Referendum: Gratitude and Outlook from the Swiss Substitute

The Foreign Committee of the Althingi invited me in spring 2026 to present my thoughts on the planned EU referendum; later, professors of the University invited me to give a lecture which took place on 10 August 2026 in downtown Reykjavík before a full house. This was followed by two podcasts and numerous conversations. My thanks go to Hannes Gissurarson, Ragnar Árnason, Erna Bjarnadóttir, Halldór Benjamín Þorbergsson, Guðlaugur Þór Þórðarson and — last but not least — former President of Iceland Ólafur Ragnar Grímsson.

As I understand it, Ólafur Ragnar led his country according to the same motto by which I sought to preside over the EFTA Court: protocol-wise, we are equal to the great powers; after that, one must fight. In this final statement before the vote, I summarise my position in eight points.

The eight points follow a simple structure: the seat at the table argument, security, democracy, exceptions, the EFTA pillar, energy and currency, the present attractiveness of the EU, and the function of the referendum. The common thread is this: would Iceland gain real advantages by acceding — or would it give up proven institutional autonomy without sufficient return?

I. The seat at the table argument

The argument about a “seat at the table” is too simplistic. What matters is not whether Iceland would obtain a seat, but at which table, on what terms, and what it would have to give up in return. On 29 August, the issue is not Europe or isolation: Iceland is already deeply integrated through the EEA, Schengen and EFTA. The real question is whether it should abandon the proven EEA/EFTA model in favour of full EU membership. Iceland’s position — Atlantic, European and at the same time distinctly Icelandic — suggests that the vote should be judged from self-confidence, not fear.

The EEA is neither a relic nor a waiting room, but Europe’s second institutional order. Alongside the political logic of the EU stands the economically oriented, sovereignty-preserving logic of EFTA and the EEA. It shows that participation in the internal market does not necessarily require full political integration.

That is precisely why the EEA remains strategically important: as a bridge for states that seek access to the internal market without becoming EU members — such as the United Kingdom, Switzerland or one day Turkey and Ukraine. Its logic is market access, common rules and institutional safeguards without full political integration.

II. The geopolitical situation

The strongest emotional (not rational) argument for accession is geopolitical uncertainty. The concern does not carry far: Iceland’s hard security rests on NATO, the defence agreement with the United States and the North Atlantic security system, not on the EU. Accession would have symbolic value, but it would not provide an additional decisive security guarantee; the EU itself remains dependent on American capabilities. Nor is the claim that the EU is the last defender of the rules-based order convincing so long as it demands, under considerable pressure, a CJEU interpretative monopoly from Switzerland and the United Kingdom — a standard that Germany, France or Italy would never accept for themselves.

III. Democratic deficits

The EEA has an open democratic deficit: Iceland incorporates internal market law without voting rights. Accession would not remove the problem but replace it with another, because responsibility would shift from parliament to government and to the EU institutions. The EU’s democratic deficit separates power from accountability: decisions emerge from the interaction of the Commission, Council, committees, agencies and courts; attribution becomes difficult; and national parliaments lose control without an equivalent democratic structure arising at EU level.

IV. Exceptions

Special arrangements are possible, but for new members they are rare and politically costly. For Iceland, fisheries are the central case. A permanent exception may not be legally impossible, but the closer it came to the EEA model, the higher the hurdles would be. Accession would in principle mean submission to the Common Fisheries Policy.

V. The EFTA pillar

The EEA combines internal market access with limited political absorption. It preserves Iceland’s control over fisheries, agriculture, currency, energy, trade policy and the independent EFTA pillar. The core of that pillar is the sharing of the CJEU’s interpretative monopoly with the EFTA Court. EU accession would mean leaving that pillar, together with ESA and the EFTA Court. Iceland would gain formal co-decision, but lose practical autonomy; exceptions would in future be interpreted by the Commission and the CJEU.

The EEA shows that Europe need not consist of the EU alone. Alongside a politically deepened Union, there can be a market-based, treaty-backed order that preserves national sovereignty while enabling economic participation.

The EEA/EFTA order is also viable because it can mediate between different European legal traditions. It is civil-law enough for the internal market and practical enough for lawyers from common-law-influenced systems. This applies to the affinity between the United Kingdom and the EFTA states as well as to Iceland and Switzerland: both are shaped by civil law but give courts a comparatively independent and practical role. This mixed form helps explain why the EEA can remain accessible both to continental Europe and to Britain.

