Foreign Policy Address to the Althing

Foreign Policy Address to the Althing
H.E. Mr. Halldór Ásgrímsson, Minister for Foreign Affairs
October 19, 1995


Table of Contents

1. Introduction
2. The United Nations
3. Resource, Environmental and Arctic Affairs
4. The Nordic Countries and the Baltic States
5. Security
6. The Adaptation of the North Atlantic Alliance
7. The Western European Union, The European Union and the OSCE
8. Disarmament
9. EFTA/EEA
10. The European Union
11. OECD/WTO
12. Marketing and Investment Initiatives


1. Introduction
My first address to the Althing on the Foreign Affairs of Iceland will concentrate on international cooperation in the field of fisheries and the Law of the Sea and our efforts in international fora to ensure the protection of our marine natural resources and their sensible utilisation. I have devoted much of my political career to these matters, and they will play an important role during my term as Foreign Minister. The speech will also address the means by which we can secure Icelandic interests in the changes now taking place in the political and security affairs in Europe. Furthermore, the increased emphasis on trade and marketing affairs will be discussed. The guiding principle of Icelandic Foreign Policy will be to ensure the independence and economic survival of our nation and active participation in the community of nations.

2. The United Nations
In a few days, on the twenty-fourth of October, the United Nations will celebrate their fiftieth anniversary. On this occasion we should reflect that participation in the UN was among the first decisions of the young Icelandic Republic, and thereby one of the first steps in Icelandic participation in international affairs. Now, as before, participation in the work of the United Nations enables Iceland to contribute to the welfare of all Mankind -to peace and security, democracy, human rights, the preservation of the environment and development aid. It was a special pleasure for me to address the fiftieth General Assembly of the United Nations on 25 September and lend my support to those who wish to strengthen the Organisation and prepare it for the challenges of the future.

A great effort is now being made to revise and improve the operation and structural organisation of the United Nations as well as solving the impending financial difficulties. We wish to contribute to reforms, whether it be in the activities of the General Assembly, individual organizations and the Security Council. This will require revision of the rules on contributions of Member States. The Nordic countries have taken a joint position regarding changes in the Security Council, where it is emphasised that an enlarged Council should reflect the changed situation in the world and that the Security Council should remain a forum for effective and responsible Member States. In my address to the General Assembly, I expressed the support of Iceland for permanent seats for Germany and Japan.

The Secretary General of the United Nations has taken the initiative in forming a new policy for the Organisation with his Agenda for Peace and Agenda for Development. The United Nations have in the recent past organised conferences on important issues, most recently the 4th World Conference on Women in Peking where a Platform for Action for the coming decades was adopted.

Peacekeeping is gaining more and more weight in the activities of the United Nations and now accounts for about two-thirds of the Organisation's expenses. Iceland has paid its share of the cost fully and on time and sent medical personnel to the efforts in former Yugoslavia. An Icelandic physician is about to take up duties in the medical team of the Norwegian force in Bosnia and two Icelandic nurses are presently participating in a training programme in Norway in preparation for work in Bosnia.

Emphasis should be placed on Icelandic participation in the work of the United Nations where the best use can be made of Icelandic expertise. A UN Geothermal Training Programme is already in operation in Iceland and preparations are being made for a Fisheries Training Programme, which could be operational in about two years.

Ways will be sought to increase cooperation with the Development Agencies of the United Nations and other international organisations to enhance development efforts. The emphasis of the Icelandic International Development Agency will be on assistance in the area of fisheries, geothermal development and technology. We should also bear in mind the long-term objective that foreign aid could mark the beginning of future trade cooperation between Iceland and the countries involved while promoting at the same time the economic development of these countries and reinforcing their democracy and human rights. Over the past years, Iceland has shared its democratic tradition through participation in elections monitoring. We will continue to promote our Icelandic candidacy for the UN Economic and Social Council for the term of 1997-1999.

