Iceland's Transatlantic Dilemma

14 March, 2002

Iceland's Transatlantic Dilemma: Economic Ties with Europe - Defence Ties with the United States

Address by Mr. Halldor Asgrimsson, Minister for Foreign Affairs of Iceland at the Deutsche Gesellschaft fuer Auswaertige Politik

Europe's neglected north-western flank

Speech in German.


Dear Hans Dietrich, Excellencies, Ladies and Gentlemen,

The ties between Iceland and Germany have long been strong. This year we celebrate half a century of formal relations between Germany and Iceland. It was exactly 50 years ago, in March 1952, that the German Ministry for Foreign Affairs contacted our General Consul in Hamburg and notified him of the wish of the German Government to establish diplomatic relations with Iceland. In a letter from the Chancellor
and Foreign Minister Konrad Adenauer, he expressed hope for Iceland's acceptance referring to "die alten, vertrauensvollen Beziehungen zwischen Deutschland und Island". I feel confident that the relations between our countries remain based on trust.

Let me now turn to the essence of my talk here today - the possible dilemmas which Iceland's position in the middle of the Atlantic presents, both in its relations with Europe and with the United States. The dilemmas can be summed up in two questions: Firstly, "Is there a conflict between our defence relations with the US and our economic and other relations with Europe?" Secondly, and a more difficult dilemma: "Why does Iceland not consider joining the European Union given its close involvement in a wide range of cooperation with the EU?"

Let me first make the following clear. Membership of the European Union is not at present on the agenda of the Icelandic government. Indeed, it is not in the manifesto of any political party. Nevertheless, for the last two years, since I presented an extensive report to our parliament on "Iceland and its place in European cooperation", there has been considerable discussion on the matter ? a certain amount in parliament, but even more outside.

Icelanders are in general very much interested in the European Union. Indeed, an opinion poll taken just three weeks ago shows that 2 out of every 3 Icelanders favours opening membership talks with the EU. Even given the unreliable nature of opinion polls, you may well ask as non-Icelanders, what is going on? Is the Icelandic government, you may wonder, completely out of touch with the people?

Iceland has never applied for membership of the EU. I think I can assure you that we will be very cautious about applying, unless it is clear that membership is a viable option for us. We are not accustomed to making offers we cannot back, or of taking on commitments that we cannot honour.
Iceland and EFTA
We are a European nation ? we have common interests with the rest of Europe, and perhaps more important, a shared destiny.

As you all know, the drive for peaceful cooperation in Europe led to two different approaches - the EEC on the one hand and EFTA on the other. EFTA was chosen by those countries needing a form of cooperation which did not seem to encroach on, in many cases, newly-won independence.

The development of the internal market and the close interdependence of the EFTA States and the EC brought about the EEA Agreement. Austria, Finland and Sweden then rapidly decided that they wished to become members of the EU, thus reducing the EFTA pillar of the EEA Agreement to Iceland, Liechtenstein and Norway. Switzerland chose a different route to the EEA and has negotiated bilateral agreements in 7 sectors.
The EEA
Through the EEA Agreement we participate in the EU internal market and have taken over about 80% of all its legislation. We have taken our obligations under this Agreement very seriously, and I think we can be counted as good and committed members of the internal market.

The Agreement has been good for Iceland, not least in assisting us to modernise our legal and economic structures, thus making us more competitive. The EEA has also given us a platform for the natural inclination of our country to participate with our European neighbours, by allowing us to pay into and participate in Community programmes on research and development and in other areas.

As well as being enthusiastic members of the internal market, we also express solidarity with the less prosperous regions of Europe through contributions to a financial fund, which has now been running since the entry into force of the Agreement. I think this alone makes the EEA cooperation unique among the association agreements of the EU - we are the only non-member countries which pay a contribution towards cohesion in the EU.
Security and defence cooperation
But our close integration into European cooperation goes much further than the internal market. As a member state of NATO, Iceland has observed the development of the ESDP. While we see many positive aspects to ESDP, it has meant, however, that for the first time Iceland is not represented in a multilateral forum where fundamental decisions relating to the security and defence of Europe are being taken. We are not represented in this forum, of course, because we are not members of the EU.

As ESDP develops, it is important that it does not become a source of division amongst European Allies within NATO or that it changes the Alliance into a venue for primarily bilateral contacts between the EU and the US, leaving other Allies, such as Iceland, on the sidelines.

The horrific events of 11 September made clear our interdependence in matters of security, as well as exposing the vulnerability of us all and of our strongest ally. There are indications that in the war against terrorism the security priorities of the US are shifting away from Europe. The war against terrorism and the following necessary reorientation has begun to transform NATO. Plans for adaptations of the US command structure could again have implications on NATO's structures. This development must not lead to the weakening of the trans-Atlantic link. As long as we maintain this link, I am confident that Iceland will not be faced with any real defence dilemma.

