The European Commission has advised European Union countries to hold initial talks with Iceland about admission to the EU.

The EC says Iceland meets the requirements for admission in the important areas of democracy and human rights. It noted, though, that financial reforms would be required, as well as talks about the country's fishing and agricultural policies.

Iceland, a North Atlantic island country with 320,000 inhabitants, had always resisted admission to the EU. But last year, following the massive problems faced by its banking system in the wake of the global financial crisis, it applied for membership.

It is hoping for a speedy entry. The country is already part of the European free market and a signatory of the Schengen Agreement, which offers open borders to inhabitants of fellow signatory countries.

It is now up to the 27 European countries to begin negotiations with Iceland. This may not happen immediately, given that its relations with the United Kingdom and the Netherlands have been uncomfortable in recent months. This is due to disagreements about the repayment of money to the Dutch and British governments, who stepped in to help their countries' investors after the Icelandic bank Icesave collapsed.