3. Resource, Environmental and Arctic Affairs
There is no need to dwell on Iceland's contribution within the UN to the Law of the Sea. This is common knowledge to the Althingi and the Icelandic People. We should continue to emphasise participation in these activities of the Organisation, which concern directly the economic survival of the Icelandic Nation. The Government's Policy Statement of April 23 reasserts our determination to participate actively in international cooperation to combat pollution and protect the marine environment. Participation in such activities will benefit future generations.

Iceland has sought to bring to the attention of the international community the consequences of polluting the oceans. In my address to the General Assembly of the United Nations I urged the Member States to participate in an international conference on pollution of the sea from land-based sources scheduled to be held in Washington. Pollution recognises no boundaries and it is necessary to have international laws to avert the danger of pollution to the oceans.

People all across the world are dependent on the sea for their food and so it is imperative to protect the ecosystem of the oceans and utilise their resources in a sustainable manner. This can only be done through international cooperation. If the nations of the world would join forces to ensure the sensible control of fisheries in the high seas this would be of enormous importance to Mankind's sources of food in the future, not least the developing countries. Iceland participated actively in the United Nations Conference on Straddling Fish Stocks and Highly Migratory Fish Stocks and took part in the conclusion of an international agreement on the protection of these species. The agreement provides a strong foundation for international control of fisheries and the rights of nations who are highly dependent on the utilisation of living resources. Attempts will be made to strengthen regional cooperation in this field in the future.

It has been decided that Iceland will put forward its own candidate to the International Tribunal of the Law of the Sea.

The same principles should apply to the utilisation of whale stocks and other living resources of the sea. Iceland is carefully monitoring developments in the International Whaling Commission. We will also participate in cooperation on the utilisation of marine mammals in the North Atlantic through our participation in NAMMCO.

Iceland's struggle for control over its economic jurisdiction is common knowledge. It is also our duty to preserve our interests in distant fishing grounds and ensure that fish stocks in the North Atlantic are utilised in a sensible manner and that control of the fisheries is governed by principles of fairness. It is my hope that it will be possible within a short time to settle existing disputes between Iceland, Norway and Russia on cod-fishing in the Barents Sea. This would make it easier for these nations, along with the Faeroe Islands, to turn their attention to the control of fisheries from the Icelandic-Norwegian herring stock. The disputes with our neighbours underline the necessity for multinational cooperation on the utilisation of resources in the high north. In various other places of the world we are witnessing signs of increased intensity in disputes over fishing rights, for instance in the position taken by the European Union, and this should serve as a warning to us. It is totally inappropriate for Iceland and Norway to engage in long-standing disputes on common interests. It is food for thought that the first and only shot fired at the order of Norwegian authorities since the end of World War Two was directed at an Icelandic fishing crew. These brother nations, who trace their common culture back to the most illustrious writer bred by Iceland, the learned historian Snorri Sturluson, must be able to reach an agreement on the utilisation of resources. Snorri Sturluson extended across the ocean a treasure which even today remains a fountain of inspiration, dedication and progress. Somewhere in the spirit of the common heritage linking us there must be a spark of the sense of fairness that will lead us to a mutually acceptable conclusion. Any fair assessment would take into account percentages and numbers as well as the assessment of the possibilities of the two nations to ensure for their populations a decent livelihood based on their resources. For obvious reasons, Iceland will continue to depend on marine resources. Great emphasis will be placed on Icelandic participation in multinational cooperation on resource issues in our part of the world. The Arctic is attracting more and more attention. Multinational cooperation in the fields of economic affairs, technology, communications and science has already begun within the Barents Council. Special attention is given to the living conditions and cultural heritage of the indigenous peoples of the area. The Barents cooperation will also provide considerable opportunities for economic and trade cooperation which could be of benefit to the Icelandic economy.

