Iceland said no. But it didn’t say goodbye to Europe

Iceland has spoken. In a referendum, 52.8% of voters rejected a proposal to reopen negotiations on European Union membership, while 47.2% voted in favour. The margin was relatively narrow, but the result was clear.

For those of us who believe that small island states have much to gain from working together within the EU, however, the outcome is undoubtedly disappointing.

For Malta in particular, Icelandic membership could have represented more than simply the addition of another country to the bloc. It could have brought another small island nation to the European table and potentially another natural partner for Malta in advocating for the realities faced by island states.

More than two decades of EU membership have taught Malta that geography matters. Islands face a distinct set of challenges which continental countries do not always experience with the same intensity: Connectivity, dependence on imports, energy security, higher costs, limited land and natural resources, pressure on housing and infrastructure, and the vulnerability of certain economic sectors.

Iceland is, of course, very different from Malta. Its climate, geography, population and economic structure are markedly different. Yet both countries share an important characteristic—they are small island states on the periphery of Europe.

Having another island nation within the bloc could therefore have strengthened the voice of those arguing for European policies that take territorial realities into account rather than applying identical solutions to very different circumstances. Malta would have had another partner capable of reminding Brussels that being an island is not simply a geographical description but also comes with very real economic and social consequences.

There is another reason why the referendum result is significant. Icelanders were not being asked whether they wanted to join the EU. They were being asked whether negotiations on membership should be reopened.

Had the proposal been approved, Iceland could have entered negotiations, examined the terms that could be secured, assessed the implications for its economy and society, and only then decide whether full membership was in its national interest.

That opportunity has now been put on hold.

But Iceland has certainly not turned its back on Europe.

In fact, this is what makes the Icelandic referendum fundamentally different from Brexit.

Iceland is already one of the European Union’s most closely integrated non-member partners. Through the European Economic Area, Iceland participates extensively in the EU Single Market. The EEA extends the four freedoms—the free movement of goods, services, capital and people—to Iceland, Norway and Liechtenstein alongside the EU member states.

As a result, Iceland implements a substantial body of European legislation relating to the single market, including rules covering areas such as competition, consumer protection, environmental standards and social policy.

The economic relationship is equally significant. The EU remains Iceland’s largest trading partner, accounting for 53.6% of Iceland’s total trade in goods in 2025 and receiving 66.5% of Icelandic exports.

Iceland is also part of the Schengen area. Icelanders can travel passport-free throughout participating European countries, while European citizens enjoy the same framework when travelling to Iceland.

Naturally, there are important differences between Iceland’s relationship and full EU membership. Iceland remains outside key EU policies, most notably the Common Agricultural Policy and the Common Fisheries Policy. It is also outside the EU customs union and retains considerable autonomy over its external trade policy.

These exclusions are significant, particularly in a country where fisheries remain such an important part of the national economy and where questions surrounding sovereignty and control over natural resources carry considerable political weight.

The referendum should therefore also provide food for thought in Brussels.

The EU should never assume that its appeal is automatic. If the bloc wants to attract and retain the support of European citizens, it must continue demonstrating the value of membership while respecting the identities, economic circumstances and legitimate concerns of its smaller member states and partners.

At the same time, the Icelandic result should not be misrepresented.

Nigel Farage congratulated Icelanders for supposedly voting to “keep their independence”, while Marine Le Pen presented the result as evidence supporting her vision of a Europe of sovereign nations cooperating without deeper European integration. Such interpretations overlook a fundamental reality.

Iceland has not voted to withdraw from the European economic and political structures in which it is already deeply integrated. It has not rejected the single market. It has not rejected free movement. It has not rejected Schengen. Nor has it rejected the substantial body of European legislation that comes with participation in the EEA.

What Icelanders have chosen, by a relatively narrow majority, is to maintain the country’s existing relationship with the European Union rather than reopen negotiations on full membership.

This is disappointing for those of us who would have welcomed Iceland into the European Union, and especially for Malta.

But it would be a mistake to portray the result as some kind of anti-European revolt. Iceland has not rejected Europe. On the contrary, it remains deeply connected to Europe’s economic and political structures. What Iceland has rejected, for now, is the prospect of taking the next step towards full European Union membership.

The Icelandic people have made their choice. It should be respected. But the door to Europe has not been closed because, in many important aspects, Iceland was never outside it in the first place.