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FM AMEMBASSY REYKJAVIK
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C O N F I D E N T I A L SECTION 01 OF 02 REYKJAVIK 000091 
 
SIPDIS 
 
DEPT FOR S/ES-S 
ALSO FOR E, EUR/FO, EUR/NB 
OSD FOR WINTERNITZ 
 
FROM AMBASSADOR VAN VOORST 
 
E.O. 12958: DECL: 05/18/2017 
TAGS: PREL MARR PINR NATO KWMN ECON UNSC IC
SUBJECT: Scenesetter for the Secretary's visit to Iceland May 30, 2008 
 
Classified By: Amb. Carol van Voorst for reasons 1.4 (b) and (d). 
 
¶1.  (U) The Icelanders are delighted to welcome you to the High 
North.  Your visit to Reykjavik is the first by a Secretary of State 
since Secretary Powell attended the NATO Summit here in 2002, and the 
first bilateral visit since Secretary Albright overnighted in 2000. 
Under Secretary for Political Affairs Burns was the last senior State 
official to visit in June of last year. 
 
¶2.  (SBU) In development and general prosperity, the Iceland you will 
see bears little resemblance to that of the Cold War years, when the 
country was struggling to emerge from a hardscrabble existence as one 
of the poorest countries in Europe.  Leveraged investments of fishing 
profits and cheap, clean electricity translated into a booming 
economy for most of the last fifteen years.  Though the economy has 
faltered in recent months as credit has dried up globally, life is 
now very comfortable for the vast majority of Icelanders. 
 
¶3.  (C) The governing coalition of the Prime Minister's Independence 
Party and the Foreign Minister's Social Democratic Alliance (SDA) is 
strong and enjoys considerable public support, though a few fractures 
are emerging as economic worries strain the partnership.  So far, the 
SDA has taken the biggest hit in public confidence, as they have 
struggled to make the shift from opposition to government and have 
lost a number of coalition policy battles.  Disagreement over EU 
membership may eventually drive the two parties apart, but most 
likely not before the next scheduled elections in 2011. 
 
FM Gisladottir: Atmospherics, topics 
------------------------------------ 
 
¶4.  (C) Foreign Minister Gisladottir's meeting with you in April was 
the last stop of an extremely heavy spring travel schedule.  Both she 
and PM Haarde have been criticized for spending too much time abroad 
during a period of economic turmoil at home.  She has focused more on 
her role as SDA leader in the last few weeks, though she did find 
time to visit the UK for consultations on development aid, to, lobby 
for Iceland's UN Security Council bid, and to sign an MOU on defense 
cooperation. 
 
¶5.  (C) Gisladottir is very appreciative of your visit and views it 
as confirmation of her role as the proponent of a more 
international-minded Iceland.  Although her welcome will be warm and 
sincere, Gisladottir is also under pressure from within and outside 
of her party to show that she can hold her own at the table with the 
U.S.  She may feel she has to raise sensitive topics such as the 
Guantanamo Bay detention facilities and renditions of terrorist 
suspects, if only to be able to report she made the point. 
 
¶6.  (SBU) Women's Empowerment:  Gisladottir will be keen to follow up 
on your previous discussion of Iceland's proposal for a Women Leaders 
Working Group. 
 
¶7.  (C) Middle East/Afghanistan:  Gisladottir will be interested in a 
readout of the ICI Conference in Stockholm and developments in Iraq, 
as well as your sense of progress in the Israeli-Palestinian peace 
process.  She has a genuine desire to hear your thoughts on what role 
small states such as Iceland can play in the peace process, and may 
point to Palestinian Authority President Abbas' comments here last 
month that perhaps Iceland could host a second "Reykjavik Summit," 
this time centered on peace in the Middle East. 
 
¶8.  (SBU) Defense and Security: The FM's focus here will be on 
continuing her earlier conversation with you regarding NATO's 
involvement in the High North and broader security issues in the 
region, possibly foreshadowing the lunch conversation on Russia and 
the North Atlantic neighborhood.  Gisladottir may also want to brief 
on Iceland's latest efforts in building robust defense and security 
ties with neighboring NATO allies, including recent progress with the 
UK.  She is also likely to cover the bilateral security relationship, 
and may raise the handover of the previously U.S.-run Iceland Air 
Defense System (IADS) radar stations, on which DOD has the lead.  We 
are hoping to complete that transfer soon but may not be able to get 
the price as low as Iceland wishes due to legal and regulatory 
hurdles. 
 