The next step in this process is the proposed establishment of the Arctic Council with the participation of the eight adjacent countries. Within the Council, work will continue on the implementation of the "Arctic Environmental Strategy" on the one hand, and on the "Arctic Sustainable Development Initiative" on the other. The latter programme emphasises economic, social, health and cultural matters. The Arctic Council is in many ways symbolic of the altered state of international politics. In the Arctic Council, neighbouring countries, which for years have been hostile to one another, will join forces for the sustainable utilisation of the resources and the protection of the vulnerable environment of the Arctic Region.

4. The Nordic Countries and the Baltic States
I have had the opportunity to work within the Nordic Council on the establishment of the Arctic Council. Yesterday, the Ministers for Nordic Cooperation decided that a proposal on Arctic cooperation, giving an enhanced priority to that matter will be presented at the session of the Nordic Council in Kuopio, Finland, next month. The number of such Icelandic interests is a constant reminder of the importance of Nordic cooperation and its significance in the future. There is no need to dwell on the extensive and close cooperation among the Nordic countries in the fields of culture, social affairs and environmental matters within the forum of the Nordic Council. This is a matter of common knowledge in the Nordic countries. This cooperation, which is founded on a common cultural heritage and common basic principles has been developing for decades in spite of different approaches to international politics and different participation in multinational fora in the fields of defence and economic cooperation.

Doubts have been raised regarding the future of Nordic cooperation due to the membership of Denmark, Finland and Sweden in the European Union. I believe that the close ties between the people of the Nordic countries, which have bound together countless individuals, companies and organisations for decades, are so strong that the membership of the three countries in the European Union cannot break them. The governments of the Nordic Countries have taken decisive steps to forestall any misunderstanding on that score. The Nordic countries have reviewed their international cooperation, especially in the forum of the United Nations.

At the meeting of the Foreign Ministers of the Nordic countries in May 1995 a report was accepted on the future international cooperation of the countries. Among other things, the report contains provisions on continuing the close political cooperation, joint candidacies and coordinated positions whenever possible. It is clear, however, that three countries have made certain undertakings to the European Union which have the effect of reducing their scope for cooperation with non-Member States. There is, however, a consensus that Iceland and Norway can join forces with the other Nordic countries with regard to joint declarations and positions taken by the European Union through the Agreement on the European Economic Area. Thus, Nordic cooperation can form an important link between Iceland and the Union.

At the Nordic Council's Fifth Special Session in Copenhagen on the 29th of September certain necessary amendments were adopted to the Helsinki Convention, the basis of Nordic cooperation, in order to adapt the procedures of the Nordic Council to changed conditions. In due course, these amendments to the Convention will be submitted to the Althing for ratification. At the same time, an amendment was made to the Convention adding an equal rights principle ensuring that in legislation, citizens of other Nordic Countries shall enjoy the same rights as the citizens of the legislating country in areas covered by the Convention.

As we know, consultation in security matters among the Nordic Countries has not been extensive. The reason, among other things, was the different positions of the individual countries with regard to security, and the neutral positions adopted by Finland and Sweden. It is true to say that consultations among the Nordic Countries have now been placed on a more formal basis than before with the associate membership of Sweden and Finland in the Western European Union; both countries are also associate members of the North Atlantic Cooperation Council, and it should be recalled that the Nordic Countries have a tradition of consultation in the forum of the Organisation for Security and Cooperation in Europe in Vienna.

I mentioned earlier the multinational cooperation in the Arctic Region. The importance of Nordic cooperation in that area cannot be overemphasised. This applies also to the Baltic Sea area. The Council of the Baltic Sea States also links together the Nordic Countries and their neighbours, Germany, Poland, Russia and the Baltic States. For centuries the last mentioned countries had close ties with the Nordic Countries. The Council has among its objectives the important task of enabling these countries to form closer ties with the community of western states and render assistance in the development of democratic institutions and judicial systems. It assists in establishing normal trade practices and attends to environmental protection, energy matters and communications.

