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Iceland’s Government Agrees to Freeze EU Membership Talks

Jan. 14 (Bloomberg) -- Iceland’s government agreed to freeze its talks on joining the European Union as it readies for parliamentary elections on April 27, Prime Minister Prime Minister Johanna Sigurdardottir’s office said.

“There will be no further work on preparing Iceland’s negotiating position in the four chapters that are still unfinished,” according to a statement from Reykjavik. “The foreign minister will inform the EU Commission and the presidency country Ireland in the appropriate manner.”

Most Icelanders oppose continuing the membership bid and want the island’s government to withdraw it, a November Capacent Gallup poll showed. The survey indicated that 53.5 percent of voters favor halting the application, compared with 36.4 percent who want the island to finish the negotiations.

Iceland, which began EU membership talks in July 2010, has opened discussions in 27 of the bloc’s 35 policy areas and completed 11. Iceland’s government sought EU entry after the economy collapsed in 2008, with banks defaulting on $85 billion and the krona plunging as much as 80 percent against the euro.

“The commission continues to be convinced that the EU accession of Iceland would be of mutual benefit and remains committed to accompanying Iceland on its path toward EU membership,” European Commission spokesman Peter Stano said in e-mailed comments from Brussels.

As the EU battles to rescue the 17-nation euro region from the debt crisis, Iceland has roared back from its financial collapse, leading the country’s 320,000 citizens to question the logic of joining.

The country’s recovery since late 2010, assisted by an International Monetary Fund loan and capital controls, coincided with the deepening of the euro crisis. Iceland’s economy grew 3.5 percent in the third quarter while the euro area shrank 0.1 percent.

To contact the reporter on this story: Omar R. Valdimarsson in Reykjavik at valdimarsson@bloomberg.net

To contact the editor responsible for this story: Jonas Bergman at jbergman@bloomberg.net

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