Icelanders head to the polls on Saturday to decide whether their country should reenter negotiations to join the European Union, a vote that could have economic and security implications beyond the small Arctic country.

The election comes 13 years after Iceland, under a Eurosceptic government, paused the last EU accession talks, believing the country would fare better outside the bloc.

But much has changed since then.

Arctic security concerns have grown amid Russia’s war against Ukraine and United States President Donald Trump’s threats to invade neighbouring Greenland, the cost of living has climbed and Iceland’s currency has kept wavering.

Prime Minister Kristrun Frostadottir, whose Social Democrats party is pro-EU, said she will honour whatever choice the public makes.

If Icelanders vote “yes”, the country would likely start years of negotiations with Brussels to hammer out membership terms. It would then hold a second referendum on whether to formally become part of the EU.

Frostadottir has said a “yes” vote would see the nation “enter negotiations with our heads held high and stand together in seeking a good agreement”.

If the result is “no”, “all speculation about what [EU membership] might involve will be set aside”, she said.

Knife-edge vote

Recent surveys show Icelanders are almost evenly split on the proposal.

A Gallup opinion poll conducted this week found that 51.6 percent of respondents were against new EU membership talks, while 48.4 percent favoured them.

An earlier survey by Icelandic pollster Maskina showed a narrow majority of 51.3 percent of respondents backing new EU accession talks.

Gabriella Gricius, associate professor of strategy at the Norwegian Military Academy, said Iceland’s lack of armed forces has always left it “reliant on NATO and specifically the US for its security”.

“As the US has grown more unpredictable, and specifically, its rhetoric around Greenland has grown more concerning, it is not surprising that Iceland is seeking additional security guarantees through the EU,” Gricius told Al Jazeera.

Adam Fishwick, a lecturer in international relations at the University of Iceland, said the expected benefits of membership would be reduced inflation, a more stable currency and fewer customs barriers for consumers.

“There may also be opportunities for regional development in Iceland, which is an important issue here, with access to dedicated EU funds,” he told Al Jazeera.

However, the debate over EU accession remains “quite polarised”, he noted. Opponents fear the small nation of 395,000 people would “lose control over everyday policy decisions” and have limited sway in a bloc filled with larger European powers, Fishwick said.

Voters to weigh impact on inflation, currency

The benefits of EU membership for Iceland are not as obvious as for other potential candidates.

Iceland is a relatively wealthy country that, as a member of Schengen and the European Economic Area, already gets a lot of the single-market access that would come with EU membership.

However, the country has experienced growing economic pains in recent years, primarily regarding the cost of living. Consumer prices in 2025 exceeded those of any EU state and were 87 percent higher than the EU average.

Iceland’s currency, the krona, meanwhile, has been prone to exchange-rate swings that opponents say lower investment confidence and make it more costly to borrow money. Earlier this year, the Ministry of Finance and Economic Affairs concluded that the costs of maintaining Iceland’s own currency probably outweigh the benefits. Adopting the euro, it said in a report, may help reduce interest rates and transaction costs.

Joining the EU could help address both issues.

Iceland would become a part of the bloc’s customs union, in which goods move freely between members and face a common tariff when imported from non-member countries. It could also adopt the more stable euro as its currency.

Fishing industry concerns: ‘Backbone of the economy’

A major concern, though, is the impact on the country’s fishing industry, an economic pillar that in 2024 directly contributed about 8 percent of gross domestic product (GDP) and much more indirectly.

By joining the EU, Iceland would become subject to the EU’s Common Fisheries Policy, which governs European fishing fleets and fish stocks.

Iceland’s fishing industry fears this change could lead to new catch quotas, increased foreign competition and, more broadly, less control over local fishing policy.

“The fundamental objection to EU membership is that Iceland would not retain full control over its fisheries – the traditional backbone of the economy,” Valur Ingimundarson, professor of contemporary history at the University of Iceland, told Al Jazeera.

Even if Icelanders vote “yes” to proceed with EU negotiations, the country is unlikely to go forward with EU membership unless it secures “ironclad” exemptions regarding its fishing industry, said Ingimundarson.

‘Additional security guarantees’

Mounting security pressures in the Arctic, coupled with uncertainty about US commitment to its traditional European partners, are also contributing to Iceland’s renewed interest in the EU, say analysts.

Though Iceland is a founding member of NATO and has a 75-year defence treaty with the US, it has no standing armed forces of its own and is located in a geopolitical hotspot that both Russia and the US have sought to project power in.

While Russia has expanded its military presence in the Arctic in recent years, President Trump has repeatedly threatened to use force to seize nearby Greenland.

Ingimundarson said pro-EU Icelanders see “the EU as a source of political and economic protection for a small state confronted by coercive great-power politics and uncertainty about the US as a reliable security partner”.

Iceland’s Foreign Minister Thorgerdur Gunnarsdottir has said membership would be “a valuable addition” for Iceland, even though NATO and the US would still be its core security partners.

In comments to Reuters, Gunnarsdottir said Iceland has been “disappointed” with the US’s “pressure campaign waged against both Greenlanders and Denmark”.

Russia poses a security threat “in our waters and nearby, in the North Atlantic”, said Gunnarsdottir.

For the EU, bringing Iceland into its orbit would expand EU territory much deeper into the North Atlantic, potentially deepening its strategic focus there, said Gricius, the professor.

“Icelandic membership in the EU wouldn’t necessarily change Arctic security dynamics, as Iceland is and will continue to be an Arctic state,” she said. “However, it may influence how the EU behaves in the Arctic, as the EU would then include four of the eight Arctic states – Iceland, Finland, Sweden and Denmark.”