Minister's Report to the Althing

Report of the Minister of Foreign Affairs and External Trade on Foreign Affairs to the Althing
27 February 2003

(for publication following delivery)
The final text is the speech as delivered


INTRODUCTION

Mr. Speaker.
In my report this time, I propose to provide a broad survey of the most prominent aspects of the current situation in our foreign affairs. At the same time, there is reason to focus the attention of the Althing on the tasks ahead for the Foreign Service and the preparations that the Foreign Service has been making in recent years in order to meet the challenges of the future. In that context there are two matters of interest to Iceland which are particularly worth noting, that is to say the situation of the Agreement on the European Economic Area in light of the enlargement of the European Union, and the ongoing round of negotiations within the World Trade Organisation. I would also like to focus attention on issues closer to home, on matters, which are of special interest to me, namely our relations with our closest neighbours. I am referring to our important relations with our neighbouring countries, Greenland and the Faeroe Islands. Another important issue is Nordic co-operation in general, which in the heavy seas of international politics has often proven a source of strength for us.


NEW THREATS

But, Mr. Speaker,
It is unavoidable to begin our discussion with a mention of the security risks we need to confront in the immediate present. The peace and security of the world is under threat of a new kind. Daily, there is news of threats and arrests of alleged terrorists. It is clear that the unprecedented international coalition that emerged in the course of the fight against international terrorist organisations has already had an extensive impact, and the nations of the world will need to maintain their vigilance and continue their joint efforts. As recent and tragic examples show, terrorists will stop at nothing. North Korea's nuclear armament plans and threats of abandoning the truce agreement with South Korea are also cause for concern. The constantly deteriorating situation in the Middle East, lost opportunities to secure peace and bring the Palestinians and Israelis to the negotiating table are a great disappointment.

But there is nothing that is so much at the focus of our concern at this time as the reign of terror in Iraq. Even though the matter has already been discussed in this forum recently, there is still reason to address this principal concern of the world again today, as it is quite possible that matters may come to a head in the near future.


ARMS CONTROL IN IRAQ

On the 27th of February, 1991, precisely twelve years ago, Mr. George Bush, then President of the United States, declared that the war on Iraq was over and that Kuwait was once again free. The Gulf War had then been going on for six weeks, with the participation of 32 states. In spite of his defeat, the dictator continued in power in Baghdad and still does. Saddam seized power in 1979. Before long, he invaded Iran. Saddam could not be persuaded to negotiate a truce until eight years later, after hundreds of thousands of people had lost their lives and the Iraqi economy was in ruins.

Iraq remains a threat. Even so, it is important to give the UN Weapons Inspection Team additional scope in order to establish beyond any doubt whether Iraq possesses, or is in the process of developing, weapons of mass destruction. Under UN Resolution 1441 of 8 November 2002, the burden of proof lies with Iraq. The Resolution also mentions serious consequences if Iraq continues to violate its obligations. It must be verified beyond any doubt that there are no weapons of mass destruction in Iraq.

This position of the Government of Iceland was reiterated by our permanent delegate at the United Nations in the Security Council on the 19th of this month, in Iceland's first speech in that forum for a long time.

In his report to the Security Council, Dr. Hans Blix confirmed that Iraq was far from providing its active co-operation. The Iraqis have not explained in detail whether and, if so, how they have dismantled the weapons of mass destruction that they are known for certain to have possessed. It is also clear that the Iraqis have both misled and deceived the weapons inspectors, not only in recent months, but for over a decade.

In one week's time, a new report will be submitted by the United Nations Monitoring Verification and Inspection Commission to the Security Council (on 7 March), and it will be most interesting to hear whether Dr. Blix has perceived any increased willingness to co-operate on the part of Iraq. A broad consensus appears to be forming that this is Saddam Hussein's last opportunity.

Of course we all agree that the objective of the international community must be to prevent war. I therefore emphasise that a peaceful solution must be sought. Armed conflict is a last resort.

