Jilted by Iceland – but Wider Europe is forming through new cooperation structures around the EU

The 29 August vote in Iceland against restarting negotiations on European Union membership is not the end of the story because the option remains to a future government to try again. But the vote also underlines the changing architecture of European integration. Countries no longer have a binary choice: join or not. Instead, there are many alternatives for formal and informal ties across Europe, many anchored in special relationships with the EU.

Wider Europe is evolving fast as geopolitics pushes all Europeans to work together more closely. The weakness of the United States makes the European pole of NATO more important. The EU is developing stronger defence structures, particularly on joint procurement and arms production. ‘Strategic autonomy’ – an idea France promoted in the defence realm to reduce dependence on the US long before the Trump presidencies – is now a policy objective shared in many other areas. Beyond defence, Europeans are working to reduce other dependencies on the US, from cloud services to the payments and settlements system.

Greater autonomy from the US requires deeper European integration but not necessarily endless enlargement. EU membership remains the deepest form of integration, but other countries can now participate in substantive initiatives on defence, economic security, space and payments systems, blurring the line.

Previously, projects that started among EU members expanded to cover non-members, such as the Schengen travel area that now includes Norway and Iceland. The only successful club that started with non-members was the Bologna Process for higher education. But now, more significant ‘variable geometry’ clubs are emerging that function around an EU institutional core.

These are trusted partnerships anchored in binding agreements. Some build on existing institutional and legal arrangements, such as the European Economic Area (EEA) covering Norway, Iceland and Liechtenstein, the EU-Türkiye customs union, and the United Kingdom and Swiss bespoke agreements. These kinds of special arrangements previously eschewed security and defence because of NATO’s pre-eminence. That restraint is now gone. New security projects are available to non-members, such as the UK-EU partnership, joint procurement loans under Secure Action for Europe (SAFE) and Iceland’s participation in EU secure connectivity. New challenges from hybrid threats and climate change will spark more collaboration.

Instead of a ‘neighbourhood policy’ designed by the EU for less-developed countries, what could emerge is a plurilateral ‘wider Europe beyond the EU’. That would open new possibilities for the UK, and even for Türkiye after a change of government, to deepen their relationships with the EU.

Canada, though geographically distant, wants to deepen ties to compensate for the deteriorating US relationship, not only through a bilateral deal on trade, digital transition and climate change, but by joining EU programmes: Permanent Structured Cooperation (PESCO) and SAFE for defence, and Horizon Europe on research. Canadian Prime Minister Mark Carney’s call in January for “middle powers” to work together has become even more relevant since the US attacked Iran and imposed more tariffs. 

The EU has a special attraction for middle powers looking for trustworthy and reliable partners. Despite a succession of financial and geopolitical crises, it has proved resilient as a hub of countries that are sovereign yet deeply integrated, and which largely stick to agreements and apply supranational laws. In a transactional world of rule-breaking superpowers, the EU’s community of law is an island of stable regional governance. Could the EU extend its institutions to provide legitimacy and legal enforcement also to initiatives with non-members? That would be a stretch, but the EFTA (European Free Trade Agreement) court, which adjudicates between the EU and EEA members, provides an interesting hybrid. 

Meanwhile, enlargement will continue because Ukraine, Moldova and the Balkan countries want nothing less. Some of the Wider Europe countries may also find that the costs of being outside rise too high. For high-income countries with access already to most EU markets and policies, the major benefit of membership is to move from being a decision-taker to having a voice and vote. The smaller the country, the bigger the gain in representation and shaping power, because the smallest members get disproportionately more influence in the European Parliament and in Council votes.

The 400,000 Icelanders have thus missed a chance for their premier to have a seat at the table as a peer alongside the French president and German chancellor. That gain in geopolitical weight may become a lot more valuable as the EU’s security weight grows and if NATO’s wanes. The 56,000 Greenlanders might also reconsider EU membership, having left in 1985, as the map of the North Atlantic again attracts the attention of the Oval Office.

This First Glance was also published in German by Makronom.