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Iceland - US Relations

The United States was the first country to recognize Iceland's independence in 1944 following Danish rule, union with Denmark under a common king, and German and British occupation during World War II. Following the April 9, 1940, German occupation of Denmark, Iceland took control of its own foreign relations. In July and December of that year Icelandic officials asked the United States to place Iceland under U.S. protection in accordance with the Monroe Doctrine to forestall a feared German invasion of the island. The United States was initially unenthusiastic about this proposal, but ultimately concluded that Icelandic occupation was a matter of national defense.

The beginning of diplomatic relations between Iceland and the US can be traced back to July 7, 1941, when U.S. forces came to Iceland in order to supplement and eventually replace British forces during WWII. Britain had occupied Iceland 15 months year earlier in order to achieve a strategic position in the North-Atlantic, fundamental to Allied forces.

The arrival of US forces in Iceland coincided with Roosevelt´s Proclamation of Unlimited National Emergency (in which he mentioned Iceland specifically) on May 27, 1941, and on the basis of a bilateral defense agreement between the two countries, concluded by a Exchange of Messages July 1, 1941. This agreement was ratified by the the Parliament of Iceland on July 10, 1941, and President Roosevelt informed the US Congress of the exchange in a letter dated July 7, 1941, asking the Congress´s permission that diplomatic representatives be exchanged between the two countries.

It is noteworthy, that the arrival of US forces in Iceland was at the behest of the Government of Iceland, under condititions that the US accepted and observed. Concurrently, this agreement marked the end of Iceland´s declaration of neutrality in world affairs in the Act of Union between Iceland and Denmark from 1918. This was further to be substantiated by Iceland´s later agreement with the U.S. on the Keflavik base in 1946, with Iceland being a founding member of NATO in 1949, and with the conclusion of the Bilateral Defense Agreeement between Iceland and the US in 1951.

On April 27, 1942, it was announced in Washington D.C. that the US had fully taken over command in Iceland. The number of US forces in Iceland peaked in 1943 when approximately 47,000 troops were stationed in Iceland. After that, the number of troops gradually declined, being around 10,000 in the fall of 1944.

After German forces occupied Denmark in 1940, Iceland assumed control over its own foreign affairs and gradually moved toward complete independence from Denmark. Following a plebiscite, Iceland formally became an independent republic on June 17, 1944. That same day, the United States recognized Iceland in public statements of congratulation by President Franklin D. Roosevelt and Secretary of State Cordell Hull.

Diplomatic relations and the American Legation at Reykjavik were established on September 30, 1941, when Envoy Extraordinary and Minister Plenipotentiary Lincoln MacVeagh presented credentials and elevated the American Consulate to Legation status. Iceland had taken over full control of its foreign relations on April 10, 1940, although the country had not yet declared itself independent from Denmark, which was then under German occupation.

Iceland concluded a bilateral Defence Agreement with the United States in 1951. Apart from the territorial defence of Iceland, the primary missions of US forces based at Keflavík (the Iceland Defence Force) included air defence, maritime surveillance and early warning in the North Atlantic area. In 1993 Iceland and the United States reassessed the mutual defence requirements at Keflavík, based on the 1951 bilateral defence agreement. The results, contained in an understanding signed on January 4 1994, called for reductions in force levels to reflect the relaxation of tension in the North Atlantic region. In September 2006 the Keflavik base was closed down following an Agreement (PDF). A Joint Understanding (PDF) was also negotiated in which both sides affirm their continuing commitment to the 1951 Defense Agreement. The Joint Understanding also lists bilateral activities designed to create a basis for future cooperation between Iceland and the United States in the areas of defence and security.

The American Legation was elevated to Embassy status on November 3, 1955, when John J. Muccio presented his credentials as Ambassador Extraordinary and Plenipotentiary.

Iceland is a member of the North Atlantic Treaty Organization (NATO) but has no standing military of its own. The United States and Iceland signed a bilateral defense agreement in 1951; it remains in force, although U.S. military forces are no longer permanently stationed in Iceland.

The U.S.-Icelandic relationship is founded on cooperation and mutual support. The two countries share a commitment to individual freedom, human rights, and democracy. U.S. policy aims to maintain close, cooperative relations with Iceland, both as a NATO ally and as a friend interested in the shared objectives of enhancing world peace; respect for human rights; economic development; arms control; and law enforcement cooperation, including the fight against terrorism, narcotics, and human trafficking. The United States and Iceland work together on a wide range of issues from fighting ISIL, to enhancing peace and stability in Afghanistan, to harnessing new green energy sources, to ensuring peaceful cooperation in the Arctic.

The 1951 bilateral defense agreement stipulated that the U.S. would make arrangements for Iceland's defense on behalf of NATO and provided for basing rights for U.S. forces in Iceland. In 2006 the U.S. announced it would continue to provide for Iceland's defense but without permanently basing forces in the country. That year, Naval Air Station Keflavik closed and the two countries signed a technical agreement on base closure issues (e.g., facilities return, environmental cleanup, residual value) and a "joint understanding" on future bilateral security cooperation focusing on defending Iceland and the North Atlantic region against emerging threats such as terrorism and trafficking. The United States also worked with local officials to mitigate the impact of job losses at the Air Station, notably by encouraging U.S. investment in industry and tourism development in the Keflavik area. Cooperative activities in the context of the new agreements have included joint search and rescue, disaster surveillance, and maritime interdiction training with U.S. Navy and U.S. Coast Guard units; and U.S. deployments to support the NATO air surveillance mission in Iceland.

The United States seeks to strengthen bilateral economic and trade relations. Most of Iceland's exports go to the European Union (EU) and the European Free Trade Association (EFTA) countries, followed by the United States and Japan. The U.S. is one of the largest foreign investors in Iceland, primarily in the aluminum sector. The United States and Iceland signed a Trade and Investment Framework Agreement in 2009.