¶9.  (C) UN Security Council Bid:  We doubt that Gisladottir will 
spend much time soliciting our vote for one of the two WEOG seats on 
the Security Council this fall (NOTE: Iceland is running against 
Austria and Turkey).  Rather, she will go forward from the premise 
that Iceland will be successful and will be looking for input on how 
 
REYKJAVIK 00000091  002 OF 002 
 
 
Iceland might shape its term on the UNSC.  Should Iceland win 
election, it will hold the UNSC Presidency in February 2009, and 
Gisladottir is exploring possible themes for Iceland's presidency, 
while also trying to prepare for the potential staffing headache for 
her small (250-person) foreign service. 
 
Prime Minister Geir Haarde 
-------------------------- 
 
¶10.  (C) Warm, witty, and pragmatic, Prime Minister Haarde is at ease 
in domestic and international settings.  Since you met him in 
Washington in October 2006 to sign the bilateral Joint Understanding, 
Haarde has only become more comfortable in the role of Head of 
Government.  Haarde spent much of the first half of this year on 
trips abroad, serving as the country's head cheerleader for 
international audiences and protesting what he sees as the financial 
media's tendency to gang up on Iceland.  Beyond economic pep talks, 
he also found time for bilateral visits with his Canadian and British 
counterparts in March and April, and in both places revitalized talks 
on defense and security cooperation that had become mired in the 
bureaucracy.  He was most recently in the U.S. in April for 
anniversary celebrations of the international students program at 
Brandeis, his undergraduate alma mater. 
 
¶11.  (C) You will find Haarde assured and affable, though possibly 
defensive on the issue of media carping and the influence of foreign 
speculators on the strength of the Icelandic currency.  You may see a 
slight awkwardness in the interplay between Haarde and FM Gisladottir 
should the topic of EU membership come up; Gisladottir makes no 
secret of her view that Iceland should join, while Haarde and his 
party are opposed.  On virtually all other points, however, the two 
leaders have put themselves firmly in sync, and in their year as 
coalition partners have skillfully presented a unified front on most 
international issues while ignoring the squabbling of their parties' 
respective fringe elements.  Haarde has given Gisladottir a free hand 
to reorganize the Defense Department, housed within the MFA, and 
supported her as she pushed through Iceland's first defense budget. 
While Haarde will defer to Gisladottir as your formal host, he is 
certain to make his own points to underline the central importance of 
the U.S. and NATO to Iceland's security. 
 
PM/FM Working Lunch Topics: Russia, Global Economy 
--------------------------------------------- ----- 
 
¶12.  (C) Over lunch with PM Haarde and FM Gisladottir, we anticipate 
a wider scope to the discussion, focusing on issues of global 
concern.  In particular, Iceland is keeping a close eye on 
developments in Russia, and the chattering classes here swing from 
criticism of U.S. "provocations" of the Russians to deep concerns 
over the increasingly assertive Russian foreign policy.  This topic 
would provide an ideal opportunity to follow up on the NATO Bucharest 
Summit and the issue of MAP for Georgia and Ukraine -- Iceland 
supported MAP for both, but did not want to appear too far out in 
front.  Further afield, both Haarde and Gisladottir would be 
interested in your views on developments in East Asia -- particularly 
China -- and in Africa, two areas where Iceland is constructing new 
business or development ties. 
 
¶13.  (U) Haarde and Gisladottir may also want to briefly cover 
economic issues, both to talk up the Icelandic economy and to explore 
developments in the U.S. and global economy that have a bearing on 
Iceland's highly leveraged financial sector.  Haarde, who as Finance 
Minister oversaw much of Iceland's startling economic transition, is 
particularly interested in reassuring the U.S. concerning Iceland's 
creditworthiness. 
 
¶14.  (C) Whaling will be in the news again shortly before your 
arrival, as the government issued a new quota for commercial hunting 
of minke whales on May 19.  While Gisladottir and her fellow SDA 
ministers believe whaling harms Iceland's image abroad and serves no 
real domestic interest, Haarde's party controls the issue and the PM 
is a firm defender of what he sees as Iceland's sovereign right to 
manage its own marine resources. 
 
van Voorst