The center-right Independence party, along with the Reform and Bright Future groups, will combine to have 32 seats in the 63-seat parliament, holding a majority of one.
While the Independence and Reform parties struck a deal on Monday, January 10, Bright Future officials said they had made an agreement overnight, in a decision that ends the country's political impasse, which has seen Iceland without a government since October's election.
BREAKING: pure right government just formed in Iceland. W/o pirates ofc. This will be fun. #breaking #iceland #kosningar
— Ásta Helgadóttir (@asta_fish) January 9, 2017
"The agreement was, after a discussion, voted on by the management by electronic voting and was accepted by the party," Bright Future spokesman Unsteinn Johannsson told Reuters.
Perhaps the most eye-catching of the new developments is the pledge to undertake a parliamentary vote on whether to hold a referendum to join the EU.
Centre-right government has now been formed in Iceland. The good thing is that it will only take one MP to rebel for the gvmnt to collapse.
— Arnaldur Sigurðarson (@Arnaldtor) January 10, 2017
The issue of EU accession is a controversial and contentious one in Iceland, with political parties and society deeply divided on the matter.
Highlighting the divisions within the country, not even the three coalition partners are aligned on the EU issue. The Reform and Bright Future parties back membership while the Independence party, the largest in parliament with 21 seats, opposes joining the bloc.
Iceland and the EU
Following the fallout from the 2008 financial crisis, Iceland applied to join the EU in 2009, with negotiations starting a year later.
However, concerns over the impacts of joining the 28-nation bloc led officials in Reykjavik to suspend its application in 2013, with foreign minister, Gunnar Bragi Sveinsson announcing in 2015 that: "Iceland's interests are better served outside the European Union."
.@Samfylkingin achievements during the #Iceland bank crisis deserve 2 be promoted. Thank you also for keeping the door open for EU accession
— Sergei Stanishev (@SergeiStanishev) April 24, 2016
Critics have pointed to the thorny issue of fishing quotas as a major hurdle to joining the EU.
Fishing represents a large slice of the Icelandic economy, with fears EU quotas could cripple the industry and damage Iceland's trading capability.
While not part of the EU, Iceland is a member of the European Economic Area (EEA).
Western Europe outside the EU
— Robert Kimbell (@RedHotSquirrel) December 26, 2016
Andorra
Faroe Is
Guernsey
Iceland
I. of Man
Jersey
Liechtenstein
Monaco
Norway
San Marino
Switzerland
Vatican
If the country was to vote in favor of joining the EU, then all members states would also have to ratify such a decision in their respective national parliaments.
The timing of the EU debate also comes at a time of concern in Brussels following Britain's decision to leave the union and the rise of Euroskeptic movements across the continent.
EU officials have remained coy on the idea of further expansion in the near future, instead preferring to consolidate current members.
