Iceland’s parliament votes to join EU

REYKJAVIK, Iceland — Iceland’s parliament voted by a narrow margin Thursday to apply for membership in the European Union, moving to relinquish some of the recession-hit country’s cherished independence in the name of stability.

In a fiercely debated motion, members of Iceland’s parliament, the Althingi, voted 33-28 to start membership talks with the EU. Two lawmakers abstained.

Prime Minister Johanna Sigurdardottir said the vote was a historic moment that “will have a great and beneficial impact on the future of this nation.”

Icelanders have always fiercely defended their independence, and been wary of transferring political power to the European Union’s center in Brussels.

Until last year it seemed this tiny, independent-minded nation, whose 320,000 people are mostly descended from Viking settlers, could thrive on its own.

Financial deregulation, a stock market boom and a surging krona helped Icelandic entrepreneurs go on a global buying spree, snapping up businesses from Britain’s Hamleys toy store to the Karen Millen clothing chain. Iceland’s banks drew depositors from around the world with too-good-to-be-true savings rates.

Then the global financial crisis hit, and Iceland became one of the earliest casualties. The over-stretched banks collapsed under the weight of debt amassed during the years of light regulation and retailers went bankrupt. The country’s currency, the krona, has plummeted, while unemployment and inflation have spiraled.

Thousands of Icelanders held angry protests against the pro-business government, clattering pots and kitchen utensils in what some have called the “Saucepan Revolution.” The government was forced to resign and was replaced after a national election by a coalition of Sigurdardottir’s pro-European Social Democrats and the Left Greens.

The disaster has forced Icelanders to consider seeking the shelter, and restrictions, of membership in the EU and possibly the euro currency, which would provide a more stable exchange rate and lower interest rates.

Sigurdardottir has said she wants to submit a membership application to the EU by the end of the month, although a final decision to join the 27-nation bloc would need approval by Icelanders in a referendum. The EU would also have to approve the addition.

European Union officials are enthusiastic about Iceland’s vote, and European Commission president Jose Manuel Barroso said the decision “is a sign of the vitality of the European project and indicative of the hope that Europe represents.”

But Iceland’s government will have to work hard to persuade the population to support it in a referendum.

“There has been a taboo in the past to talk about transferring power from Reykjavik to Brussels, and from Althingi to any international organization,” said Baldur Thorhallsson, professor of political science at the University of Iceland. “To convince people (about EU membership) the debate is now going to have to focus on the euro and how the Icelandic economy will receive much faster on joining the EU.”

Iceland is already part of the European Economic Area, a trading block that gives Icelanders the right to live and work in the EU while allowing the country to run its own agricultural, fishing and monetary policies.

Full EU membership will hit Iceland’s fishing industry, one of the few sectors to have survived the financial crash and a symbol of national pride. If Iceland joined the EU it would likely have to sign up to its common fisheries policy and allow other European fishermen access to its waters.

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Helgason reported from Reykjavik. Selva reported from London.