Iceland in the Arctic

In this episode of What’s New, Serafima Andreeva speaks with Guðbjörg Ríkey Th. Hauksdóttir about Iceland’s evolving role in Arctic geopolitics. The conversation explores how Iceland has shifted from viewing the Arctic primarily as an economic opportunity to treating it as a core security concern shaped by great-power competition.

The episode examines Iceland’s unique position as a founding member of NATO without a standing military, and its long-standing reliance on the United States for defence under the 1951 bilateral agreement. Ríkey explains how military infrastructure and allied presence have expanded in recent years, while public trust has been tested by growing geopolitical uncertainty and shifting US rhetoric.

The discussion also covers Iceland’s limited but sensitive relationship with Russia, the domestic debate over sanctions following the 2014 and 2022 crises, and the strong public consensus in support of Ukraine. A central focus is Iceland’s relationship with China, including cooperation on geothermal energy, Arctic research, and the controversial Aurora Borealis Research Station in northeast Iceland. The episode unpacks concerns around dual-use research, intelligence risks, and the challenges Iceland faces in assessing such threats with limited domestic expertise.

Finally, the episode reflects on Iceland’s late embrace of an Arctic identity following the 2006 closure of the US base and the 2008 financial crisis. Ríkey argues that strengthening national expertise on Arctic security and resilience is now essential as political, economic, and security domains in the Arctic become increasingly intertwined.

