Iceland, a small island in the North Atlantic Ocean, is home to 393 000 inhabitants. Driven by tourism, fishing, and aluminium smelting, its economy is robust. The gross domestic product (GDP) per capita is the 5th highest globally. After applying for European Union (EU) membership in 2009, Iceland suspended its well-advanced accession process in 2015. However, the country's relations with the EU have remained positive. It maintains close economic, political and sectoral ties, largely shaped by the European Economic Area (EEA) Agreement. This agreement, in force since 1994, brings all EU Member States, alongside Iceland, Norway and Liechtenstein, into the single market. It also enables free movement of people, services, goods and capital in the EEA. It covers competition and State aid regulations, horizontal policies such as consumer protection, energy, environment and social policy, as well as flanking policies including research, education, public health and entrepreneurship. The EU and Iceland are aligned on key foreign policy issues and hold regular dialogues. Cooperating under North Atlantic Treaty Organization (NATO) auspices and beyond, they are equally close partners on security and defence. Moreover, Iceland participates in key aspects of EU cooperation concerning justice and home affairs, primarily through the Schengen Agreement. Currently, the debate on joining the EU has revived in Iceland. Following the latest Icelandic parliamentary elections in November 2024, the new coalition government agreed to hold a national referendum on whether to open EU accession talks by 2027. The European Parliament is closely involved in nurturing EU-Iceland relations. It sends a delegation to the EEA Joint Parliamentary Committee and holds an annual bilateral interparliamentary meeting with Iceland. Source : © European Union, 2026 - EP Read more