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RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHRK #0121/01 1891700
ZNY CCCCC ZZH
R 081700Z JUL 09
FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC 4109
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/SECDEF WASHDC
RHMFISS/HQ USEUCOM VAIHINGEN GE 0086
RHMFISS/CDR USNORTHCOM PETERSON AFB CO
RUEKJCS/JOINT STAFF WASHINGTON DC
RHEHNSC/NSC WASHINGTON DC
RUEAIIA/CIA WASHDC
RUEKDIA/DIA WASHDC

C O N F I D E N T I A L SECTION 01 OF 04 REYKJAVIK 000121 
 
SIPDIS 
 
DEPT FOR EUR/NB, EUR/RPM 
OSLO FOR DATT 
OSD FOR OSD-P (FENTON) 
EUCOM FOR J-5, JTRE (CROSSEN) 
NORTHCOM FOR PLANS, POLICY & STRATEGY (CARDWELL) 
NSC FOR HOVENIER 
 
E.O. 12958: DECL ON: 07/01/2019 
TAGS: PREL MARR MOPS PGOV NATO AF IC
SUBJECT: U.S.-Iceland Security Dialogue: Icelandic Defense Policy 
Still in Flux 
 
Classified by CDA Neil Klopfenstein for reasons 1.4 (b),(d). 
 
REFS: A) 08 STATE 63686 
 
¶1.  (C) Summary:  Expert-level Security Dialogue talks in Reykjavik 
June 16 found broad agreement on the bilateral defense relationship. 
Both sides agree on the importance of a new NATO Strategic Concept, 
which Iceland hopes will contain language on the significance of the 
High North.  Iceland reiterated its commitment to meeting its NATO 
obligations at home and in Afghanistan despite budget cuts and an 
ongoing review of defense policy.  Iceland Air Defense System radar 
transfer issues will be reviewed in FY10, and reestablishing a data 
link to NORAD/NORTHCOM is under discussion.  Both sides agreed to 
move to a biannual schedule for NORTHERN VIKING exercises.  Iceland 
was urged to look at niche capabilities where it might contribute in 
Afghanistan.  The next round of talks in 2010 is planned for 
Washington.  End Summary. 
 
NATO and the High North 
--------------------------- 
 
¶2.  (C) Icelandic and U.S. representatives met June 16 in Reykjavik 
for annual working-level Security Dialogue talks.  In her opening 
remarks, Ministry for Foreign Affairs Political Director Greta 
Gunnarsdottir, the Icelandic Delegation Head, said Iceland wanted to 
ensure that the security agenda between the U.S. and Iceland stayed 
robust, and noted that the meeting's planned discussion was a good 
reflection of this effort.  Turning to NATO issues and High North 
policy, the first agenda item, Gunnarsdottir said Iceland was very 
pleased with the Strasbourg-Kehl Summit and its success in 
reaffirming the strength of the Alliance.  She said the decision to 
revisit the Strategic Concept was a key outcome for Iceland.  DAS 
Garber agreed, noting several additional important results from the 
U.S. perspective: Allies' endorsement of the new Afghanistan 
strategy; a reconfirmed sense of family and common values among the 
Alliance; the return of France to the military command; the accession 
of Albania and Croatia and the message that NATO's door remains open; 
and the consensus built on a transatlantic approach to Russia ahead 
of the upcoming NATO-Russia Council meeting. 
 
¶3.  (C) Looking specifically to the High North, Foreign Affairs 
Advisor to the Icelandic Prime Minister Amb. Sturla Sigurjonsson said 
that Iceland was pleased to see a new Secretary-General coming from 
the Nordics.  Though both the SecGen and the new Strategic Concept 
need to reflect the needs of all Alliance members, it is important 
that the new document contain some language on the High North as an 
area of interest to NATO.  Gunnarsdottir built on this assessment, 
reviewing recent Icelandic Government efforts to draw attention to 
the region.  Beginning with the NATO Seminar on the High North in 
Reykjavik in January 2009 and a government report from April on 
Iceland in the Arctic, Iceland has tried to highlight the policy 
challenges stemming from climate change and increased resource 
exploitation in the area.  Iceland still wants to see the Arctic 
Council remain the primary venue for Arctic issues, but NATO must 
also play a role.  Gunnarsdottir also asked about plans for U.S. 
ratification of the UN Convention on the Law of the Sea (UNCLOS), 
which Iceland considers very important. 
 
