March 27, 2009 / 5:26 PM / 10 years ago

Iceland's Independence Party seeks two votes on EU

* Iceland Independents to seek two refendums on EU accession

* Ruling coalition split on referendum issue

(Adds detail, background, comment)

By Omar Valdimarsson

REYKJAVIK, March 27 (Reuters) - Iceland should hold a referendum on starting EU entry talks and organise a second ballot on the terms the European Union offers, if voters back membership talks, the island’s biggest party said on Friday.

The Independents, traditionally backed by both anti-EU fishing groups and the pro-EU business community, has long been opposed to EU membership, but in the wake of the financial crisis they have shown a readiness to at least consider talks.

The party dominated Icelandic politics for decades until its government coalition with the Social Democrats collapsed in January under the weight of criticism of its handling of events leading to the collapse of the country’s economy last year.

Early parliamentary elections are due on April 25.

A national Independence Party congress on Friday approved a motion rejecting EU membership, a party official said in a webcast speech. But it called for a ballot during the next parliament 2009-2013 on whether to start entry talks.

The motion also called for a second referendum on the outcome of those talks. Some party members said a first referendum might be held in the spring of 2010.

Prime Minister Johanna Sigurdardottir’s EU-friendly Social Democrats favour only holding a vote on the terms offered. The smaller Progressive Party, which is outside the ruling coalition, has taken a similar line.

But the Social Democrats’ junior coalition partner, the Left-Greens of Finance Minister Steingrimur Sigfusson, opposes EU membership although it is open to the idea of a popular vote.

"The Social Democrats would like to see it as soon as possible if they were to have to make such a compromise, either in the autumn or at the same time as local elections in the spring of 2010," said Baldur Thorhallsson, a political science professor at the University of Iceland.



NO FOREGONE CONCLUSION

Shaken by the financial meltdown that shattered the island’s economy, many Icelanders believe membership could help restore economic stability. But entrenched opposition to entry suggests membership is far from a foregone conclusion.

The anchor of EU membership and a clear path towards the euro zone would seem an easy sell in Iceland, whose banks and currency collapsed last year. Yet membership is rejected by powerful constituencies such as the fishing lobby.

Before the crisis, Icelanders tended to be sceptical about the EU, fearing Brussels could interfere with their fishing and energy industries. Close ties with the United States during the Cold War also kept membership off the agenda.

The Social Democrats, the junior partner in the government coalition that collapsed in January, has formed a caretaker administration with the Left-Greens ahead of the early elections.

Recent opinion polls show the Social Democrats and Left-Greens commanding a solid lead in run-up to the elections of the 63-member parliament, the Althing. (Reporting by Omar Valdimarsson; Writing by Anna Ringstrom and Niklas Pollard; Editing by Jon Boyle)



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