Iceland's long-isolated existence was broken by World War II and the Cold War when its strategic location at the gateway to the North Atlantic and the Arctic were key to the defense of NATO and the United States. But with the disintegration of the Soviet Union the island country seemed again to pass into irrelevance, and in 2006 the last American military aircraft were withdrawn from the Keflavik Air Base. Now the situation is changing again, as the melting north polar ice opens new ocean routes and access to vast natural resources.
According to a 2008 estimate by the U.S. Geological Survey, 13 percent of all the unexploited oil, 30 percent of natural gas and 20 percent of the natural gas liquid resources are located under the seabed of the Arctic. Iceland is an ideal location to base ocean research, drilling and support for extraction and transport. The shrinking polar ice also introduces a revolutionary change in ocean transport between Asia and Europe — the Northeast Polar Passage would reduce transport costs by as much as 40 percent as compared with the traditional route via the Suez Canal.
Once again, Iceland has become a strategic gateway, and among the nations that are showing a growing interest in the country is China. The time has come for the United States to strengthen its relationship with Iceland.
With the Ilulissat Declaration of 2008, five member states of the Arctic Council — the United States, Canada, Denmark-Greenland, Norway and Russia, joined by Iceland, Sweden and Finland — declared their jurisdictional rights in the Arctic Region under the terms of the United Nations Convention on the Law of the Sea.
Though Iceland is not regarded as a coastal state in the North Polar region, it lies in the Arctic and has recognized exploitation rights on the potentially mineral-rich coastal shelf of the Jan Mayen Island under a 1981 bilateral agreement with Norway.
Although China has not stated an official policy on the Arctic, it is not likely to support the unilateral decisions of the Arctic Council. The polar sea route is of major importance to the world’s leader in manufacturing. And China has made a major effort in recent years to acquire access to mineral and energy resources in many parts of the world. Chinese public institutes and scholars have maintained that Arctic maritime routes and seabed riches should be for the use of all mankind.
China has also begun to court Iceland to help get access to the Arctic Council. Last year, Iceland was the first stop on an official European tour by Prime Minister Wen Jiabao and a large Chinese delegation. And when the Chinese icebreaker Xuelong paid a call on Iceland, the crew was received by President Olafur Ragnar Grimsson at his residence. The colossus China and tiny Iceland, half a world apart, are now discussing a bilateral free-trade agreement.
A Chinese proposal to build a “tourist paradise” at a vast, isolated site in northern Iceland could also be used as a facility for workers building and serving ports for trade and Arctic exploration. This undertaking in northeastern Iceland could also be integrated in China’s recently announced interest in a multibillion-dollar project to develop iron mines north of Nuuk in Greenland.
In short, China is reaching out for a position in the Arctic, beginning in Greenland, followed by support facilities in Iceland — which is not a member of the European Union and seemingly has been put out in the cold by the United States — with potential use for naval vessels patrolling the Arctic and the Northeast Polar Passage.
Security and stability in the European Arctic region are a matter of vital interest to the European Union and the United States. Fortunately, bolstering that security does not require re-establishing a military base in Iceland or negotiating new treaties — the North Atlantic Treaty of 1949, the U.S.-Iceland Defense Treaty of 1951 and arrangements agreed to in 2006 regarding air policing, military exercises and the establishment of joint search and rescue cooperation at Keflavik airport all remain in force.
It is time for the United States to take the changing situation more fully into account. Firstly, that means first increasing consultations and cooperation with an old ally, friend and neighbor in the North Atlantic. At a minimum, the United States and Iceland should forge a closer relationship on Arctic issues. Supporting Iceland’s efforts at economic security and stability would also bolster its continued importance for NATO in this increasingly important region.
Secondly, Iceland should be included in the proposed Trans-Atlantic Trade and Investment Partnership while it concurrently moves toward membership in the European Union.
Thirdly, the United States should visibly join Norway and Iceland in the coming “Northern Viking” military exercise. And the U.S. and Icelandic Coast Guards should develop more robust cooperation in providing search and rescue assistance from Keflavik Airport.
It is through such clear actions of mutual help and cooperation that Iceland can continue to ensure its full freedom and independence. At the same time, the United States would make clear that full cooperation with Iceland, especially on access to raw materials and protection of the environment, are a key part of its national strategy in this increasingly important region.
Einar Benediktsson is a former Iceland ambassador to the United States, NATO and the European Union. Thomas R. Pickering is a former U.S. under secretary of state for political affairs and ambassador to Russia and the United Nations.