Leadership: Iceland Invites The Russians In



November 14, 2008: The president of Iceland has offered Russia the use of an abandoned NATO airbase. The Russians declined, partly because the president of Iceland does not have the authority to make such a deal. What is happening here is that, at the moment, Iceland is unhappy with their NATO allies. Partly this is the result of the global recession  hitting Iceland particularly hard. That's because Iceland's economic boom was fueled largely by Icelandic banks making heavy use of risky derivatives. This was fine when the global economy was growing, but leverage works both ways, and GDP is expected to contract by at least 15 percent in the next year. The Icelandic currency has lost over half its value (against major foreign currencies.) Icelanders suddenly feel poor, although unemployment is still under four percent, that is high by local standards. But the real sting has come from the unwillingness of European nations to help bail out the Icelandic banks. This has caused bad feelings towards the NATO countries, which have provided for Icelandic defense for over half a century.

The U.S. has had troops stationed in Iceland since World War II. That's because Iceland has no armed forces of its own, and occupies a strategic position in the north Atlantic. During the Cold War, U.S. warplanes regularly intercepted Russian maritime patrol aircraft that strayed into Icelandic airspace. But two years ago, the U.S. Air Force withdrew its fighters. Right about then, Russian long-range patrol aircraft, which had been absent since the Cold War ended in 1991, returned. Since then, Russian aircraft have wandered into Icelandic air space over a dozen times. So the Icelandic Defense Minister (actually the Minister of Justice, who also takes care of military matters), asked NATO for some help.

NATO countries agreed to  provide interceptors (usually four at a time) on a rotating basis. But what Iceland would really like is some economic assistance. Some Icelanders believe that leasing the old air base to the Russians would generate some needed income. A few million dollars goes a long way in Iceland, because the island nation only has a population of 320,000.



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