By Louise Rasmussen and Anna Ringstrom
COPENHAGEN, March 6 (Reuters) - Iceland will hold a referendum on August 29 on resuming European Union membership negotiations, the government said on Friday.
Reykjavik in 2013 abandoned EU membership talks after four years of negotiations, but a rise in the cost of living and the war in Ukraine in recent years rekindled the country's interest in joining the bloc, polls have shown.
The government had said it would hold a referendum no later than the end of 2027.
Repeated threats by U.S. President Donald Trump to annex Greenland, located between Iceland and the United States, also made the question of EU membership more pressing for the Nordic country, home to almost 400,000 people.
Iceland first applied to join the EU in 2009 following the collapse of its banking system during the 2008 global financial crisis, which pushed its economy to the brink of bankruptcy.
If voters back the resumption of talks, the final terms of EU membership will require approval in a second referendum. However, the government stated that a "No" vote would end any future attempts to restart accession negotiations.
A new Gallup poll showed 57% of Icelanders favour talks while around 30% are opposed, according to public broadcaster RUV.
A SIGNIFICANT DECISION, EU OFFICIAL SAYS
The Icelandic people must now make "a significant decision", EU Enlargement Commissioner Marta Kos said in a statement.
"The geopolitical context is fundamentally different today than when Iceland first applied for membership," Kos added. "In a world of competing spheres of influence, EU membership offers an anchor into a bloc grounded in values, prosperity and security."
Iceland is already part of the European single market, the Schengen open-border travel zone, and the European Free Trade Association (EFTA) alongside Norway and Liechtenstein.
EU membership would give it a direct say in decision making via institutions such as the European Commission, the Council of Ministers and the European Parliament, as well as becoming part of the customs union and the option to adopt the euro.
(Reporting by Louise Rasmussen and Stine Jacobsen in Copenhagen, Anna Ringstrom in Stockholm and Lili Bayer in Brussels, editing by Terje Solsvik and Susan Fenton)
