San Francisco Frontiers - Iceland in suspense after close EU vote

Voting stations closed at 10:00 pm (2200 GMT).

In the absence of exit polls and with ballot counting only beginning once voting stations closed, it could take several hours before a clear victory emerges for the 'Yes' or 'No' camp.

The country of just under 400,000 people applied to join the EU in the wake of a 2009 financial crisis that devastated its economy.

Membership talks were then suspended in 2013 when a eurosceptic government came to power.

An opinion poll by analyst firm Maskina on Friday gave the 'Yes' side a slight edge with 50.4 percent of the vote, but that gap is within the statistical margin of error.

If the 'Yes' side wins, an accession agreement would be negotiated with Brussels and then put to a new referendum on actual membership.

The issue of fisheries -- a pillar of Iceland's economy and over which Reykjavik wants to retain exclusive control -- would have to be hammered out with Brussels, which this time around appears more willing to find "creative solutions".

On Saturday, Iceland's 273,000 voters were asked to answer 'Yes' or 'No' to the question: "Should Iceland resume accession negotiations with the European Union?"

Technically, the referendum result is non-binding, but the coalition government headed by Social Democratic Prime Minister Kristrun Frostadottir has vowed to respect the result.

"This has been a tight race, extremely exciting," she said Saturday after casting her ballot in Reykjavik.

She added that the campaign had "lifted discussions about the EU, about Iceland's place in the world, about our general geopolitical situation and status, to a higher level".

The government has called a press conference for Sunday at 1:00 pm (1300 GMT) to present its plans going forward.

If the 'No' side wins, the government has already vowed not to resume accession negotiations during its term, which runs until 2028, and indicated that it would refer to parliament the question of a possible formal withdrawal of Iceland's EU membership bid.

Political analysts have said it is unlikely the government would resign.

- 'A nail-biter' -

"I think for the last week there has been momentum for the 'No' side," Lovisa Olafsdottir, a 24-year-old consultant told AFP at a referendum watch party for the 'No' camp just before voting stations closed.

"Of course it will be a close call. This will be a nail-biter, but we are hopeful that we will come out on top," said Freyr Rognvaldsson, a 48-year-old public relations employee and 'Yes' campaigner.

Throughout the campaign, debates have mainly revolved around domestic and economic issues, even if rising international tensions, with the war in Ukraine and US President Donald Trump's ambitions for neighbouring Greenland, have featured in discussions.

Iceland's economy has recovered and is now thriving.

Many see no reason to join the EU since the island is already part of the European single market through the European Economic Area, which does not cover the Common Fisheries Policy.

But Iceland's currency is volatile, and the flip side of its newfound prosperity is soaring inflation and interest rates, leaving many indebted Icelandic households glancing longingly at the prospect of adopting the euro and its lower interest rates.

On the global stage, the return of war in Europe with Russia's invasion of Ukraine has shaken established security doctrines.

Iceland is an island strategically located in the sub-Arctic. It has no military and depends on NATO and a 1951 bilateral agreement with the United States for its defence.

Trump's unpredictability and his threats to take over neighbouring Greenland -- which he has mixed up with Iceland on several occasions -- have added to Icelanders' concerns.

The result of Saturday's vote will be followed closely by the EU, which has not welcomed a wealthy, net contributor to its budget since 1995.

I.Wright--SFF