will be held on 29 August 2026. The purpose of this study is to explore the dynamics behind Iceland’s renewed interest in the European Union and other decisions that will determine the country’s position on the current geopolitical chessboard.

A Peculiar Geopolitical Actor in the North Atlantic

Iceland is an army-less country that lived through the Cold War under a bilateral defence agreement (1951) with the United States. In exchange for defending the island against potential threats, the Americans received access to the Keflavik base and were able to monitor the region against possible Soviet incursions. Iceland has often shown a remarkable ability to endure turbulent times and to efficiently face external hostilities, making the best of its limited tools and exceptional geographical position. For instance, Iceland fought and won the Cod Wars, three bloodless disputes with the UK over fishing rights in the North Atlantic during the Cold War. The small country used its strategic position in NATO—even threatening to leave the alliance if its fishing claims were not respected—and in the so-called GIUK gap (Greenland-Iceland-United Kingdom) to win the disputes with its much stronger opponent. A potential scenario in which Iceland left NATO during the Cold War would have sounded highly alarming to many members of the alliance. Iceland is strategically located and can be used as a base to monitor or even strike countries such as Canada, the USA, Russia, or the UK.

Iceland’s location was too strategic to be left unmonitored or in enemy hands. As German General Karl Haushofer, and later Winston Churchill, said, “whoever possesses Iceland holds a pistol firmly pointed at England, America, and Canada.” Iceland and the waters surrounding it were highly relevant during the Cold War, and still are today, due to the current hostilities between the West and Russia, and the strategic relevance of the Northern Sea Routes for global trade. Today, Iceland feels threatened by US declarations on Greenland—not to mention its discontent with US tariffs on Icelandic imports—and by the growing interest of China and Russia in the Arctic. The current geopolitical situation in the North Atlantic has become more turbulent, and a more hostile climate will push smaller actors such as Iceland and the Faroe Islands to choose their partners and allies carefully in order to preserve their strategic autonomy. An increasing need for military and economic security guarantees can make larger organisations more attractive also for states that have traditionally chosen to follow a lonely path. In this context, the Icelandic governing coalition—formed by The Social Democratic Alliance (Samfylkingin) in coalition with the Reform Party (Viðreisn) and the People’s Party (Flokkur Fólksins)—has turned its gaze towards Brussels and the European Union.

The Path Towards the European Union

Despite its reduced population and resources, Iceland’s GDP per capita ranks among the highest worldwide, and Icelandic institutions are well known for their democratic rigor. Observers argue that if the Referendum planned for August 2026 were to approve the resumption of EU membership talks, Iceland could join before many other candidate countries, as declared by EU Foreign Policy Chief Kaja Kallas. This single aspect reflects not only the high standards of Iceland’s institutions and democratic vocation, but also its readiness to satisfy the EU eligibility criteria. Furthermore, Iceland shows remarkable innovation in forward-looking sectors such as renewable energy and climate tech, making it a valuable new entry to join Europe’s innovative industrial landscape, adding to the competitiveness of the bloc.

The reasons that have reinvigorated the interest in potential EU membership and the August Referendum are clear to both Icelandic voters (according to opinion polls, 58% of Icelanders supported holding such a referendum) who are aware of the unreliability of current alliances, and also to EU officials. A new, strategically relevant member state would bring considerable prestige and leverage to Brussels. EU enlargement in the current state of world affairs would not only be a stability guarantee for more vulnerable states facing geopolitical uncertainty, but would also demonstrate a European willingness and capacity to strike a balance between larger and hostile powers. European Commissioner for Enlargement Marta Kos said in an interview with Politico that the conversation on enlargement is “increasingly about security, about belonging and about preserving our ability to act in a world of competing spheres of influence. This concerns all Europeans.” Naturally, having Iceland as a member state would signify a series of strategic advantages that would allow the EU to elevate its autonomy and relevance in the North Atlantic and Arctic region. First, Northern Atlantic dynamics would have to be discussed in cooperation with Brussels, and the region could be further integrated into frameworks such as the EU Strategic Compass, PESCO, and especially the EU Maritime Security Framework. Secondly, Brussels would gain a stronger say in the Arctic Council—going beyond the mere role of observer—thus reducing EU reliance on NATO concerning arctic affairs. Furthermore, according to experts, if Iceland were to join the EU, then Norway might also become interested in EU membership, feeling the increasing irrelevance of the European Free Trade Association. A scenario in which an economically affluent country such as Norway and other EFTA members might consider joining the EU is particularly attractive to Brussels.

However, it is mandatory to consider the importance of EU-sceptic voices in the Icelandic domestic debate and how these voices might react to the likelihood of resuming EU-Iceland talks. The Independence Party (Sjálfstæðisflokkurinn) and the Progressive Party (Framsóknarflokkurinn) have often voiced the need to protect Iceland’s fisheries and agriculture from EU competition and regulation. Many fisheries industry representatives have expressed concern about the reduced autonomy and profits that would follow the imposition of EU quotas and the Common Fisheries Policy. The ruling government overseeing the referendum is aware that fisheries, as well as challenges related to Iceland’s small size and population, are central issues. Prime Minister Kristrún Frostadóttir has stated that she will be cautious if the referendum on 29 August reinitiates EU membership talks. In a declaration, the Prime Minister said that the country’s natural resources and its fisheries sectors will need special attention if the country embarks towards EU membership.

Conclusion

The transformation of the North Atlantic into a vulnerable and contested region is one of the main reasons behind the Icelandic reconsideration of EU membership. A resumption of EU membership talks following the 29 August referendum would mark a significant shift in Iceland’s foreign policy, and a strategic victory for the EU. It would highlight the value of the Union, which would be internationally viewed as a chosen guarantor for rule of law and economic stability. Furthermore, future EU membership would bring considerable geopolitical advantages to Iceland, as it would be integrated into important security frameworks, strengthening the EU’s position in the arctic region. Naturally, EU membership would also require compromises on national control over key economic resources. While becoming a EU member would bring considerable mutual benefits, it could also carry the risk of reduced autonomy and growing domestic public discontent. Alternatively, if Iceland were to abandon EU talks again, it would expose itself to the interests of hostile actors that aim to exploit the island’s position and resources for their strategic imperatives—both offensive and defensive. Iceland-EU relations will certainly deepen regardless of the referendum’s outcome, but the extent and nature of this relationship will depend on how Iceland chooses to balance sovereignty with strategic integration in a risky multipolar context in the North Atlantic.

Questions

1. Will Iceland gain a more advantageous position if it joins the EU?
2. How will actors such as the US, China, and Russia react to an Icelandic EU membership?
3. Will the Referendum encourage other smaller states in the region and elsewhere to consider EU membership?

Suggested readings

1. Wheelersburg, Robert P. The Security of Iceland and the Arctic 2030: A Recommendation for Increased Geopolitical Stability. Springer. 2022.
2. Bilms, Kevin. “The Cod Wars and Lessons for Maritime Counterinsurgency”. Proceedings. February 2023.
3. Einarsdóttir, Margrét. “Half in, half out: Iceland’s relationship with the EU”. UK in a Changing Europe. 12 June 2025