For Iceland to participate in cooperation with the countries bordering on this enclosed sea of northern Europe is nothing new. As far back as the Middle Ages Iceland was a part of the trading area of the Hanseatic League, which could with some justice be called the first European Economic Area. We still have political and commercial interests in the area. We wish to participate fully in the work of the Council of the Baltic Sea States and preserve our interests there as well as contributing in meeting the needs of these newly independent nations. This applies particularly to the Baltic States. Ever since Iceland and the Baltic States gained their independence in 1918, Icelanders have taken an interest in the Baltic States and had warm feelings for them. Active participation in the Council of the Baltic Sea States will help to solidify the foundation of the independence of these friendly nations and at the same time foster political stability in Northern Europe.

5. Security
Security in Europe is now at a turning point and work is in progress on the establishment of a new security architecture for the continent. The key issue is for the organisations involved in this endeavour to reach a consensus on a framework for security which will ensure peace and stability in the long term. In these times of transition it has become clear that staying neutral in the process is impossible; in fact, nations with long-standing traditions of democracy have a special duty to contribute. We have a responsibility to play an active role.

Discussions on security today are not limited to the traditional aspects of defence; they are marked by the threat of regional conflicts, terrorist activities and international organised crime. It should be borne in mind that security involves the combination of numerous different aspects: military and political as well as economic, social and humanitarian. Peace will not be secured except on the basis of economic welfare, mutual trust and respect for human rights. The activities of the various organisations working towards this end, such as the OSCE, the European Council and regional cooperative efforts across the lines which formerly divided East and West need to be strengthened.

Innumerable tasks await the European Council on securing the position of democracy and human rights in the new member countries. Ahead lies the membership of Russia in the Council, which is a matter of great satisfaction. Most of the Ministries of the Icelandic Government are involved in the work of the Council and active participation by parliamentarians within the Council is of great importance. The participation of Iceland in the defence cooperation of the Western States has been the foundation of a successful foreign and security policy. The security of our country has been assured through our membership of NATO and our bilateral defence agreement of 1951 with the United States. We must place great emphasis on the transatlantic link, which is the key to ensuring peace and stability in Europe. Iceland's policy in security and defence will continue to rest on this foundation as underlined in the government's Policy Statement.

The political parties forming the present government of Iceland supported Iceland's membership of the Alliance, even though opinion on the subject was divided. Time has revealed that this decision was correct and crucial to the interests of Iceland. There is hardly a political party in any of the Member States of the Alliance which is not intent on strengthening and fortifying the Alliance. The democratic forces of Eastern Europe wish to join the Alliance in order to secure their democracy. Since Iceland joined the Alliance, circumstances have changed dramatically. Now we need to examine our membership and the presence of the defence force in Iceland in a totally different light from fifty years ago.

The United States have been adapting to new defence realities. This has involved a reduction in the US armed forces in Europe. The reductions in the Iceland Defence Force is one result of this policy. As we know, an Agreed Minute was signed with the United States early in 1994 on the adaptation of defence commitments to the new world situation. This agreement rests on the firm foundation of the Defence Agreement and it underlines the desire for continued co-operation. The defence co-operation rests on the premise of credible defences in Iceland.

In these times of uncertainty, where even a small group of extremists can wreak havoc in established societies, it is of critical importance for any independent, democratic nation to have a visible means of defence. The presence of the defence force in Iceland supports the security and stability of the North Atlantic and reasserts the importance of the Trans-Atlantic link. There is reason to examine whether the ties of the democratic nations across the Atlantic cannot be widened and deepened beyond the traditional defence co-operation, especially in the area of economics and trade.

6. The Adaptation of the North Atlantic Alliance
The course of events in former Yugoslavia has demonstrated that only NATO has the capacity to put a stop to the devastation of that conflict. Through the efforts of the Alliance and on the initiative of the United States efforts to reach a compromise, a basis has finally been established which could lead to peace. There is every indication that the Alliance will continue to play a key role in the solution of this dreadful state of affairs. It should also be borne in mind that if peace is achieved we will be faced with the enormous task of rebuilding in Bosnia-Herzegovina.

