Iceland's Economic Crash and Integration Takeoff: An End to European Union Scepticism?

Iceland's application for European Union (EU) membership in summer 2009 suggests that the country's political parties had reconsidered their longstanding scepticism towards European integration and opted for closer engagement with the EU after the financial crisis. Applying Moravcsik's liberal theory of preference formation, this article investigates the European policies of Iceland's political parties from 2007 to 2010, focusing on four related European issues which have been prominent in the Icelandic EU debate: an application to join the EU with no reservations; the unilateral adoption of the euro; the inclusion of a clause in the constitution allowing a transfer of sovereignty; and the holding of a referendum on an EU application. It analyses whether the economic crash actually led to a change in the political parties' economic preferences and to a subsequent reformulation and adaptation of their long‐term European policy goals and, if not, then how Iceland's decision to apply for EU membership is to be understood. The article concludes that the parties' European policies have remained remarkably stable despite the EU application. This indicates that Iceland's EU membership application can only be understood through a thorough examination of domestic politics, to which liberal intergovernmentalism pays insufficient attention.