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### Viewing cable 07REYKJAVIK233, ICELAND SCENESETTER FOR EXERCISE NORTHERN VIKING 07 AND

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Reference ID | Created | Released | Classification | Origin
--- | --- | --- | --- | ---
07REYKJAVIK233 | 2007-08-09 16:04 | 2011-01-13 05:05 | CONFIDENTIAL | Embassy Reykjavik

`

    VZCZCXYZ0020
    OO RUEHWEB

    DE RUEHRK #0233/01 2211614
    ZNY CCCCC ZZH
    O 091614Z AUG 07
    FM AMEMBASSY REYKJAVIK
    TO RUEKJCS/SECDEF WASHDC IMMEDIATE
    RHMFISS/HQ USAFE RAMSTEIN AB GE IMMEDIATE
    INFO RUEHC/SECSTATE WASHDC IMMEDIATE 3401
    RUEHZG/NATO EU COLLECTIVE

` `

    C O N F I D E N T I A L REYKJAVIK 000233

    SIPDIS

    SIPDIS

    USAFE FOR GENERAL HOBBINS
    OSD FOR ASD/RA HALL

    FROM AMBASSADOR VAN VOORST

    E.O. 12958: DECL: 08/09/2017
    TAGS: MOPS PREL MARR PGOV IC
    SUBJECT: ICELAND SCENESETTER FOR EXERCISE NORTHERN VIKING 07 AND
    VISIT OF USAFE GEN TOMMY HOBBINS AND ASD THOMAS HALL

    Classified By: Amb. Carol van Voorst for reasons 1.4 (b) and (d).

    ¶1.  (C) Your visit and NORTHERN VIKING 07 come as Iceland's
    government gets back to work after summer vacation, with a new
    governing coalition for the first time in 12 years.  The
    parliamentary election on May 12 strengthened Prime Minister Geir
    Haarde's mandate to govern.  The new Foreign Minister, head of the
    Social Democratic Alliance, the new junior coalition partner, is wary
    of us.  While clearly uncomfortable with the use of force, she is
    trying to assert control over defense matters in the government.  We
    have found her open to an exchange of views.  Bold initiatives on the
    use of the former NASKEF facilities have eased public resentment over
    the closure of the base, and a series of defense activities in
    Iceland are providing visible reassurance to the public that the U.S.
    remains committed to Iceland's defense.  Your visit and NORTHERN
    VIKING 07 build on the Washington bilaterals at State and Defense
    last October, as well as the visit of Under Secretary of State Nick
    Burns in June of this year.  All of this fulfills our Joint
    Understanding commitment to hold periodic high-level strategic
    discussions with the Icelanders as well as bilateral military
    exercises.  You will find your hosts more self-assured and more
    relaxed with us than they were last summer - and with a clearer
    concept of Iceland's role in NATO's North Atlantic neighborhood.

    ¶2.  (SBU) You arrive three months after elections resulted in a
    strong new coalition government of PM Haarde's center-right
    Independence Party and the leftist Social Democratic Alliance (SDA).
    While the government is still in its shake-down period, the SDA's
    assumption of six of the twelve cabinet ministries is proceeding
    relatively smoothly.  The Prime Minister -- by a huge margin the most
    popular politician in Iceland -- remains a calm, pragmatic partner
    and a personable, witty interlocutor.  Although he has returned
    formal oversight of defense-related issues to the Foreign Ministry,
    Haarde continues to exert a strong influence on Iceland's foreign
    policy.  Haarde and his Independence Party colleagues are ecstatic to
    see NORTHERN VIKING 07 taking place, and you can expect him to make
    this clear during his meeting with you.  He may press for your
    thoughts on future U.S. exercises in Iceland.

    ¶3.  (C) SDA chair Ingibjorg Solrun Gisladottir -- prickly,
    turf-conscious, outspoken, always controversial -- is adjusting to
    the change from opposition leader to Foreign Minister.  Gisladottir
    has made waves, however, by insisting that the coalition government
    agreement contain language "regretting" the war in Iraq.  She has
    also noted her general disapproval of the current U.S.
    administration.  Reflecting her perceived need to show some
    independence from the U.S. on security matters, the FM has waffled on
    how much public interest she wishes to show in NORTHERN VIKING.
    Gisladottir has apparently made a last-minute decision to attend and
    will accompany you and the Prime Minister to the all hands call and
    media events at the former NASKEF site on August 13.

    ¶4.  (SBU) Putting the exercise in broader context, NORTHERN VIKING is
    the largest demonstration of the continued U.S. defense commitment to
    Iceland since the closure of NASKEF.  It builds on the June 14-18
    visit of Standing NATO Maritime Group 1 (SNMG-1) with USS NORMANDY as
    flagship, and the highly successful visit of the USS WASP last
    October.  We continue the work of wrapping up the remaining
    post-NASKEF legacy issues.  You can expect the Prime Minister to
    raise the Iceland Air Defense System (IADS), which the USG will stop
    funding on August 15.  Press interest in the IADS handover has been
    intense, and we will wish to stress that solid bilateral work by
    USAFE/DOD and the Icelandic Radar Agency and the MFA will ensure that
    Iceland takes over a functioning air defense system.  Equipment
    transfer and operating costs are a concern for a government that is
    budgeting for defense for the first time in its history, and are
    beginning to be aired in the press and discussed in parliament.
    Similar issues surround NATO Air Policing; progress at NATO has been
    excellent but questions of how Iceland will foot the bill for
    quarterly NATO air surveillance operation remain.  On both points,
    the Icelandic government feels public pressure to demonstrate that
    Iceland's security has not been compromised by the U.S. departure.

    ¶5.  (SBU) In most areas, though, the message of moving on from Cold
    War-era constructs has taken root.  The government has signed MOUs on
    enhanced defense cooperation with Norway and Denmark, is buying SAR
    equipment from Canada, and is endeavoring to build more formal
    security ties with the U.K. and Germany.  The Icelanders are taking
    advantage of the first-rate facilities we left at Keflavik to create
    a university-level international education institution as well as a
    technology park.  Smaller-scale initiatives are thriving too; an
    experimental kindergarten with 80 students will open in a former base
    child care facility on August 15.  While making it clear that the
    U.S. "unilateral" departure still grates on Icelandic sensitivities,
    Icelandic politicians and citizens are increasingly enthusiastic

    about the economic potential of the former base.  Meanwhile, the
    Embassy's initiatives to broaden our ties to Iceland in such areas as
    trade and direct foreign investment, energy development, and
    scientific research are well-received by a public skeptical of USG
    policy but deeply fascinated by the U.S.  High-level visits by the
    U.S. Dept. of Energy and upcoming Congressional Delegations in the
    week following your visit have reinforced this spirit and will
    continue to do so.

    ¶6.  (SBU) This vibrancy continues on the economic front, where you'll
    see ample evidence of a continuing economic boom in Reykjavik, thanks
    to utilization of fish and energy resources and leveraging of assets
    to invest abroad.  The Viking spirit of risk taking, acquisition, and
    swift decisiveness have all helped to multiply Icelandic holdings in
    Europe.  The U.S. market is likely the next target, and the business
    community has pressured the GOI for a free trade agreement with us.
    The Icelanders know the prospects are slim for the foreseeable
    future, but you may hear of their abiding interest.

    van Voorst

`