We must not forget, however, that Iraq is a dictatorship under the tyranny of Saddam Hussein, where all human rights are trampled on. The most peaceful solution would be for Saddam Hussein and his cronies to go into exile so that Iraq could be disarmed without armed intervention. With people like Saddam, diplomatic solutions are useless unless they are backed by threat of military force

We should keep in mind that there is no way that we can call the United Nations to account for the current situation in Iraq. Responsibility for that lies with Saddam Hussein's reign of terror. He has shown that he has no qualms in oppressing his own people. The international community must show its resolve and the United Nations its strength. The United Nations' handling of this matter must leave no one in any doubt about its authority and ability to carry out its decisions. The United Nations have a fundamental role to play, and no other organisation can take its place.

The position of the Icelandic Government can be summarised as follows:

Iraq has not complied with UN Resolution 1441, which states that this can have serious consequences.
Saddam Hussein can still save his people from conflict by complying with the instructions of the United Nations to the Government of Iraq.
The weapons inspection team should be granted more time.
Iceland supports a peaceful solution and war is a last resort.


NATO/INCREASED RESPONSIBILITY FOR SECURITY AND DEFENCE

Mr. Speaker.
The security and defence arrangements around the world reflect the international political and economic trends. In the wake of the Cold War, a process of adaptation began in European security affairs, which have gained increased weight and new relevance in light of the terrorist attacks on the United States. The threats against Europe have not vanished; they have changed. In place of the previous balance of terror, we are confronted by the danger of deadly attacks by terrorist groups, even armed with weapons of mass destruction. Such groups could, with the least of provocation, attempt to blackmail democratic countries with threats of bloodshed or destruction, possibly with the support of rogue states. In spite of the sense of security, which has been created in the stability of recent years, nothing can be taken for granted as far as European security is concerned, and the need for a strong defence is no less than it was before.

There is no doubt in anyone's mind that the disagreement caused by the Iraq issue within NATO was a serious matter. Even though the problem has been solved, following difficult discussions, it is clear that it will take time for all the wounds to heal. The issue did not concern the position of individual states with regard to possible action against Iraq, but the timing of a decision to implement defence plans relating to Turkey. One of the Member States, France, would not relent and so the decision was made to bring the matter to a conclusion in a forum where France does not have a seat, i.e. in the NATO Defence Planning Committee. In the Committee, Belgium and Germany were persuaded to come aboard and overcome the impasse, as Secretary General Lord Robertson put it.

It is a matter of concern for Iceland if NATO is marginalised and placed outside the central course of events, and there is a potential risk of a dispute of this kind rising again. Such an eventuality might increase the risk that the United States or other countries might choose to take measures without consultation with or approval by NATO. The essential consultation between the United States and Europe might increasingly be conducted outside the perimeters of NATO, even in direct discussions between the United States and the European Union, when decisive decisions are made concerning security and defence. However, the disagreement within the European Union in recent weeks concerning the Iraq dispute indicates that a Common Defence and Security Policy for the EU is still a considerably long way off.

Nevertheless, there are plans to deepen and widen EU co-operation in foreign policy, security and defence. Our own co-operation with the European Union could therefore become more complex and touch upon a wider range of fundamental issues than the internal market and the European Economic Area. In our relations with the European Union we must therefore increasingly take this into account and consider how we can best preserve our security and defence interests within the forum of the European Union. The enlargement of the European Union makes these questions even more urgent.

The world needs the concerted efforts of Europe and the United States. We must be careful not to allow the voices proclaiming the imminent formation of an unbridgeable gap to become too loud or self-fulfilling.

Perhaps we are witnessing the dawn of a new era in international affairs. The United States, as the World's sole superpower, have recently been taking on a much more pronounced leadership role than before. Some of the Member States of the European Union appear to see themselves in the role of providing a counterbalance, and it is in that light that we must view the disagreement that surfaced within NATO. Whatever the case may be, there is no avoiding the fact that the United States, with its size and strength, will play a key role in international affairs.

It is vital for the close security co-operation between Europe and the United States within NATO to remain in place, and the same applies to the Trans-Atlantic link. Iceland has a role to play within NATO as a proponent of strong relations across the Atlantic, from Turkey in the East, over the Atlantic to the United States and Canada, because it is in the fundamental interests of Iceland to maintain an unbroken link between Europe and North America.

This was the firm position held by Iceland when the basis was laid for the security and defence co-operation of NATO and the European Union. Iceland has always supported this development provided that great care should be taken to preserve the Trans-Atlantic Link and make sure that no state should ever be forced to choose between the states of North America and Europe in this respect.

