May 25 (Reuters) - Iceland's government on Monday presented a proposal to parliament authorising it to start talks on European Union membership, the first tentative step towards joining the bloc and eventually adopting the euro.
As the island slowly recovers from its worst financial crisis, the two parties in the coalition have been at odds over the EU question. But Prime Minister Johanna Sigurdardottir has said a majority of lawmakers support holding talks.
Here are some of the milestones and issues involved.
ROAD TO MEMBERSHIP
- The first round of possibly three debates in parliament on the proposal will likely take place this week. A vote in parliament is expected within a matter of weeks.
- The pro-EU Social Democrats have 20 seats in the 63-seat parliament. The euro-sceptic Left-Greens, the junior partners in the coalition government, have 14 seats but the party leadership has agreed to let members vote as they please or abstain. Pundits say about half of the Left-Greens could vote in favour.
- The Independents, with 16 seats, have long been opposed to joining the bloc although several have indicated they may vote in favour of the proposal. There is also more support from the Progressives (9 seats) and the Civics (4).
- If the proposal goes through, Iceland can apply for talks. Sigurdardottir wants this to happen no later than July.
- EU approval could take years although some officials say membership could be achieved within 12 months of application.
- Iceland is already a member of the European Economic Area and officials have said negotiations could move quickly.
- Once given a green light from Brussels, Iceland intends to hold a referendum on whether to join. Polls show the Icelandic population is evenly split over the issue of actual membership.
- To qualify for the euro, a country must stay in the ERM-2 for two years. New EU members can join the euro only once they meet strict criteria based on inflation, interest rates and fiscal deficit. Icelandic and EU officials say it could meet the criteria within three years of joining.
FISH
- Sigurdardottir says membership would foster economic stability and a campaign for membership could reassure foreign investors. The crown collapsed in October when Iceland's top banks failed and it has yet to regain its footing.
- But Iceland's powerful fishing lobby has reservations. Joining would require Iceland to sign up to the EU's centralised fisheries policy and ceding control of waters teaming with cod, haddock, herring and other lucrative catches.
- Icelandic officials said they would not be seeking a complete opt-out of the EU's fisheries policy, but would seek some flexibility from Brussels for their fishermen since its territorial waters do not border those of any EU member state.
- In 2007, the export of fish products made up roughly 28 percent of Iceland's total exports. However, in the past decade, the fishing industry as a percentage of Iceland's GDP has shrunk to about 5 percent from about 8 percent.
JOINING THE CLUB
- A valid application for membership triggers a sequence of EU evaluation procedures.
- EU diplomats say an application would probably be looked on favourably by member states. EU officials have held out the prospect of something akin to a fast-track process, possibly enabling Iceland to enter the bloc from around 2011.
- The European Commission provides a formal opinion on the applicant country, and the European Council decides whether to accept the application.
- Once the EU Council unanimously agrees a negotiating mandate, negotiations may be formally opened between the candidate and all the member states.
- A "screening report" is then drawn up for the applicant country and each area of legislation as a basis for further negotiations.
- Negotiations take place at various levels -- among experts, permanent representatives for EU countries, chief negotiators and ministers. The European Commission is consulted during the process.