A divided island, a divided left: Iceland after the EU referendum

First published at Rosa-Luxemburg-Stiftung Brussels Office.

On 29 August 2026, Icelanders voted on whether to resume accession negotiations with the European Union. The result was close but clear: 52.8 percent voted No and 47.2 percent Yes, with a turnout of 82.6 percent. Yet the campaign revealed a country — and a political left — sharply divided on much more than Europe.

The question on the ballot was narrower than much of the debate suggested. Icelanders were not deciding whether to join the EU, but whether to re-open negotiations that began after the financial crisis in 2009 and were suspended in 2013. Even a Yes vote would therefore have marked the beginning of another political process, not accession itself. Any eventual agreement would still have required a further political debate and approval in another referendum.

Yet the campaign became a referendum on much more: sovereignty, the Króna (Iceland´s currency), fisheries, agriculture, prices, inflation, interest rates, political trust, and Iceland’s place in Europe. It exposed a divided country: Reykjavík against much of rural Iceland, university-educated voters against those with shorter formal education, and, most interestingly, a left that had no common answer.

For the left, this makes the result more complicated than either disappointment or celebration. A No vote can reflect democratic scepticism towards the EU, market liberalisation, and distant institutions. But it can also leave unchallenged concentrations of economic power at home. The central question — the one the referendum did not ask — is therefore not simply “Brussels or Reykjavík?”. It is: where does power sit, who controls it, and who benefits from it?

Sovereignty — a sensitive issue

To understand the emotional force of sovereignty in Iceland, one must go further back than 2009. Iceland is a young republic, but its history is inseparable from the struggle to recover political and economic power, first from Norway, then from Denmark. For centuries, political authority in Iceland was exercised from abroad, severely restricting trade, and economic and social mobility. Home rule came only in 1904, and Iceland became a sovereign state in 1918, but remained in personal union with the Danish king. The republic was finally established in 1944.

That history matters. A political culture built around recovering control from Copenhagen will not casually transfer authority to Brussels. In that sense, a No vote is not irrational or simply nationalistic. Independence is part of modern Iceland’s political identity; also reflected in the name of the historically dominant Independence Party (Sjálfstæðisflokkurinn).

But independence has never meant isolation. The financial collapse of 2008 demonstrated the limits of economic self-sufficiency. Iceland’s oversized, newly privatised, banking system imploded, the Króna plunged, and the country turned to the International Monetary Fund and bilateral creditors — particularly among the Nordic states — for assistance. Iceland followed a recovery path that differed from that imposed on several southern EU countries, but the idea that Iceland simply rescued itself is a myth. The IMF-supported programme included capital controls, currency depreciation, debt restructuring, and the protection of important parts of the welfare state, while limiting the socialisation of private banking losses. Recovery combined domestic political choices with international assistance, access to markets, and cooperation.

Closer to the EU — and back again

It was in this context that Iceland applied for EU membership in 2009, under the country’s first majority left-leaning government led by the Social Democratic Alliance (Samfylkingin), in coalition with the Left-Green Movement (Vinstri græn). The coalition itself was divided: the Social Democrats favoured accession, while the Left-Greens remained sceptical. The application was no mere technocratic response to the financial crisis either. Rather, it emerged from a debate within the Icelandic left over whether greater European integration or greater national autonomy offered the better route out of the crisis for rebuilding economic stability.

Negotiations began in 2010. By the time they were put on hold in 2013, 27 negotiating chapters had been opened and 11 provisionally closed. A new centre-right government suspended the process, however, and in 2015 Iceland notified the EU that it should no longer be regarded as a candidate country.

Iceland nevertheless never really left “Europe”. It remains part of the European Economic Area (EEA), the European Free Trade Association (EFTA), and Schengen. Through the EEA, Iceland participates in the European single market and implements substantial amounts of EU legislation, while remaining outside formal EU decision-making. Agriculture and fisheries, however — both important sectors for Iceland — are excluded from the EEA’s core single-market arrangements.

The road to the 2026 referendum

The paradox of the European question in Icelandic politics was intensified by its more recent return. There was no parliamentary majority committed to EU membership, nor did the three parties of the governing coalition share a common position on it: The Liberal Reform Party (Viðreisn) is pro-European, while the People’s Party (Flokkur fólksins) is opposed, and the Social Democrats took a more nuanced position. Nevertheless, the coalition promised a referendum on resuming negotiations no later than 2027.

In 2026, that timetable was brought forward. Inflation was persistently high (~5.6 percent in August), and the Central Bank of Iceland had raised its key interest rate to 8 percent. Household purchasing power, housing costs, and the price of imported goods kept questions about Iceland’s economic model on the political agenda.