¶4.  (C) DAS Garber commented that the U.S. and Icelandic approaches 
to the High North are very much in line with each other.  As for 
UNCLOS ratification, the Administration is in favor but there is not 
yet progress in the Senate on ratification.  Sigurjonsson added that 
Iceland is not looking for increased militarization of the High 
North, but wants to increase NATO "situational awareness" of what is 
going on in the region.  This is important to maintain Alliance focus 
as well as public support. 
 
¶5.  (C) Gunnarsdottir opened discussion of the NATO Strategic Concept 
by stating Iceland's hope that the exercise will prioritize tasks for 
the Alliance as well as recommit Allies to the NATO mission.  The 
process of drafting the document can also be an important rallying 
point to reenergize public support.  However, she noted, it is 
important to reiterate the importance of Article 5 and strike a 
balance between the traditional NATO Area of Responsibility and 
out-of-area operations.  In this vein, smaller Allies' concerns about 
the process need to be addressed -- there needs to be common 
ownership of the final document, even if only a restricted group is 
 
REYKJAVIK 00000121  002 OF 004 
 
 
involved in the drafting.  Garber agreed that the drafting process 
will be very important in building support for the final document, 
but reiterated that the SecGen needs to own the process.  We have 
said we want the drafting effort to be as consultative as possible 
early on, but we have concerns that a document drafted "at 28" will 
not truly be a Strategic Concept. 
 
Russia 
--------------------------- 
 
¶6.  (C) On Russia, both sides observed that Russian engagement is 
often uneven, and that while dialogue in the NATO Russia Council is 
important, it is equally important for Allies to remain united.  It 
was noted that the Russians are very skillful at exploiting political 
divisions within the EU and NATO, and it is therefore critical for us 
to hold to our key principles on the indivisibility of security and 
the rejection of spheres of influence.  Sigurjonsson said Iceland 
does not want to exaggerate the importance of increased Russian 
military activity near Iceland, including new, more provocative 
flight patterns, but it is important that NATO respond and maintain 
its capabilities accordingly.  DAS Garber commented that the US 
position is that the current European security institutions are 
working well, and that in Corfu and beyond we will not be looking to 
replace the current architecture.  Gunnarsdottir concurred, though 
adding that in bilateral consultations with Russia the previous day, 
Icelandic officials heard clearly that Russia does not believe the 
present security structure meets its needs.  Still, Russian officials 
have been less than forthcoming on details for their proposals of a 
new European security institution, almost as if they have been 
waiting for the rest of Europe to give them something substantive in 
response.  LtCol Anne Marie Fenton, OSD-Policy, noted that it is 
important for Iceland to try to move the Russians in a productive 
direction, which DAS Garber seconded.  (Note:  Meeting participants 
were informed later in the meeting that Russian Tu-95 bomber aircraft 
had just entered the Icelandic air traffic control sector on an 
unannounced long range aviation exercise.  End Note.) 
 
Icelandic Defense Policy: Under Review 
--------------------------- 
 
¶7.  (C) MFA Defense Department Director Thordur Aegir Oskarsson and 
Iceland Defense Agency (IDA) Director Tinna Vidisdottir provided an 
overview of Icelandic defense policy with a significant major caveat: 
 the new government that took office after the April elections has 
called for a review of IDA operations and the NATO air surveillance 
mission in Iceland.  Despite the fact that much is still undecided -- 
and added pressure of state budgetary cuts required by Iceland's 
economic crisis -- the Foreign Minister has committed to fulfilling 
Iceland's defense and security obligations.  Simultaneously, the 
government plans to carry out a policy-based review of the report 
produced by an MFA-appointed Threat Assessment Committee in 2008. 
While the previous report was descriptive in nature, this effort will 
be focused on policy prescriptions in an effort to prepare the ground 
for the upcoming budget, Oskarsson said.  While acknowledging the 
uncertainty of Iceland's situation, the U.S. side noted the 
importance of the government maintaining its commitments to NATO, 
both in Iceland and further afield.  In particular, maintenance and 
operation of NATO assets is key to retain the Alliance's capability 
to deploy to Iceland. 
 
