The myth of Icelandic insularity

On 29 August 2026, a referendum will be held in Iceland on whether to resume accession negotiations with the European Union. Opinion polls indicate that the nation is split down the middle, between those who see EU membership as a loss of Icelandic sovereignty on one side and those who see membership as a guarantee of greater economic prosperity on the other.

But what has the relationship of this island in the middle of the North Atlantic been with suzerain and supranational European powers throughout history?

Iceland (a member of EFTA and the EEA) has, in theory, been in negotiations to join the EU since 2009, when a left-wing coalition government initiated them amid economic uncertainty following the collapse of Iceland’s financial system in 2008. Pro-EU momentum in Iceland decreased significantly, however, during the Icesave compensation dispute in 2010–2011 and eventually petered out when, in 2013, a new Eurosceptic right-wing government was formed and subsequently halted accession negotiations.

The issue of the fisheries was perceived as one of the most important obstacles to progress during the accession talks (despite talks collapsing before negotiations on fisheries had formally begun). Iceland’s fishing industry is one of the pillars of the Icelandic economy. At the end of the 20th century, it accounted for roughly half of all exports of goods and services, but in recent years this figure has stood at about a fifth. While its relative share of the overall economy has shrunk, the industry has still been growing and is now more profitable than ever. These figures largely reflect the expansion of other industries, such as tourism, which took off after 2010 and has gradually become the largest source of export revenue, accounting for roughly a third of all Icelandic exports.

The roots of Iceland’s reluctant relations with Europe, however, go back centuries. They are overshadowed by potent myths of an Icelandic ethnostate, untouched for over a millennium, protecting itself from foreign interference by asserting its independence after centuries of repressive colonial rule.

The core narrative of this movement centres on Iceland’s gradual loss of independence and the growing ‘foreign’ interference by Norwegian kings in the 13th century, which eventually ended a ‘golden age’ of independence. Yet the period from the founding of the Icelandic Commonwealth in the 10th century to the civil wars of Sturlungaöld in the 13th century – the brutality of which embarrassed Icelandic Enlightenment thinkers but was later romanticised by 19th-century nation-builders – was neither a proto-democracy nor a paradise of equality, but a somewhat typical medieval society.

The period from 1300 to 1800 was then dismissed as one of decline, in which the Kalmar Union ultimately made Icelanders subjects of the Danish Oldenburg kings. Lost with foreign rule was the great literary culture of the Sagas; in its place came a period of survival in the face of misery, with hardship replacing creativity and wonder. This path of slumber and deference was overturned only in the 19th century by a native independence movement, which gradually reclaimed power from Copenhagen, culminating in full autonomy in 1918, and Iceland becoming a republic in 1944. Although elements of this narrative are accurate, it also assumes that Iceland’s population, which did indeed show remarkable resilience in the face of environmental and political hardships in the early modern period, always regarded ‘foreign rule’ as inherently negative. Moreover, a literary tradition not only survived but thrived in Iceland throughout the 14th and 15th centuries.

That story of Icelandic resistance and exceptionalism often resurfaces in Icelandic domestic politics when it suits those seeking to use it as an historiographical means to pursue a political end. The history of Iceland’s relationship with Europe is not, however, a tale of a proud nation defending itself from foreign interference. Rather, it is a tale of Iceland’s aristocracy safeguarding its wealth and power, a stance they have maintained since the late 15th century – whether with the assistance of foreign power or in opposition to it.

Despite its remoteness, Iceland’s historical insularity is often exaggerated. When Christopher Columbus was about to make landfall in America, the fate of Iceland had recently been altered by his contemporary, the nobleman Didrik Pining, a German privateer and explorer whom King Christian I of Denmark appointed as governor of Iceland in 1478. Pining’s task was to ‘drive the English out’ and bring law and order to Iceland. This marked a culmination of a chaotic period in Icelandic history known as the ‘English Age’, roughly corresponding to the 15th century, when up to a hundred English vessels would sail to Iceland annually to fish and trade. Both English and German merchants established significant trade relations in Iceland (and often fought skirmishes with each other), exploiting a chaotic political environment and offering lucrative seasonal employment amid a general labour shortage caused by the plague. Locals sold stockfish and purchased grains, iron, and beer. Successive Danish kings struggled to enforce bans on English trade; meanwhile, Icelanders demanded that it continue, given the scarcity of royally chartered vessels.

