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RPT-INTERVIEW-Good post-Brexit relationship with UK crucial, Iceland says
October 18, 2016 / 11:01 AM / a year ago

RPT-INTERVIEW-Good post-Brexit relationship with UK crucial, Iceland says

(Repeats for additional clients)

By Steve Slater and Marc Jones

LONDON, Oct 18 (Reuters) - Iceland sees scope to strike more effective cooperation deals with Britain and wants to keep a “successful relationship” as Brexit talks begin, the Icelandic foreign minister said.

Britain is Iceland’s biggest trade partner, representing about 12 percent of Icelandic exports and imports.

Foreign Minister Lilja Alfredsdottir said the country’s government had set up a Brexit unit for a detailed assessment of trade relationships and was enlarging its presence in London.

”A successful relationship with the UK going forward is a key priority,“ Alfredsdottir told Reuters in an interview. ”There’s a lot of interest to continue the current relationship we have with the UK, but there will be a new format, which we will try to decide with the UK authorities.

“There might also be new opportunities, which is what we are looking at, and we’re increasing our staff in London due to Brexit,” Alfredsdottir said.

The Brexit unit will have five to eight staff - a significant number in relation to the ministry’s total of 100 employees.

Iceland has a population of about 330,000. Situated on the edge of the Arctic Circle, it is not part of the European Union, but it is a member of the European Free Trade Association {EFTA) - along with Norway, Switzerland and Liechtenstein - which can provide access to the EU’s single market.

Britain voted on June 23 to leave the EU. The terms of the divorce are unlikely to be agreed for at least two years, but investors are growing concerned that Prime Minister Theresa May is heading towards a “hard Brexit”, or a clean break from the EU’s lucrative single market.

Iceland’s future relationship with Britain was likely to take one of three options, Alfredsdottir said: a bilateral free-trade or economic agreement; an agreement with a group of countries, such as EFTA; or, as part of the European Economic Area, to join any trade agreement Britain reaches with the EU.

“It also depends on what the UK wants to do. Does it want to do lots of bilaterals or try to do agreements with groups,” she said. For the moment, at least, it looks as if the first is more likely, she said.

Iceland’s own economy is rebounding after a banking meltdown eight years ago that brought it to its knees. It has just taken a big step towards dismantling capital controls and tourism is booming.

Alfredsdottir said a decline of nearly 20 percent in the value of the British pound since the EU referendum could reduce the 250,000 Britons that visit Iceland each year. That is almost 20 percent of all Iceland’s tourists, but she predicted visitors from elsewhere would more than compensate.

“We might see less tourists coming from the UK, but we still forecast there will be an increase of 20 percent coming to Iceland all-in-all next year,” she said.

Iceland aims to complete its own assessment of possible post-Brexit areas of co-operation with Britain by the end of the year.

Fishing is one such area, although Alfredsdottir said that would be on issues such as sustainable fishing, not on allowing access to each other’s fishing zones.

“We are open-minded and trying to maximise the possible benefit both countries have with trading with each other,” she said.

Iceland, which holds parliamentary elections on Oct. 29, could see its own changes in government - the members of the current coalition party are behind in the polls. But there appears to be little appetite among the public or any of the parties for a major shift in economic policy. (Editing by Larry King)

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