Icesave demonstrates the value of the EFTA pillar. The EFTA Court’s judgment of 28 January 2013 protected Iceland from claims of roughly four billion euros plus interest. The Court held that EEA law did not require a state in a systemic banking crisis to assume the debts of a deposit guarantee scheme. It thereby also confirmed the two Icesave referendums.

The later EU Directive 2014/49/EU tightened and harmonised deposit guarantee rules for EU Member States. For EEA/EFTA states, however, it would have become binding only if it had been incorporated into the EEA and implemented nationally. Iceland refused that incorporation; under EU accession, this non-incorporation would be irrelevant for the future. EU accession would not formally overturn Icesave; the CJEU would not sit as an appellate court over the EFTA Court. For the future, however, the EU acquis would apply. In a new Icesave-type case, the CJEU would decide under EU law and would not be bound by the EFTA judgment. Icesave would remain historically significant, but practically largely neutralised.

VI. Energy and currency

Iceland’s isolated grid supplies stable renewable electricity; accession would not automatically require a submarine cable. Over time, however, market integration, climate policy and pressure for solidarity could make a permanent refusal more difficult. Iceland does not necessarily need a submarine cable in order to export the value of its renewable energy. Iceland can instead use its stable hydroelectric power domestically — for example, in data centres — and export digital services rather than electricity.

Iceland’s small size and particular situation make flexibility especially valuable — in energy, agriculture, foreign trade and currency. The króna facilitated recovery after the financial crisis, and the free trade agreement with China showed independent trade-policy capacity. Norway also shows that interconnectors can transmit European price volatility into national electricity markets.

VII. Is EU membership attractive?

Accession must be measured against today’s EU: against centralisation, regulatory zeal, weak counterweights after Brexit and a Commission that increasingly acts as a political executive. The Digital Services Act, disinformation rules, AI regulation and industrial-policy steering show the same reflex: political problems are managed administratively. Access to the digital internal market is largely secured through the EEA; membership would not create technological capacity of its own. Added to this is a CJEU whose case law can reach deeply into core areas of state self-determination.

The German philosopher Peter Sloterdijk warned Switzerland against allowing itself to dissolve into the European Union’s “uniform soup.” A similar consideration applies to Iceland. A small, successful and self-confident state should be especially cautious before exchanging institutional independence for integration into a larger political structure.

The New Hanseatic League after Brexit and Bruegel’s proposal for a “Continental Partnership” point in the same direction: both inside and outside the EU there remains a need for market openness, institutional cooperation and limits on unnecessary centralisation.

Instead of inventing new special arrangements, the EU should take the EEA seriously as a proven second European order. Europe’s “two souls” — political deepening and economic cooperation while preserving sovereignty — are not a weakness, but a source of resilience.

VIII. The function of the referendum of 29 August 2026

A Yes vote on 29 August 2026 would not yet decide EU accession; a later accession agreement would again have to be submitted to the people. But even the reopening of negotiations would create deadlines, expert networks, administrative routines and international expectations. What is formally a first step can politically become a track.

EU information campaigns, expert papers, political contacts and the message that the chosen path is rational, modern and historically inevitable would follow. The debate would shift from “whether” to “under what conditions.”

That is framing: Iceland would no longer be asked whether it should accede, but whether it is finally ready to take its “natural place” in Europe. Visits, conferences, studies, media briefings and funding programmes could present the EU as the only viable framework for prosperity, security and influence.

Path dependence means that earlier decisions shape later options. Rules, routines, expectations and interests make switching to another system more costly over time. That is why a first Yes in a two-stage procedure is not politically neutral.

Conclusion

The function of the referendum is not to discover, without commitment, “what Brussels has to offer.” It would place Iceland on an institutional path whose political dynamics would be difficult to reverse. EU accession would be justified only if it offered concrete, durable and superior advantages. The burden of proof lies with those who want to replace a functioning European arrangement. Iceland should preserve and strengthen the EEA, defend the EFTA pillar and further develop its own institutions of direct democracy. The Icesave judgment shows what this autonomy can mean in practice. Iceland should decide not from fear, but from self-confidence. A country that has survived isolation, financial collapse, volcanic eruptions and the pressures of small-state existence need not be frightened into membership. That is not a defensive position. It is an expression of national self-confidence.

The author is an expert of European, Swiss, and international business law.  He served as a judge of the EFTA Court from September 1995 to April 2018 and was the court's president from 2003 to 2017