Iceland is generally fully in step with the EU. In foreign affairs, in matters of human rights and the environment you will find that we are a supportive ally.

Schengen
Our efforts to integrate ourselves as far as possible, given that we remain outside the EU, are very clear in our participation in Schengen cooperation. This is not least thanks to the understanding of Germany and of the other Nordic EU members. It is in the interest of the whole of Europe to recognise Iceland as a full part of the Schengen area with equal responsibilities to other member states. Again here we could jeopardise the security of the whole area if we do not approach this cooperation in an inclusive manner. We cannot afford to create two classes of member states in this area.
Why not membership?
As you see we are deeply integrated into European structures. It is true that there are a number of issues which the Icelandic people need to form a position on. Because we have never applied to the EU, discussions on the pros and cons of possible membership are still not fully mature. For example, there are those who see the euro as a major argument in favour of membership, while there are others who see it as a disadvantage. The issue of sovereignty is also important. But I know that many outsiders ask the question: So why on earth doesn't Iceland just apply for membership of the EU?

The answer to this question needs an introduction. Let me just sketch my country as I see it. Iceland sits at the meeting point between the tectonic plates of the American and the European continents. We guard the western approaches ? we are a staging post on the way west. We are the embodiment of the transatlantic link.

Together with our neighbours in the Faeroe Islands, Greeland and in Norway, and also with our Nordic cousins, we share a cultural heritage with you and also with the rest of Europe. As a Nordic country we have strong sympathy with the aspirations of the European model of society, where wealth and prosperity is balanced by social responsibility and concern.

Together with our North Atlantic neighbours we provide balance to the wonderfully varied cuisine of Europe. Our fish in the gigantic food store of the Atlantic balances the fine meats of mainland Europe, the grains of the rich arable lands, the exotic fruits and fine wines of the south. I would claim that Europe without its North Western flank is an incomplete Europe.

It is important to understand that Iceland is a relatively newly independent state, though as a nation it is over a thousand years old. Part of our struggle for sovereignty, which was achieved in 1918, was control over our own resources. This struggle continued from 1918 onwards with various disputes over fishing rights. The struggle for control over our resources is closely related to our existence as an independent nation - fisheries is the very bedrock of our economy ? still two thirds of the value of our exports in goods comes from fish. Control over our own resources means control over our own destiny ? the means for economic survival are and must remain in our own hands.

Now this brings me to the key to why Iceland has never applied for membership of the EU. It is the common fisheries policy of the European Union and to a certain extent the common agricultural policy.
The Common Fisheries Policy of the EU
Now the Common Fisheries Policy has very laudable aims ? improvement of productivity and technology, market stability and a secure supply of marine products at a reasonable price. All efforts to achieve these objectives, furthermore, have to conform to the principles of anti-discrimination, environmental protection and consumer protection. The goal is responsible and sustainable utilisation of marine resources in the interest of all.

It is difficult to argue with these objectives. Indeed, we believe that Iceland has a very effective management system, proven over many years, which ensures these objectives. In addition, we run fishing, as we have to, as a sustainable economically viable activity.

Now I do not want to go into a lengthy analysis of the CFP. Indeed, I know that the EU is now addressing many of the problematic issues in its review of the CFP, which must be completed by the end of this year. However, given what I have said about the importance of fisheries for the very existence of Iceland, you will understand that we could never contemplate putting the management of our resources into the hands of others.

You will understand if we find it difficult to visualise a council of fisheries ministers from thirty states, including a substantial number of land-locked states, intruding on sensitive decisions involving fishing permits, quotas, mesh sizes etc. in Icelandic waters. This is not to say that we could not agree on joint overall aims, for example, in line with many of the basic objectives of the CFP. I should add here that a special feature of fisheries is that the activity can be carried out without delivering any economic return to the country around which the activity is happening. This is a further reason for caution on our side.
What does "common" mean?
I think there may be a key to this problem. It lies partly in the meaning of the word "common" in the context of the fisheries policy and partly in the important concept of subsidiarity.

Let us take the CFP first. It is clear to me that the European Union needs a common fisheries policy because its fish stocks are for the most part common ? that is they are shared by two or more states. For example, the UK, Belgium, Germany and the Netherlands fish from the same stocks. They are a common resource and it makes sense to have common rules on how to manage and share them. A common policy for a shared resource.

It is interesting to note that there is not a common policy in the same sense for, say forests, which are so important to Finland, or for oil and gas, which is of such importance to the UK. This is surely because the resource in question is not shared. Indeed, such an idea would be unthinkable ? these resources belong to those countries.

The word "common" is used differently again in the Common Agricultural Policy. Here it does not refer to common resources. There is no common ownership of the land or of the livestock. What is common is the market, to which access has to be managed in order to prevent over-production.

