// BBC WORLD NEWS — MONDO
Iceland holds knife-edge referendum on EU - and it could be decided on fish
Prime Minister Kristrún Frostadóttir (C) supports Iceland joining the EU
Inside a waterfront factory, workers in hairnets and blue overalls are sorting freshly caught cod and haddock, and machines process the fish into fillets, mostly bound for Europe.
Visir fishing boss Pétur Pálsson, who fears joining the European Union would cost Iceland jobs and drive factories abroad, says: "If we are in the EU, they will be the ones who make the policy."
On Saturday, voters in this island nation of almost 400,000 people will decide whether their country should resume talks on joining the EU. It is a referendum that polls suggest is too close to call.
Supporters think closer European ties could help tame Iceland's volatile currency and soaring cost of living.
Opponents say Iceland's sovereignty and control over "priceless" fishing waters are at stake, and would rather continue going it alone.
Fisheries and other marine industries make up almost 40% of Iceland's exports
It is a fault line that has divided Icelanders for decades, but after winning a snap election in 2024 Prime Minister Kristrún Frostadóttir's centre-left government pledged to hold a referendum by 2027.
Russia's war in Ukraine, sharpening Arctic rivalries and US President Donald Trump's tariff threats and designs on Greenland have accelerated that timetable.
"Things have been moving very rapidly with respect to geopolitical challenges," Finance Minister Daði Már Kristófersson tells the BBC, pushing Iceland's place in the world "up the agenda".