The geopolitical environment had also changed significantly. The Trump administration’s threats towards Greenland (including confusing it with Iceland), and a remark by the new US ambassador joking that Iceland could become the 52nd US state, raised uncomfortable questions about the reliability of Iceland’s traditional security relationships. The search for greater economic stability increasingly became connected to a broader question: in an increasingly uncertain world, which political alliances could a small state rely on?

A divided left

The referendum exposed an unusually complicated political map. As the table shows, Icelandic Euroscepticism cannot simply be mapped onto left and right, nor did party leadership always correspond with party voters.

In addition to the differences within the governing coalition, which spans the political centre, three parties represented in parliament opposed the referendum. No party to the left of SDA is currently represented in parliament, although these parties together received just under 10% of the vote in the 2024 elections. Their absence from parliament does not mean that they were absent from the wider debate. The Left-Green Movement, moreover, had provided the prime minister from 2017 until 2024, with Katrin Jakobsdóttir retaining the premiership even after the party lost ground in the 2021 election. After a second term in government, however, the party’s support collapsed: it lost its parliamentary representation altogether in 2024 and is currently undergoing a process of political and organisational renewal.

The 2024 election result further complicates the picture. The SDA narrowly emerged as the largest party, but its success coincided with the parliamentary disappearance of all parties to its left. The last election therefore produced an apparent success for the centre-left, while at the same time leaving the broader Icelandic left considerably weaker and less plural in parliament. Table 1 List of parties in Iceland, their broad orientation, last election results, position in the negotiation talks, as well as the level of support from possible party voters regarding the referendum (according to last Gallup poll before the referendum).

The most revealing division was within the left. The Social Democratic Alliance made the clearest centre-left case for Yes: negotiate first, then judge the actual terms on offer. From this perspective, European integration could provide economic stability and political influence. There was also a democratic argument: Iceland already participates extensively in the European economic order but has no formal role in setting the rules it must follow. In this view, EU membership was not a simple surrender of Icelandic sovereignty, but a recovery of economic decision-making power.

By contrast, the Socialist Party offered the most explicit radical-left argument for No. Its critique sees the EU as fundamentally structured around markets, competition, and capital, while also raising concerns around militarisation, food sovereignty and the space available for independent socialist economic and labour politics. The EU’s democratic deficit, and its broader geopolitical alignment, and its policy towards Gaza, were further sources of mistrust.

The most striking internal division emerged within VG. The formal Left-Green position remained that Iceland’s interests were better served outside the EU, yet the party is divided, not only between party policy and voters, but also between generations of the party leadership. Its newly elected chair, Rósa Björk Brynjólfsdóttir, and vice-chair, Bjarki Hjörleifsson supported reopening negotiations to establish what kind of agreement might be available. This approach found substantial support among the party’s supporters. In Gallup’s final pre-referendum poll, around two thirds of potential Left-Green voters intended to vote Yes.

Several prominent former leaders took the opposite position, including former chair Svandís Svavarsdóttir, founding leader Steingrímur J. Sigfússon, and former prime minister Katrín Jakobsdóttir, with the latter intervening particularly forcefully in the final days of the campaign. Katrín had supported opening negotiations in 2009 but later concluded that this process had demonstrated how little room Iceland had on critical issues such as fisheries and agriculture. She also criticised the EU’s democratic deficit, decision-making process and its treatment of member states during the financial crisis. She therefore rejected the idea that reopening negotiations was simply a neutral exercise to “see what Iceland could get” (reflected in the slogan of the Yes campaign “Já til að sjá”, “Yes, to see”).

The result was an unusual reversal: much of the old Left-Green leadership defended traditional Euroscepticism — rooted in a tradition of national sovereignty, environmental control, peace politics and distrust of centralised European power — while its new leadership and a clear majority of its potential voters were willing to reopen the European question.

Finally, the Pirate Party, which rejects a conventional left-right classification, approached the issue less through a fixed position on integration than through the lens of democracy and transparency.

One country, several political geographies and cleavages

Nationally, the result of the referendum was relatively close. Geographically, it was not. Reykjavík voted Yes, while around six in ten voters outside the capital voted No. However, it would be a mistake to reduce rural opposition to backward-looking nationalism. Rural Iceland has substantial reasons to be cautious. Fisheries and agriculture matter much more outside Reykjavík, and decisions about access to fish, farm support, and resource management can determine whether a village has jobs, and whether younger residents remain.

There is also a long history of decisions being made in Reykjavík about places hundreds of kilometres away. Replacing one distant centre with another, even more distant, one is not an especially attractive proposition for these communities.