¶8.  (C) Discussion of Iceland's cooperation with neighboring states 
focused primarily on the report commissioned by the Nordic Foreign 
Ministers on defense and security cooperation, known generally as the 
"Stoltenberg Report" after its author, former Norwegian Foreign and 
Defense Minister Thorvald Stoltenberg.  Gunnarsdottir said the report 
had been very well-received and contained a number of good 
recommendations, though it also covered many areas in which the 
Nordic countries are already working well together.  It is important 
to carefully map out those areas to avoid duplication of existing 
efforts.  Iceland was particularly impressed by the report's 
statements on the importance of the Arctic, the idea of joint Nordic 
diplomatic missions abroad, and the suggestion that Nordic countries 
(including non-NATO states) participate in the air surveillance 
mission over Iceland as well as the U.S.-Iceland NORTHERN VIKING 
exercises.  Sigurjonsson was careful to clarify that the Icelandic 
Government views the suggestions in the report as a supplement to 
Iceland's activities with NATO, not as a replacement.  DAS Garber 
 
REYKJAVIK 00000121  003 OF 004 
 
 
noted U.S. support for the idea of closer security cooperation among 
the Nordics, particularly if it provides a boost to efforts to cut 
costs and improve military capabilities in the region. 
 
Bilateral Initiatives: IADS, Exercises, Coast Guard 
--------------------------- 
 
¶9.  (C) A review of specific activities in bilateral defense 
cooperation focused on the status of the Iceland Air Defense System 
(IADS), planning for exercise and defense events for 2009-2013, the 
status of the Military Representative Billet at U.S. Embassy 
Reykjavik, and the relationship between the Icelandic and U.S. Coast 
Guards.  On IADS, both parties agreed that due to the Icelandic 
financial situation, action on the final transfer of U.S.-owned 
equipment will be deferred until Fiscal Year 2010.  Although no 
political decision has been taken on upgrades, Iceland's NATO Mission 
in Brussels is exploring the technical issues related to possible 
NATO-funded upgrades in 2011-2015 as part of Alliance adoption of a 
next-generation radar system.  Iceland is also very interested in 
reestablishing the data link between IADS and U.S. NORTHCOM/NORAD, 
which Iceland Defense Agency reps and a representative of NORTHCOM 
discussed on the margins.  Some operator-level discussions on this 
point have already taken place. 
 
¶10.  (C) IDA Head of Strategic Planning Fridrik Jonsson thanked the 
U.S. for a successful September 2008 deployment of fighter aircraft 
for NATO air policing in Iceland.  Iceland is also happy to hear that 
the U.S. has committed forces for a planned 2010 rotation.  On 
NORTHERN VIKING exercises, there was agreement from both sides to 
shift from the annual schedule laid out in the 2006 Joint 
Understanding to a biannual schedule, with 2009 as an off year.  U.S. 
EUCOM Joint Training Readiness and Exercises Representative LTC Bill 
Crossen outlined a proposed five-year plan for defense engagements, 
with two events planned per year in addition to scheduled air 
policing deployments in odd years.  Exercise NORTHERN VIKING will be 
held in 2010 and 2012, and beginning in 2011 U.S. Army Europe will 
also look to participate in the Icelandic Coast Guard's NATO NORTHERN 
CHALLENGE explosive ordnance disposal (EOD) exercise.  Both sides 
agreed that the Stoltenberg Report's suggestion of Nordic 
participation in NORTHERN VIKING and/or the air patrolling mission 
would be a positive addition. 
 
¶11.  (C) On the MilRep position at Embassy Reykjavik, OSD-Policy 
Representative LtCol Fenton reviewed CDR EUCOM General Craddock's 
decision to support the creation of a permanent billet, but noted 
that the modalities are still being worked out.  In the interim, 
EUCOM will fill the position in FY10 with an activated reservist. 
Icelandic Coast Guard (ICG) Director Georg Larusson then briefed on 
moves to boost ICG capabilities, including the acquisition of a new 
fixed-wing aircraft and patrol vessel as well as Iceland's 
chairmanship of the North Atlantic Coast Guard Forum (NACGF). 
Iceland will host the NACGF Plenary in Akureyri in September 2009, 
where Norway will take over as Chair.  Both sides voiced support for 
continued exchange, building on the ICG-USCG Memorandum of 
Understanding from 2008, though Larusson cautioned that the ICG is 
under tremendous financial pressure and may need to adjust 
participation accordingly. 
 
