EU News from Iceland reports that the government narrowly carried the vote to apply for EU membership, losing in the process some of its own voters and even one of the Ministers (the Ag and Fish one, naturally enough).
The plan is to complete negotiations by 2012 when there will be a referendum on membership and, if it goes the "right" way becoming members by January 1, 2013. There is many a slip, of course. It would appear that even the politicians are split on the proposal and the populace is split about 50:50. Clearly the brief panic after the financial crash that manifested itself in a desire to seek refuge in the EU has already abated and there are several years to go before the people are asked to approve, assuming the negotiations go well.
Hjörtur J. Guðmundsson gives all the details. From my private discussion with him I know that he thinks there is everything to fight for and the government is very anxious.