A common management policy for a shared resource ? that is the key. Now, it may surprise you to know that the great bulk of fish around Iceland upon which we base our economy is not a shared resource. We have not printed "Made in Iceland" on it, but I can assure you, and this is generally recognised by fisheries experts around the world, including the EU, that most fish stocks around Iceland remain within Icelandic waters. It is therefore not a shared resource any more than Finnish trees are a shared resource or British oil.

Now, there are of course certain fish stocks which we do share with other countries ? fish which migrate to areas of the high seas and are under international management. Herring and capelin are examples. Where a stock is shared we must have a common management policy. The alternative is a free-for-all with the resulting over-fishing.

It should not be a surprise that the Common Fisheries Policy of the EU takes for granted that all fish stocks are shared. This is simply a result of the geography of the EU as it was. The creators of the CFP never imagined the possibility of fish stocks which were exclusive to one country. But I put the question to you: is it reasonable to expect Iceland, or indeed other North Atlantic nations, to squeeze themselves into a policy which never had them in mind?

Yet we have never received any message to the contrary from the EU. We recognise that the acquis must be applied, but application must also take account of circumstances! Can anyone really imagine that we could apply to a club which insisted on taking over management of our exclusive resource? It is in the interest of the whole of Europe that every nation can make the best of their resources and possibilities.
Where is the solution?
But we already have examples of creativity in finding new solutions to new situations. For example, in relation to agricultural policy, it is interesting that in the last enlargement, ways were found to take account of the fact that the EU was not only getting bigger, but that its very nature was changing - that it was stretching into climatic regions where it had never been before. Suddenly, the EU had an Arctic region with tundra! To take account of this new situation, agriculture north of 62 degrees north was given a special status. I could see this at least in part addressing some of our concerns as well.

Now the question is whether one could be inventive in the same way with the application of the CFP. It seems to me quite clear from the rules of implementation of the policy that the Icelandic economic zone could be a separate management zone and catch quotas would be issued on the basis of previous fishing experience and therefore remain in Icelandic hands.

This however, is not enough - even though relative stability ensures in practice that states maintain their traditional fishing rights, tradition would not be enough for us. There would always be the theoretical possibility that a majority of states could try to pressure Iceland into adjusting the relative share. Unlikely though this might be, we could not base our economic future on such uncertainty.

My view is that the special situation of the Icelandic fishing zone would need to be defined within the Common Fisheries Policy as a special sort of zone. It would not be a derogation from the CFP but a special implementation of the policy adjusted to new circumstances, so that decisions on the utilisation of our natural resource, which is not shared with other member states of the EU, would be taken in Iceland.
Subsidiarity
There is another very important concept, developed by the EU, which I think could help. It is subsidiarity. The principle of subsidiarity is to allow decisions to be taken as close as possible to the level where they will have their effect. The aim of subsidiarity is to ensure that common rules are not established where they are unnecessary or undesirable. Thus subsidiarity applied to the Common Fisheries Policy would recognise the essentially local nature of fisheries around Iceland.

This logic does not only apply to Iceland. I can tell you that the Færoes, Greenland and Norway are, as I see it, all in a similar situation. Indeed, one could say that the entire North West Atlantic flank of Europe is excluded from the EU, not by the objectives of the CFP, but by its proposed application. Need I remind you that Norway has now said "No" twice. Greenland voted with its feet to get out.
Iceland belongs to Europe
Understandably, the EU has been preoccupied with its south and eastern flanks. We have the EEA Agreement, which works well and presents virtually no problems to the EU side. But I have argued strongly for the need to update it in line with Maastricht and Amsterdam - from the Commission I have been met with a certain lack of understanding. Yet while the EEA Agreement is the main foundation for our participation in Europe, it is essential to keep it in good working order.

To me our relationship with Europe on the one hand and with the US on the other does not present a dilemma. A strong, inclusive Europe needs a strong trans-Atlantic link. It is in the common interest of Iceland, Europe - and the US - that Europe be strong, whole and free and that the ties across the Atlantic remain as robust as ever. Here there is no dilemma.

However, as I indicated at the beginning of my address, we have a second dilemma, which concerns Iceland's relations with the EU. We are keen and active participants in European cooperation. In this context, I know that many in the EU like to accuse the EFTA countries of wanting Europe á la carte. According to this theory, we are cherry pickers and we only choose the ripest and sweetest of cherries.

I object to this description ? I have already indicated how we participate in almost all of the EU's fields of activities and demonstrate our solidarity. The problem is that while we have shown ourselves willing to partake of almost all items on the menu, we have not been invited to the dinner on terms that we could realistically consider. But as I have pointed out, there is a possible solution. It is up to the politicians, both in Europe and Iceland, to shape the future on that basis. We are looking forward to working together with our friends in that spirit.