The adaptation of the Atlantic Alliance to new circumstances has been successful beyond expectations. The establishment of the North Atlantic Co-operation Council and the Partnership for Peace met some of the security expectations of the countries of Central and Eastern Europe. A total of 26 nations of Central and Eastern Europe are now participants in the Partnership for Peace. The Ministry for Foreign Affairs is conducting a study of the best ways for Iceland to contribute to the success of the Partnership. One possibility is that Iceland could be the site of an exercise within the Partnership for Peace framework in 1997, which would have the main purpose of practising responses to crisis situations resulting from natural disasters.

Many states are of the opinion, however, that only full membership of the Atlantic Alliance will provide full assurance of their security. The Alliance has confirmed that it is open to new member states. A recently released Study on NATO Enlargement underlines that new member states will have the same rights and commitments as the present member states. The Partnership states are now being acquainted with the Study. The Study itself and the reactions of the Partnership countries will be the subject of discussions at the Foreign Ministerial meeting next December. The next step will probably be to assess which states can be accepted as members and when they can join. It is extremely important that the prospective enlargement of NATO does not weaken its defensive capabilities and its security commitments to the present member states. Iceland supports a calculated and cautious enlargement of the Alliance. It should be noted that the Atlantic Alliance has been enlarged before with good results.

It is important to ensure that Russia does not feel threatened by the enlargement of the Alliance. The Alliance therefore places great emphasis on co-operation with Russia on security. In connection with the ministerial meeting of the Alliance in the Netherlands last spring the formal membership of Russia in the Partnership for Peace was finalised and a joint declaration was issued by the foreign ministers of the Alliance and Russia regarding further co-operation between Russia and the Alliance beyond the framework of the Partnership. Consultations with the Ukraine along the same lines are now commencing. It should be noted that the Alliance alone has the power of decision on its enlargement. Neither Russia nor any other country should have a veto in this matter.

The enlargement and adaptation of NATO does not proceed in a vacuum. This work is influenced by and has an influence on foreign and security affairs in other European organisations.

7. The Western European Union, The European Union and the OSCE
The activities of the European Union in security matters are expanding. One of the main tasks of the Intergovernmental Conference will be to define in greater detail the Common Foreign and Security Policy, which form one of the three main pillars of the Maastricht Treaty. Influential member states of the Union are intent on strengthening co-operation in the field of security and foreign affairs. In this context, the organisational links with the Western European Union will become an important issue.

Within the WEU, groundwork is now being laid for the formulation of a Common Defence Policy. A report on this work will be submitted to the Intergovernmental Conference. Opinion is divided on this matter and there are some member states that wish to merge the WEU into the EU, while others believe that the WEU should remain an independent organisation. It is important for Iceland to follow these discussions closely and make its position known within the WEU and take effective advantage of the political consultations among the member states of the European Economic Area and the opportunities provided by the Joint Declaration of the EEA Council on Political Dialogue.

Our position is clear. We must pursue the policy of retaining the WEU as an independent organisation rather than being merged into the Union, of which we are not members. We must emphasise that the development within the Union should be to strengthen the WEU as the European pillar of the Atlantic Alliance.

The conflict on the Balkan Peninsula should serve as a timely reminder that there are still ancient animosities between ethnic and religious groups in Europe. It is now twenty years since the Conference on Security and Co-operation in Europe was launched in Helsinki in 1975. The contribution of the Conference to disarmament in Europe, to improved relations between East and West and to human rights is indisputable. At the December Summit Meeting of 1994, where the Conference was transformed into an Organisation, the OSCE, the decision was made to explore a new Security Architecture for Europe, and that work is now well under way.

