NOBEL Laureate Edmund Phelps warned yesterday against the dangers of European Union membership as Iceland became the latest nation to question the sense of affiliation with a bloc mired in economic crisis.
Iceland's new government said on Wednesday it will halt its EU bid and drop the previous coalition's goal of euro adoption.
Prime Minister-elect Sigmundur Gunnlaugsson, whose Progressives won last month's vote together with the Independence Party, said he doesn't want to join a bloc in crisis as his own economy recovers.
According to Mr Phelps, the decision is likely to spare Iceland many of the risks plaguing the EU. "We're still learning about the European experiment and to what extent it's going to succeed," Phelps (79) said in a telephone interview. "The possibility is not foreclosed that the experiment is going to prove unworkable, unsuccessful."
The appeal the EU once held to nations seeking economic stability and access to free trade is crumbling as the region fails to emerge from its crisis.
The UK is now openly questioning its allegiance with the EU while other members like Denmark have distanced themselves from the goal of euro adoption to protect their economies. Iceland, which in 2008 became the first nation to succumb to the global financial crisis, now enjoys faster economic growth than the EU average.
"I can't believe that anybody's serious about joining the EU right now," Mr Phelps said. "It's like saying: 'It's a beautiful house – it happens to be on fire at the moment – we should buy it!'"
Mr Phelps, who won the Nobel Economics Prize in 2006 for his theories on the interplay between inflation expectations and unemployment, questions the future of the euro, and the larger EU, after three years of debt crisis have left five nations relying on bailouts.
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