Transcript

 Serafima Andreeva: Welcome to What's New, a podcast by the Fritjof Nansen Institute and the Arctic Institutes. Covering Iceland in the Arctic and we have an expert on Iceland in the Arctic with us here today, Gudvjørð Rík Haugsdóttir. You are an expert on many things, China in the Arctic is one of them, but also Iceland. It's great to have you! Ríkey: Thank you so much for inviting me. Serafima Andreeva: Thank you for coming and you're sitting in Reykjavik right now. So when we look at Iceland in the Arctic, what does the Arctic really mean for Iceland? I mean, how does it view Arctic affairs? Are they domestic? Are they international? Is it economic? Ríkey: Well, I think that's a good question and it depends on what is the object for whom, right? Are you focusing on the government or the public? And if you look at the government, for instance, it increasingly sees the Arctic region as where military tensions may arise. Although there's not this sense of an immediate threat emanating from the Arctic itself, but an area of heightened geopolitical tensions. For both the government and the general public, the Arctic is also viewed as having possible economic benefits, such as Iceland becoming a transportation hub. Although that rhetoric has subsided quite a bit, there have been discussions about continuing the search for oil, for instance. For some among the public, there's a real sense of Iceland being in the Arctic region, but for others, the Arctic as a region tends to be something a bit more distant. Serafima Andreeva: Yes, and you mentioned that for some it's a bit more distant. I think after 2022, many, after the full scale war against Ukraine, many things happening in the world have become less distant. We view them differently. And how is Iceland in this position? I mean, is it more challenging to cooperate with Russia? Maybe, of course, but is it also more challenging with the Trump administration? I mean, Iceland is a middle power in the optic stage so how does it navigate this? Ríkey: Yeah, that's a good question. So. Cooperation with the US is a pillar for Iceland's security. Iceland and US have a bilateral defense agreement from 1951. We depend on the US for military security, as Iceland has none of its own. And this is not something that is going to change anytime soon. Iceland is a founding member of NATO and has cooperated with NATO allies in all avenues it is capable of. Even though Trump's statements on Greenland have had serious impact on especially opinion and trust among the public, the collaboration within the MFA and the US counterparts is very close still in the lower levels. And what we have seen these past few years is a rapid enlargement of the military infrastructure in the Keplervik, for example. But Russia is a different thing. Iceland has adopted all of the EU sanctions for example, and this is quite different. Well, Iceland did adopt the sanctions after 2014, after the invasion of Crimea, but then there was more push against the sanction, more lobbying against the sanction because of the possible impacts on fisheries, for example. But now there's a very strong consensus among the public that we should support Ukraine in ways we can. What people don't agree on is whether or not Iceland should be funding the military equipment for Ukraine. Serafima Andreeva: But also, I'm wondering about one thing, because I mean, I'm sitting in Oslo and we have some chaos happening in our fisheries questions But Iceland has also had some form of cooperation with Russia, haven't they not? Ríkey: I think it's a bit different from Norway because just because of your geographical location you're closer, you have more areas where you have to cooperate. What the disagreement was on in 2014 was whether or not we should adopt sanctions because we were put under counter sanctions. So fishing exports were from Iceland to Russia were put under sanctions. Not that we are sharing a large area of joint fishing grounds like I think Norway does. Serafima Andreeva: When it comes to also the great power conflicts which is increasing in the Arctic now, I mean with the current Trump administration being more more expansionist, you could say, in the Arctic at least verbally and Russia being expansionist militarily, we have this rising case of middle powers kind of having to cooperate together and one term that has first showed up was the Arctic Seven and you know it's problematic for many reasons, but that there was this new term that showed up recently it does the Arctic 6 and you've been in you've been talking about this at the Arctic Circle assembly in Reykjavik earlier this year so I was just I wanted to ask you do you have any thoughts on this Arctic 6 term and Iceland's place in it? Ríkey: Yes, absolutely. And what we did, what the thought process behind that session at the Arctic Circle was just to have a discussion. Is this really the place where we are at? What does that mean, etc.? So it was more like an academic exercise, if you will. But what I would say is that the Arctic six, we're not at that place yet. We're still cooperating with the US. We still have joint, we have colleagues in the US that we would like to continue to work with and likewise. But it's more a question of how seriously should we take the Trump administration's threats to annex Greenland and Canada, et cetera. But I don't believe we're at that stage yet, very fortunately. Serafima Andreeva: Well, I'm glad to hear. I also have one question, I think, going a little bit back to Iceland's identity, because it hasn't really been counting itself as Arctic for so long. I mean, the concept of Arctic is quite new to Iceland, isn't it? Ríkey: Well, if you look at the 1990s, I don't think you can see any policies where Iceland really established itself as an Arctic state. But if you look at late 2000, so in 2006, the US Army left the Keplervik airbase. And then in 2008, we have our economic crash. And after that, we had to really rethink our economy. And then there was this notion of the Arctic scramble, as I know you yourself talked about quite a bit. I think politicians saw this, well, and business people alike. So this is an opportunity or a possible avenue in which Iceland could strengthen its economy. So I think it was more economically focused than politically. And with that came this need to establish Iceland as an Arctic state. Arguably Iceland's EEC is in the Arctic and even though not a lot of its landmasses, we're still in the Arctic region. Serafima Andreeva: And do you hear some other misconceptions about Iceland in the Arctic? Ríkey: I think one misconception is that just because we don't have a military that we are not a valuable member to NATO. And I think Icelandic is extremely valuable to