It is important for Iceland to participate fully in the work of the OSCE, since the Organisation is the only Security Forum in Europe in which all the states of Europe are participants. We must follow closely the events in this forum as we do in other security fora. The Permanent Mission of Iceland at the Conference for Security and Co-operation in Europe in Vienna was closed late in 1993; this must be rectified.

8. Disarmament
The most important disarmament treaty of Europe, the CFE, is scheduled for full implementation on the 17th of next month and its revision has been scheduled for the spring of 1996. Member states of the Atlantic Alliance as well as the Nordic countries have emphasised the need for a careful revision process and for all countries to contribute to the revision process. The implementation of existing disarmament agreements is a basic premise for the new security environment in Europe and the world. Successful negotiations on nuclear and conventional weapons in the past years have brought us greater security. Thus, the indefinite extension of the Nuclear non-proliferation Treaty is a matter of great satisfaction. Unfortunately, some nuclear powers have not discontinued nuclear testing. The Icelandic Government, along with the other Nordic Countries, has therefore strenuously protested the nuclear tests conducted by China and France.

As a party to several disarmament treaties, Iceland will support all realistic attempts at disarmament and will give its whole-hearted support to a comprehensive ban on nuclear testing.

9. EFTA/EEA
As Minister of Foreign Trade, I will concentrate on securing the trade interests of Iceland and extensive Icelandic participation in the international trade cooperation within the World Trade Organisation, the Organisation for Economic Cooperation and Development, the European Free-Trade Association and the European Economic Area.

When Iceland became a party to the European Free-Trade Association, the purpose was not only to strengthen cooperation with the other member states of the Association but also to establish a firm platform for cooperation with the European Union, and this has been realised with the Agreement on the European Economic Area. The role of EFTA has been evolving over the past years with the signing of declarations of co-operation and free-trade agreements. The EFTA states have already concluded free-trade agreements with nine states and negotiations are in progress with the Baltic States. The purpose of this has been, not least, to ensure that the markets of these countries are no less accessible to companies in EFTA states than they are to companies in the EU.

The EU has decided on a policy of strengthening relations with the Mediterranean countries and free-trade agreements have already been concluded with Tunisia. Preparations for EU agreements with Egypt and Morocco are well under way. The EFTA countries have responded by offering these countries co-operation and this cooperation will be developed in the coming months. EFTA can also be of support when the time comes to monitor the development of regional cooperation in other areas, e.g. ASEAN and MERCOSUR. Another possibility is to increase direct cooperation between EFTA and the Free-Trade Association of Central and Eastern European States (CEFTA).

The Agreement on the European Economic Area has proven a solid foundation for our co-operation with the European Union. Following the accession of three member states to the EU, the work of the EFTA cooperation rests heavier on the Icelandic Government.

Since the EEA agreement took effect, the main emphasis has been on the adaptation of our legislation to that of the EU and the reorganisation of the cooperation within EFTA following the accession of Austria, Finland and Sweden to the Union. This provides us with a greater opportunity to increase our participation in the formulation of new European regulations. Among the important matters under discussion within the EEA concerning Iceland we could mention that Iceland and Norway are currently negotiating with the Union on the abolition of health control on the EU borders. The interests at stake for the fishing industry are enormous. The advantage of being able to import fish products into the EU markets without such control is clear. Work is in progress on the coordination of the rules of origin of the EEA and the free-trade agreements which the EU and EFTA states have concluded with the countries of Eastern Europe. When this coordination process is over, Icelandic producers will be able to use resources from Central and Eastern Europe without the final product losing its Icelandic origin and the exports will therefore enjoy the rights conferred by the EEA-Agreement. Iceland is a participant in the so-called Fourth Framework Programme of the European Union on Science and Research. A number of Icelandic companies have taken advantage of the possibilities afforded by the cooperation, and grants could amount to considerable sums.

