Coming in from the cold: Iceland weighs joining the EU

European Union officials are hoping a referendum in Iceland on whether to restart membership talks will help boost support within Europe for other less wealthy states to join the bloc, diplomats told Reuters ahead of a public vote this month.

Iceland, a NATO member which already enjoys access to the EU's single market through the European Economic Area, will vote on August 29 on whether to reopen negotiations.

The referendum comes as Europe faces major decisions on enlargement, with Montenegro hoping to join the EU in 2028 and aspiring members Albania, Ukraine and Moldova pushing to make progress on their bids.

Iceland's referendum is not a vote on membership itself and any deal would require a second referendum. Supporters say membership could help the island address its high living costs, stand up to larger trade partners and withstand shifting geopolitics in the Arctic, such as US President Donald Trump's designs on Greenland.

Prime Minister Kristrun Frostadottir said she believes now "is a great time for Iceland to join (the EU) because of the geopolitical situation we're in."

She praised the conduct of the EU in recent years and said it had made her want to expedite the referendum process.

A yes vote is not guaranteed. A Gallup poll this month found voters split on restarting talks: 46 per cent said they would vote yes and 46 per cent no, with eight per cent undecided. Polls show a majority against actually joining the bloc.

But EU diplomats say restarting talks with a wealthy country that would be easy to integrate - albeit one with a population of just 400,000 people - could help improve the optics of enlargement among those European citizens who are wary about welcoming new members.

A positive vote in Iceland "would show the attractiveness of the EU in general and thus boost morale in the EU," said a senior EU diplomat.

Reykjavik abandoned previous negotiations in 2013 when a Eurosceptic government took power, but Russia's war in Ukraine and Trump's statements about Greenland have put a spotlight on Iceland's geostrategic position.

EU officials have sought to stay out of Iceland's internal debate. But if Icelanders vote in favour of restarting talks, officials expect the country to make quick progress.

"It speaks to the growing attractiveness of the EU in a world that is rapidly changing," EU Enlargement Commissioner Marta Kos told Reuters.

"We see that practically all European countries seek accession or closer association to the EU. And it would undoubtedly add to growing momentum for the EU to accept new members."

If the "yes" vote wins, Kos said she would expect accession negotiations to take one to two years, with the timing of membership dependent on a second referendum in Iceland and ratification by the EU's 27 members.