Iceland will either adopt the euro after joining the European Union or drop the krona and unilaterally adopt another currency as “the situation can’t remain unchanged,” said Prime Minister Johanna Sigurdardottir.

“The choice is between surrendering the sovereignty of Iceland in monetary policy by unilaterally adopting the currency of another country or become a member of the EU,” Sigurdardottir said in a speech delivered at a Social Democrat Alliance party convention Saturday in Reykjavik, the capital. EU membership will allow Iceland to “cooperate with EU countries as a sovereign nation, which has a say in the decision and policy making in all fields of cooperation.”

Iceland started EU-entry talks in July 2010 and will probably vote on accession in early 2013. Of a total of 35 negotiating chapters for EU accession, Iceland has opened 11 and completed eight, the EU said in December. The primary challenges facing the talks relate to agriculture, the environment and fisheries, according to EU Enlargement Commissioner Stefan Fule.

A Capacent Gallup poll last month showed that about a quarter of the island’s voters support joining the bloc, or 26.3 percent, while 56.2 percent oppose EU membership.

Iceland could fix the krona’s exchange to the euro and be sheltered by the European Central Bank “as early as by the middle of next election term” in 2015, said Sigurdardottir. 

(Bloomberg)