10. The European Union
Enlargement to the East is without a doubt one of the most challenging and difficult projects the EU has faced to date. The question is no longer whether this enlargement will take place but when. The basic purpose of the accession of the Central and Eastern countries to the Union is to promote welfare, peace and stability in Europe. The conflict raging in former Yugoslavia is a reminder to Iceland that this is a goal we must not lose sight of in all the upheavals and changes taking place on the Continent. At the same time, this is a development which has historical, political and economic repercussions far beyond the Union itself and the countries lining up for accession. It is therefore of the utmost importance to the interests of Iceland, not only because it is a European country but also because every new country joining the EU expands the EEA as well. Iceland cannot, therefore, stand by as a passive observer. We must follow these developments closely, evaluate them and give voice to our views when appropriate. It is natural, therefore, to ask what the situation of Iceland will be at the dawn of the twenty-first century. There are many who believe that we should apply for membership in the EU. This is not, however, on the agenda of this government. What is it that separates those who wish to apply for membership and those who do not? Those who wish to apply for membership are not ready -or so they say- to submit to the Common Fisheries Policy and the ensuing control by the Union over the resources outside the 12 mile territorial limits. No nation in Europe is ready to place their chief resource under joint control or agree that their chief industry is operated under public protection and subsidies. An application under the present conditions would imply that we could accept the Common Fisheries Policy of the Union in broad terms. There has been no indication that Iceland could be exempted from the provisions of the Treaty of Rome in this matter, and therefore an application for membership is illogical. Clearly, however, if this changes and if there are new indications, then we will find ourselves in a new position which we will evaluate when the time comes. It is not least for this reason that it is important to monitor the situation carefully and promote the interests and views of Iceland. Only in that way can we ensure that the choices we make will best serve Icelandic interests in the long term. The European Union is now confronting the difficult question of how enlargement can be achieved without undermining the foundation of the Union. The Intergovernmental Conference will face difficult tasks. It is clear that many of the issues raised will concern Iceland and therefore care must be taken to follow the proceedings closely and make Iceland's views known.

Among the issues before the Intergovernmental Conference will be cooperation within the Union on police matters, defence and security matters and the simplification of the decision making process. There are indications that various major issues will be postponed, e.g. regarding the institutions and structure of the Union and the Common Agricultural Policy and Regional Policy, even though these are prerequisites for the enlargement of the Union.

Iceland and Norway have begun exploratory talks on accession to the Schengen Agreement and it is assumed that formal negotiations will begin in a few weeks' time. The other three Nordic countries in the EU have made reservations regarding a solution for the Nordic Passport Convention. If Iceland becomes a party to the Schengen Agreement, Iceland would become part of a large area where people can travel across inner borders without controls, but there are provisions, despite the discontinuation of border control, allowing temporary border control at inner borders in the interests of public order and national security.

11. OECD, WTO
Participation of Iceland in the work of the Organisation for Economic Cooperation and Development has grown rapidly in recent years, and most Ministries, as well as the Central Bank and the National Economic Institute, are now directly involved in the activities of the Organisation.

In many ways, the OECD now finds itself at a crossroads. The importance of the Organisation can be seen from the fact that numerous countries are applying for membership. There is a general consensus that the enlargement of the OECD should proceed with care; otherwise there is a risk that the quality of the work of the Organisation would suffer.

The OECD is currently involved in a study among member states of new emphasis in the Organisation's work. Iceland has emphasised continuing work in the fields where our interests are the greatest, e.g. in fishing.

The World Trade Organisation has now been operating for just over nine months. Great hopes are attached to the Organisation which, as we know, is not involved only with traditional trade, like the GATT, but also covers trade in services and intellectual property rights. The WTO is on its way to becoming a much larger body than GATT. There are now in progress discussions on the accession of 28 states, including Russia and China as well as smaller countries such as the Baltic States.

