According to a senior official in Brussels on Thursday, Iceland could join the European Union by 2011 if its governement applies to join this year. Their application would be fast-tracked, and according to EU Commssioner Olli Rehn, they would be welcomed with open arms, despite their recent catastrophic banking and currency collapse.

Expectations in Brussels are that Iceland could submit a formal application after a general election in May, as long as a pro-EU government is returned to power. The application process typically takes many years. Croatia is expected to become the 28th member in 2010, and has been carrying out a number of internal reforms in order to meet the entry criteria.

If Iceland were to apply however, they could jump the queue of other candidate countries, including Bosnia, Turkey, and Macedonia. According to Rehn, the EU prefers two countries joining at the same time rather than individually, so if Iceland can get in their application they could join along with Croatia.

Rehn said of Iceland:

“It is one of the oldest democracies in the world and its strategic and economic positions would be an asset to the EU.”

A senior EU official said that he did not see any major objections from member statese, which would be required to ratify the accession. He said they could be fast-tracked because of close trade links with the EU and their democratic traditions, which would mean they already meet most of the criteria for joining.

There remains one problem, however. A poll published just last week found that only 38 of Icelanders want to join the EU, compared to more than 50 percent in October when the crisis first began. While the new Icelandic government is not seen as being too keen on the EU, it is expected to call elections in May and one of the top issues will be EU membership, along with ditching the krona for the euro. Switching to the euro has become a big attraction to Icelanders after many had their savings demolished in the crash of the krona.