LONDON, Jan 30 (Reuters) - Iceland will be put on a fast track to joining the European Union to rescue the Arctic state from financial collapse amid rising expectations it will apply for membership within months, The Guardian reported on Friday.
The newspaper said the European commission is preparing itself for a membership bid, depending on the outcome of a snap general election expected in May.
It could join the EU at the same time as Croatia, Olli Rehn, the European commissioner in charge of enlargement, told The Guardian in an interview.
"The EU prefers two countries joining at the same time rather than individually. If Iceland applies shortly and the negotiations are rapid, Croatia and Iceland could join the EU in parallel," he said
The Guardian reported that an application would be viewed very favourably in Brussels and the negotiations, which normally take many years, would be fast-forwarded to make Iceland the EU's 29th member in record time, probably in 2011.
"We would like to see Iceland join the EU," the paper quoted a senior European diplomat in Brussels as saying.
The woman expected to become Iceland's new prime minister said on Thursday that talks on forming a centre-left government were set to wrap up on Friday and that it would take office the following day.
Johanna Sigurdardottir's Social Democratic Party is talking with the Left-Greens on a new administration after protests helped force out her predecessor, Geir Haarde of the Independence Party.
The talks need to find common ground on many issues, including whether to apply to join the European Union.
The Left-Greens are more cautious about EU membership than the Social Democrats, although the parties broadly agree there should be a referendum on whether to open EU accession talks. (Reporting by Matt Scuffham; Editing by Giles Elgood)