When the World Trade Organisation is mentioned in this country, it is almost invariably in connection with agriculture. This is understandable since the Agricultural Agreement of the Organisation has entailed changes here as it has elsewhere. It should not be forgotten, however, that there are other aspects to the Organisation and its agreements. Much less has been said about the positive effects that the conclusion of the Uruguay Round will have on the economic environment and trading conditions of Iceland, due, among other things, to the considerable reductions in tariffs on Icelandic exports, and increased opportunities in important future markets.

The Agricultural Agreement marks the beginning of reforms which will promote trade in agricultural products and place such trade under the principles of international commerce. In the course of these changes we cannot simply ignore the interests of the agricultural community and sacrifice their livelihood. This would not be in the spirit of the Agreement. The route chosen by the Icelandic Government was to ensure Icelandic agriculture sufficient scope to adapt to the new conditions within the framework established by the Agreement while at the same time taking the first steps towards increased foreign competition. The implementation of the Agriculture Agreement in this country reflects the consensus that has been reached in the Althingi on the matter and is at the same time compatible in principle with corresponding measures in other countries.

The systematic implementation of the agreements of the World Trade Organisation with the support of sound regulations on the settlement of disputes will place the Organisation on a firm basis, increase discipline and stability in international trade and strengthen the legal positions of small states. Although the Uruguay Round has been concluded there are still ongoing discussions on increased freedom in various aspects of trade in services and the relationship between trade and environmental issues.

12. Marketing and Investment Initiatives
Vigorous promotion and marketing of Icelandic products abroad is an important element in increasing growth and combating unemployment. To this end, the ministries, agencies and companies will have to take up more active cooperation. The staff and facilities of the Ministry for Foreign Affairs must be utilised in a more systematic and effective manner in the area of trade. Special emphasis will be placed on increasing the services and relations of the Ministry with export companies, and export trade will receive increased attention in the Trade Directorate of the Ministry. It will also be necessary to coordinate and strengthen the marketing activities of the Ministry, the Export Council, the Tourist Bureau, and the Energy Marketing Agency of the Ministry of Industry and the National Power Company.

Just recently, a conference of over one hundred honorary consuls of Iceland was concluded in Reykjavík. Almost fifty Icelandic companies exhibited their products in the conference area and the consuls were introduced to Icelandic firms and representatives of Icelandic industry. One of the representatives of a company which sells industrial machinery commented that if the conference led to the sale of one of their larger machines, the government's share from the sale of the single machine would do more than cover the entire cost of the conference. There is indeed much to be gained from supporting Icelandic companies and industries with all our efforts.

I have, on a previous occasion, mentioned the President's visit to China this last fall. It was important to take advantage of that visit and schedule meetings between high level Chinese officials and the presidents of large Chinese corporations and the executives of Iceland companies in the field of geothermal resource utilisation, fisheries, machinery and software. Two Icelandic firms signed contracts during the visit and an agreement was signed on the establishment of an Icelandic-Chinese Trade and Economic Cooperation Committee. The representative of an Icelandic company commented that participation in the delegation to China had speeded up its marketing operations by a year or two. A Chinese Trade Delegation visited Iceland in late September and in November we expect a group of experts to examine the feasibility of investing in an aluminum plant in Iceland. Within the next few days an Icelandic-Chinese Council of Commerce will be established.

Based on previous experience, it has been decided to organise official visits so that they can be of the best possible use to companies.

We have set ourselves the goal of intensifying the promotion of Iceland abroad as an attractive country for investment. Cooperation has already been established between the Investment Agency of the Ministry of Industry, the Icelandic Export Council and the Trade Directorate of the Foreign Ministry, which is intended to increase radically the promotional efforts of the embassies in this area. At the same time, the possibilities of assisting companies seeking to invest or operate abroad will be explored.

I have in this address given an account of the current state of Icelandic Foreign Affairs. Iceland has had the good fortune of enjoying political and economic security in an insecure world. It is our duty to prepare for the future. This can only be done through a responsible foreign policy. We will try to secure the interests of Iceland through active participation in international affairs. That is Iceland's best assurance for future success in the world community.