FILE PHOTO: Parliament House, which houses the Althingi, the national parliament of Iceland, is seen in Reykjavik, Iceland, September 3, 2020. REUTERS/John Sibley/File Photo
COPENHAGEN (Reuters) - Iceland's voters will head to polls on Saturday in a snap election that could potentially steer it towards seeking European Union membership, an issue that has divided the country for years.
The prospect of EU membership has resurfaced in an election campaign for the first time in more than a decade, with polls showing that voters are backing pro-EU parties.
The polls show that EU membership has become more popular, with just over 45% of voters in favour, 35% against and the rest undecided. Support for joining the EU was much lower in the recent past, based on polling data.
The shift is partially attributed to Iceland's cost-of-living crisis, as some people believe EU membership could bolster the economy by reducing trade barriers while joining the euro zone would reduce exchange-rate volatility.
"The state of the economy is always what drives the EU question," said Eirikur Bergmann, professor in political science at Bifrost University in Iceland. "Inflation and interest rates have been relatively high in Iceland and that always brings back the question of the euro."
The country's economy has also been impacted by a series of volcanic eruptions, causing the displacement of thousands, costly infrastructure construction and a decline in tourism.
Despite its non-EU status, Iceland is part of the EU single market, the Schengen open-border travel zone, and the European Free Trade Association (EFTA).
The shift towards supporting EU membership could also reflect the impact of the war in Ukraine.
"People are looking at the world and thinking: what about us? Should we be more tied to our allies?" said Jon Steindor Valdimarsson, a former MP and co-founder of the pro-EU Liberal Reform Party.
Iceland's Prime Minister Bjarni Benediktsson dissolved parliament in October and called for elections to be held on Nov. 30, citing disagreements between the ruling coalition's three parties.
The Reform Party, a front-runner in polls along with the Social Democratic Alliance, is keen to hold an EU referendum if it wins the election.
But the Social Democrats consider a referendum would be premature, saying it could cause division in the country.
"I don't want to be put in a position as the leader of a government having a referendum to continue talks with the EU where 52% say yes and 48% say no," Social Democratic leader Kristrun Frostadottir told Reuters.
The latest polls suggest that the two parties combined would secure 40% of votes. Valdimarsson said that if they were to form a coalition post-election, a referendum on the initial step towards EU membership could occur within the next four years.
A positive outcome would lead to negotiations with the EU, followed by a vote on whether to officially join or not.
The country had applied for EU membership in 2009 following the financial crisis. But the negotiations were abandoned in 2013.
(Reporting by Jacob Gronholt-Pedersen. Editing by Jane Merriman)
