Iceland government to introduce bill on EU talks

By Omar Valdimarsson

REYKJAVIK (Reuters) - Iceland announced a first step on Wednesday towards potential European Union membership, an unthinkable prospect until the global financial crisis wrecked the island's economy.

Prime Minister Johanna Sigurdardottir said she would present a parliamentary bill authorising the start of membership talks.

Sigurdardottir did not give a timeframe for the tabling of the bill. But one politician, who asked to remain anonymous, told Reuters the government would introduce it next week when parliament convened.

Sigurdardottir's Social Democrats have been in favour of EU talks but their coalition partners, the Left-Greens, have been much more cautious about joining the bloc.

Many of Iceland's 320,000 people have warmed to the idea of joining the EU and ultimately adopting the euro currency.

The Icelandic crown virtually ceased trading due to the crisis triggered by the global credit crunch. Strict capital controls were introduced so Iceland could ensure it was able to import vital goods such as food and medicine.

Commentators and some politicians say the Social Democrats should be able to cobble together enough support to pass the bill, although haggling in parliament could mean it might take weeks before the bill actually came to a vote.

A Gallup poll for state television on Wednesday showed 61.2 percent in favour of EU talks and 29.6 percent against. Those polled were evenly split over the issue of actual membership.