EU Commission recommends entry talks with Iceland

The European Union's executive recommended on Wednesday launching accession talks with Iceland, the start of a process that Reykjavik hopes will lead to EU membership by 2012.

The European Commission said Iceland met many of the EU criteria on democracy and human rights but called in a statement for some structural reforms, "fiscal consolidation and full implementation of a credible fiscal strategy".

It also identified fisheries, agriculture, rural development and the free movement of capital and financial services as areas where Iceland would have to make big efforts to join the 27-country bloc.

The recommendation, formally called an opinion, requires the approval of EU member states before accession talks can start.

"The opinion is an important step in the accession process and provides guidance to Iceland in its efforts to become an EU member," European Enlargement Commissioner Stefan Fuele said.

Iceland, an island of 320,000 people in the far north of Europe, had been reluctant to join the bloc for decades and applied only last year when the global financial crisis devastated its banking system.

It is hoping for speedy accession talks, since it is better prepared than other EU hopefuls and already belongs to the EU's single market and its Schengen borderless zone.

But its aspirations are tied partially to a dispute with the Netherlands and Britain over $5 billion in debts lost in the country's banking collapse in late 2008.