EU, eurozone membership best option for Iceland: PM

4th February 2009, Comments 0 comments

Icelandic new Prime Minister says joining the European Union and adopting the euro is the best option to revive the country’s failing economy.

REYKJAVIK – Icelandic Prime Minister Johanna Sigurdardottir said Tuesday joining the European Union and the eurozone would be the best option for the crisis-hit country.

"In my opinion, the best option is still to join the EU and adopt the euro," Sigurdardottir told reporters in Reykjavik.

Her comment came as the new left-wing interim government, in power since Sunday and made up of pro-EU Social Democrats and the EU sceptical Left Green party, examined different options for digging the country out of its deep economic crisis.

Finance Minister Steingrimur Sigfusson of the Left Green party said Tuesday another option was currency co-operation with non-EU neighbour Norway.

"We will certainly discuss this among other things," he told reporters.

Norwegian Finance Minister Kristin Halvorsen meanwhile told AFP in an email Tuesday that "a monetary cooperation" could be discussed during her visit to Iceland next week.

The new left-wing interim government took power on Sunday after the previous coalition resigned on 26 January following months of increasingly violent protests over the country's dire economic situation.

Thousands of Icelanders lost their savings and jobs after the country's once-booming financial sector crumbled in October 2008, with Reykjavik forced to nationalise its major banks as the country's currency nosedived.

The Icelandic krona lost nearly half its value in 2008, and authorities have been scrambling to shore up the crumbling currency and avoid national bankruptcy.

While in the previous coalition government, the Social Democrats had called for a referendum within months on joining the EU.

The new government programme presented Sunday called only for a report on the prospects of joining the union to be published by 15 April.

A party spokesman said Monday the new government aimed to change the constitution to make it possible to rapidly join the EU following early elections proposed for 25 April.

Iceland, which is a member of the European Economic Area and already meets much of the EU's membership criteria, could see its application fast-tracked to make it a member of the bloc, EU Enlargement Commissioner Olli Rehn told British daily The Guardian last week.

[AFP / Expatica]

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