Earlier, in the 14th century, a new, wealthy aristocracy gradually came to power in Iceland through a revamped fishing industry and further consolidated its position in the aftermath of the Black Death. Its leading members included wealthy cosmopolitans such as Björn ‘Jerusalem-farer’ Einarsson and the knight Loftur Guttormsson, who made a fortune through stockfish exports. The power of this aristocracy had grown to such an extent that, when an Anglo-Danish charter authorising increased English presence in Iceland was brought before the national legislature, the Alþingi, in 1490 for ratification, the Icelandic elite effectively annulled it. Instead, they adopted their own revised version, prohibiting foreign merchants from wintering in Iceland and from hiring locals. This elite was quick to close ranks in the face of foreign threats to their wealth and power.

At the height of the ‘English Age’, it was reported in Copenhagen that Englishmen were abducting Icelandic children to sell them in English ports. It was a potent rumour, even appearing on cartographer Martin Behaim’s 1492 globe. There was some truth to it, as more than a hundred Icelanders relocated to Hull and Bristol during the English Age (either voluntarily or involuntarily). Such rumours would have benefited the Icelandic aristocracy by deterring labour emigration on putatively moral grounds.

In the 16th century, the Danish Crown gradually increased its power in Iceland amid an increased presence of more regulated Hanseatic merchant vessels. At the same time, a small landholding elite further solidified its position, coming to own almost all land on the island at the end of the 17th century. When the Danish Crown sought to reform a deteriorating Icelandic economy through a land commission in the late 18th century and improve peasants’ livelihoods, all proposals were ultimately stifled by this landowning elite.

During the Second World War, Iceland was first occupied by the British Army, which was later replaced by the US Army. The latter left a long-standing military base there. After the war, Iceland became a founding member of NATO and the US opened its domestic market as a guaranteed buyer of Icelandic fish to counter Reykjavík’s growing Soviet trade dependency. The Icelandic elite had now become fully immersed in the new international system. Fishing had become Iceland’s leading industry by the 20th century, but it generally struggled until the early 1980s, when a new system was introduced to regulate it by allocating catch quotas to vessels, which could then be bought and sold.

Since the 1990s and early 2000s, the industry’s outlook has improved, but at the same time, an ever-shrinking group, a new aristocracy, has accumulated tremendous wealth and power from this national resource and then expanded beyond it. Ten companies own more than half of the catch quota. The biggest, Brim, is approaching the 12 per cent cap that a single owner can hold, with Samherji not far behind. The former CEO and majority owner of Samherji, Þorsteinn Már Baldvinsson, is among the richest people in Iceland, as is his ex-wife, Helga S. Guðmundsdóttir; and his cousin, Kristján Vilhelmsson, also a former owner of Samherji, is not far behind. Baldvinsson’s son is now the CEO and a major owner of the company along with his sister and Vilhelmsson’s children.

The fishing industry fought strongly against EU membership in 2009, but today it is harder to identify a coherent stance among them. Guðmundur Kristjánsson, the CEO of Brim and one of Iceland’s richest men, has publicly declared his support for the upcoming referendum. Brim, for example, already settles accounts in Euros (rather than in the Icelandic króna). Moreover, the Icelandic fishing industry’s largest market is Europe, where it is a major competitor. However, the official lobbying group for the fishing industry is more Eurosceptic, citing a potential loss of sovereignty if Iceland must re-negotiate its catch shares in shared European fisheries as an EU member state.

The Independence Party, which has been in government for 62 of the 82 years since the formation of the Icelandic Republic in 1944, has historically favoured the status quo position but is now in opposition. Moreover, it was powerless to stop the referendum from taking place, which the centrist Reform Party, now in government, campaigned on.

Joining the EU could present new opportunities for the Icelandic elite to adapt and use the means provided by a new supranational power to enhance its status and power, much as its predecessors have done throughout history. As the two opposing camps mobilise their campaigns for the referendum, it is worth remembering that, throughout history, Iceland was less insular and more permeable to European political currents and power than is often assumed.