This distinction between national sovereignty and local power is crucial, and exposes a central contradiction. Iceland may exercise sovereign control over its fisheries in international law, but individual fishing communities often have very little influence over whether quotas, boats and jobs remain there. Fishing quotas have become increasingly concentrated over decades, with research documenting significant consolidation at a company and vessel level.

This is where the rhetoric of sovereignty becomes complicated. Brussels can be presented as the great threat to Icelandic control over resources, while the concentration of control within Iceland can receive considerably less attention. The core issue is not whether Iceland should surrender control over fisheries — it is whether national control is the same thing as democratic control. Clearly it is not.

Agriculture and the politics of protection

The same tension exists in agriculture. There are strong reasons to support Icelandic farming: food security, difficult production conditions, rural employment, cultural landscapes and the maintenance of settlements outside the capital. Iceland also provides substantial agricultural support, much of it through price support, border measures, and production-linked payments. Yet protection has not solved the underlying problems. Many farms struggle to remain viable, farm numbers have declined, and succession is increasingly difficult.

This produces an uncomfortable contradiction. Consumers pay high prices partly because domestic agriculture is protected, while many farmers still struggle financially. The question is therefore not simply whether Icelandic agriculture should be protected, but whether the existing system distributes its benefits effectively between farmers, consumers, and rural communities.

Nor is EU agricultural policy simply a matter of Brussels imposing farm payments or market rules. The EU’s rural-development framework includes programmes such as LEADER, through which local groups develop and manage their own strategies and budgets. Iceland’s existing system provides regional and rural support of its own, but the possibility that European integration might change the tools available to rural communities received little attention during the referendum. The debate instead frequently presented a binary choice: protect Icelandic agriculture from Brussels or expose it to Brussels.

The unexpected question of age

Perhaps the most striking development concerned young voters. Gallup’s final survey, conducted from 24 to 27 August, found that 60 percent of voters aged 18–29 intended to vote No. Even more strikingly, this appears to have been a very late shift: in June, 63 percent of voters in that age group had intended to vote Yes. For comparison, among 30–39-year-olds the result was almost even, while older age groups leaned slightly towards Yes. University graduates were also substantially more favourable towards negotiations than people with compulsory or secondary education.

We do not yet understand why this dramatic shift occurred among younger voters, but the result complicates the familiar assumption that younger voters are necessarily the most cosmopolitan or pro-European bloc one might expect after experiences like the Brexit referendum.

Sovereignty for whom? The debate Iceland did not have

What was perhaps most revealing is what was not discussed during the campaign. Many of the longer-term social, economic, and regional challenges facing Iceland remained largely untouched. At the same time, the No side was effective in mobilising fears and resentments around Brussels, sovereignty, fisheries, and agriculture, presenting the vote as a choice between Icelandic independence and European control. This framing considerably narrowed the debate.

The central weakness was that the campaign talked extensively about sovereignty but relatively little about the distribution of power inside Iceland. Fisheries provide the clearest example. Icelanders were asked whether they wanted to protect control over fisheries from Brussels, but much less about how that control is already exercised in Iceland; by whom, for whose benefit, and with what consequences for communities. The same applies to agriculture, regional development, housing and financial policy. The larger question not asked is not whether sovereignty should move from Reykjavík to Brussels, but whether Icelanders have sufficient democratic control over the economic decisions that already shape their lives.

Outlook: The question is closed — the problems are not

The immediate result is clear: at least for now, Iceland will not resume EU accession negotiations. But very little else has been resolved. Iceland remains inside the EEA and Schengen, deeply dependent on European trade and labour mobility, outside EU political decision-making, outside the Common Agricultural and Fisheries Policies, and outside the euro. The EU remains Iceland’s largest trading partner, accounting for more than half its goods trade in 2025.

The No vote is understandable in historical terms. Iceland became a republic only in 1944, after centuries in which important political and economic decisions were made elsewhere. Sovereignty therefore carries a particularly powerful historical meaning, closely linked to national political identity.

But history can become ideology when independence is treated as an answer rather than as a means. Iceland’s recent history illustrates this contradiction. When a financial model built around large, highly deregulated banking sector collapsed in 2008, the country needed international assistance, making the mantra “we are better off alone” increasingly difficult to sustain. Yet Iceland’s recovery was also shaped by domestic choices that differed from approaches taken elsewhere, including capital controls, restructuring, and protection of the welfare state.

The lesson is not that Iceland should join the EU, nor that it should remain outside it — neither of these choices address the deeper challenges around the distribution of economic and political power in Iceland. The referendum answered a narrow question printed on the ballot paper. It did not resolve the larger disagreement within the Icelandic left between social-democratic Europeanism, left-green sovereignty and socialist Euroscepticism, nor did it resolve who governs the country’s resources, institutions, and economic decisions, and in whose interests. Those questions are not going away.