the Alliance. And first is geographical reasons obviously, but also host country support, NATO air policing, Iceland's Coast Guard and also the bomb squad. So that's probably the misconception I would like to have people think about. Serafima Andreeva: But when it comes to Arctic decision-making, I mean, how much of a place strategically and military-wise do Northern relations have for Iceland? I mean, arguably, this is kind of the entire theater is Arctic, even though Iceland itself doesn't have an Arctic landmass. But what is the dynamic between the military and between the security and between the, you could say, strategic, economic, aspects of the Arctic for Iceland. Ríkey: Yeah, I think as with the other Arctic states and especially probably the European Arctic states, I think it's becoming increasingly difficult to separate the two or three avenues. So political cooperation, economic and then security. And what I have been looking at is, for example, Iceland's relationship with China, how China was viewed as this sort of economic savior and we signed the free trade agreement with China, etc. And now what we have seen is this trend in the Nordic states and also Canada that there's this push against, for example, investments. So I think... And that is not only Arctic related, that is the whole of Europe. This talk about de-risking, as you probably have heard. So I think it's becoming increasingly difficult for politicians to accept all investments or all trade. Serafima Andreeva: But you mentioned China, and how has the Icelandic relationship with China been and how has it changed? I mean, in recent times, is China as much of a threat, for example, either economically or in other ways, that it is frequently portrayed as? Ríkey: Iceland's relationship with China has been relatively stable. Iceland and China have cooperated on Arctic issues, geothermal energy, and Iceland supported, as did the other Nordics, supported China's bid to become an observer within the Arctic Council. While China supported Iceland within the IMF during the economic crisis. Iceland supported China to become an observer in the Arctic space. Although we have the free trade agreement, it's imports of goods from China and not so much exports. And we don't see as much happening politically as we did like 2013, 14, 15, those years. And that is also probably because of China's economic situation. That has drastically changed. We have COVID and then we have the invasion of Ukraine. Right. So I think it's a bit on the down low for now. But what is perhaps the most contested is the research station, the Aurora Borealis Research Station in the northeast of Iceland. We've seen a clear push from the US especially not to engage further with China. had two high-level visits in 2019, Mike Pence and Mike Pompeo both came to Iceland and talked specifically about Iceland's relationship with China. And then we have the letter to former Secretary of State Blinken from the US House Committee on the Chinese Communist Party, where they pretty much state that China is probably conducting espionage in this station. And this puts Iceland in quite a pickle because, as I mentioned, we rely on the US for security, but we also have learned that maintaining strong relationship with other countries is important for us, right? Serafima Andreeva: Do you think, are these concerns, how much of a risk, if there is espionage, how much of a risk is it? How much depth or heaviness does the dual use term hold? And what are the Chinese interests for the research station? Would you say that it's very dangerous or what's your take? Ríkey: Well. There's no way for me to say with full certainty that China is conducting espionage. There just isn't. I just don't have the knowledge to go through all that equipment and look at the data. So I contacted the researcher with my colleague, Kristian Ingurstotir, who is an expert on Japan and Japan in the Arctic. And we did a comparative analysis of the two research projects, the Chinese aurora borealis research. the Japanese aurora borealis research. The Japanese research has mostly been very directly from researchers, Japanese researchers who install equipment literally on top of farmers houses and conduct the research in that way. And the Chinese was a bit of a top-down thing. It was a very political endeavor. was on the Icelandic side, looked at us as facilitating the free trade negotiations. in 2012-2013 with China. So the house is literally a very large house on a land that is owned by an Icelandic company and it's leased for 99 years. But the thing is that we just don't have the expertise in Iceland to look at the machinery, to look at the data, to say with full certainty that this is espionage or not. There have been all these rumors etc but we just don't know. But just not knowing also is not a good place for Iceland to be in, right? I think we should know and if it's not espionage well great. But the problem is the notion you mentioned of dual use. Maybe it could be used for dual use purposes. That could very well be. Serafima Andreeva: But if you were to give a policy recommendation to Icelandic decision makers, what would you say? Ríkey: I do believe the government is really on the right track in many regards. What I think, if I were to add one more policy recommendation, is that we really need to have a long-term view and strong emphasis on strengthening our knowledge base. We need more manpower with expertise on specifically Arctic security. We must start now by training experts and emphasizing more research funding in areas of security and resilience. That will be my main recommendation. Serafima Andreeva: Can I ask you just one last question? You mentioned security here. And is Iceland in this somehow security crisis? Because you mentioned that, okay, even though there has been no military, there's still been presence from the US, you still have some historic strategic role in geographically but also in general. But when it comes to the current security situation, mean, how prepared is Iceland? What are the risks? What are the opportunities? What's the situation? Ríkey: I don't think we're in a crisis, although it's the same as with other European countries. We have the invasion of Ukraine, Russia's invasion of Ukraine. We have the pressure from the US to fund. our own security or like put the money into our own security and but I don't think Iceland is in a crisis but I think we need to take our security seriously and we need to be calm but move quickly as well as with Norway I suppose. Serafima Andreeva: Thank you for coming. It's been great to listen to you. Ríkey: Thank you so much for having me, it's been a pleasure. Serafima Andreeva: Thank you and to our listeners, thank you for listening.