Global Issues: Financial Crisis, Afghanistan-Pakistan 
--------------------------- 
 
¶12.  (C) The MFA provided a briefing on the Icelandic economic 
situation and the government's response to the financial crisis, with 
a particular focus on the recently-negotiated agreement on deposit 
guarantees for the Icelandic-owned Icesave banks in Britain and the 
Netherlands.  Of note, Chief Negotiator for Trade Agreements Einar 
Gunnarsson estimated that the sales of other bank assets would, even 
by conservative estimates, cover a large portion of the guarantees, 
possibly as much as 75 percent.  Additionally, Gunnarsson described 
the government's hope that a way forward can be found in dealing with 
the creditors of the failed Icelandic banks so that they are awarded 
an ownership share in the new banks or some other means of 
profit-sharing in the future. 
 
¶13.  (C) Both delegations agreed on the importance of success in 
implementing NATO's Afghanistan strategy, and Gunnarsdottir 
emphasized that despite budget cuts, Iceland does not intend to drop 
 
REYKJAVIK 00000121  004 OF 004 
 
 
its level of support for the ISAF mission.  Garber welcomed this 
statement, and Fenton noted that the Icelandic Coast Guard's EOD 
expertise would provide a great potential contribution to needs in 
Afghanistan.  Additionally, better civil-military integration is 
necessary, and Garber and Fenton urged Iceland to look at ways to 
assist in this regard in areas where Iceland may have niche 
capabilities.  Garber welcomed the Icelandic delegation's interest in 
possible Afghanistan-specific consultations.  In response to a 
question on public support for the Afghan mission, Gunnarsdottir 
noted that the Icelandic public has largely turned inward following 
the economic collapse.  Support for foreign involvement in general 
has dropped, not just in Afghanistan.  That said, the Left-Green 
Movement, formerly the party most opposed to Iceland's contribution 
to NATO in Afghanistan, has mitigated its comments since coming into 
government in February. 
 
¶14.  (SBU) The two delegations agreed to hold the next round of 
expert-level talks in Washington, D.C., though the Icelandic side 
also urged that planning begin for a coming round of senior-level 
talks. 
 
¶15.  (U) Meeting Participants: 
 
U.S.: 
--EUR DAS Judy Garber, Head of Delegation 
--LtCol Anne Marie Fenton, USAF, Office of the Under Secretary of 
Defense for Policy 
--Stephen Wheeler, Iceland Desk Officer, EUR/NB 
--LTC Bill Crossen, USA, U.S. EUCOM Joint Training Readiness Exercises 
--Capt Brian Driggers, USAF, Iceland Desk Officer, EUCOM J-5 
--Barry Cardwell, Deputy Chief, Strategy and Policy Division, Plans, 
Policy and Strategy Directorate, U.S. NORTHCOM/NORAD 
--Neil Klopfenstein, Charge d'Affaires, Embassy Reykjavik 
--Brad Evans, A/DCM, Political Officer, Embassy Reykjavik 
--CDR Patrick Geraghty, USN, Military Representative and Assistant to 
the Defense Attache, Embassy Reykjavik 
 
Iceland: 
--Amb. Greta Gunnarsdottir, Ministry for Foreign Affairs Director 
General for International and Security Affairs 
--Amb. Thordur Aegir Oskarsson, Director, MFA Department of Defense 
--Amb. Sturla Sigurjonsson, Foreign Affairs Advisor to the Prime 
Minister 
--Thorunn Hafstein, Ministry of Justice Acting Permanent Secretary 
--Ellisif Tinna Vidisdottir, Director, Iceland Defense Agency 
--Fridrik Jonsson, IDA Head of Strategic Planning and Exercises 
Section 
--Jon Gudnason, IDA Air Command and Control Manager 
--Georg Larusson, Director General, Icelandic Coast Guard 
--Harald Johannessen, National Commissioner of Police 
--Ingibjorg Rafnar Petursdottir, Desk Officer, MFA Department of 
Defense 
 
 
 
Klopfenstein