It is quite probable that the states of Europe, led by the European Union with the support of NATO, will sooner or later partly take over NATO's operations in the Balkans. A common policy in these affairs is being formulated within the Alliance and the European Union, and in our view the forum for consultation established between the two organisations is extremely important. This way we ensure not only the participation of Iceland, but also of the states of North America.

Next year, the number of member states in NATO will be increased to 26. Iceland has always supported the enlargement of NATO, placing special emphasis on the importance of including the Baltic States, which are now among the acceding states. It is an important feature of the discussion mentioned earlier regarding the Trans-Atlantic Link that the new Member States appear to place the same stress as Iceland on the Trans-Atlantic Link, which will undoubtedly strengthen the Alliance.

Further enlargement of NATO eastwards could nevertheless have the effect of shifting Iceland further outwards to its margins, but in fact this trend began immediately following the Cold War. In light of this, it is particularly important for us to make sure our voice is heard in this forum and to contribute to the extent that our size and capacity will permit. Efforts have been made in this direction in recent years, most recently through Iceland's active co-operation in the NATO activities in the Balkans and the development of the Icelandic Crisis Response Unit.

The Icelandic Crisis Response Unit is the most important aspect of our more active participation in security affairs, particularly within NATO. The Government has now decided to enhance the development of the Unit so that 50 peacekeepers can be deployed in the field as early as 2006.

The largest task undertaken by the Icelandic Crisis Response Unit to date is the administration of Pristina Airport in Kosovo, where Icelandic air traffic control officers are working under the auspices of NATO in close co-operation with the United Nations. It took quite some time to bring this about, but when it became clear the Italians would be pulling out, Iceland took the initiative in offering, in co-operation with NATO, to explore our possibility of taking over. In spite of considerable doubt at the outset that a country with no military means could take on such an extensive task, the eventual conclusion was that Iceland should lead the administration of the airport. This was a unique opportunity to increase our contribution to NATO without the need for military forces. Another important aspect of the project for Iceland was that the objective of the take-over was to train locals in air traffic control operations and airport administration, and as a matter of fact it is now proposed that administration of the airport should be handed over to the locals under the control of the United Nations before mid-year next year.

This means that the members of the Icelandic Crisis Response Unit will soon take over the full administration of the airport, i.e. the management of a staff of over one hundred people of fourteen nationalities, as well as the administration of the training of locals. I am therefore particularly looking forward to the opportunity of being present when the Icelandic team formally takes over the airport next Monday, on March the 3d. As an example of Icelandic undertakings, I would also like to mention the successful NATO meetings held in Reykjavík last spring, the third such meeting held in Iceland in the 54-year history of the Alliance. Among the decisions made at the meetings was the approval of the participation of Croatia in the Membership Action Plan and to establish a new consultation forum with Russia, The NATO-Russia Council.


THE DEFENCE CO-OPERATION

Mr. Speaker.
For over half a century, the security of Iceland has been founded on Iceland's membership of NATO and the bilateral defence treaty with the United States of 1951.

The implementation of the bilateral defence co-operation between Iceland and the United States has been shaped by the changes in the security environment of Europe. By a protocol to the Defence Treaty in 1996, a substantial reduction in the Defence Force in Iceland was confirmed and a consensus reached on a minimum response capability in Iceland, which was acceptable to the Icelandic Government. The level must be credible, both as regards deterrence and defence capability.


ENLARGEMENT OF THE EUROPEAN ECONOMIC AREA AND THE EUROPEAN UNION

Mr. Speaker.

As I have previously said in this hall it has been quite difficult, in the course of the discussions and work on enlargement of the European Union, to maintain a waking interest and awareness among EU officials of the co-operation within the European Economic Area.

It is quite possible that the relations of the EEA/EFTA states with the European Union will become more unwieldy following the enlargement, and that the European Union will show the EFTA countries less understanding and flexibility in the future. The experience of recent years indicates that the understanding of our special position and the historical background of the EEA Agreement has eroded in the course of the years. The European Union is a completely different organisation than it was at the time of the negotiation of the EEA Agreement, while the EEA has remained unchanged. The EU claim for up to a thirty-fold increase in Iceland's contribution to the EU has no basis in the EEA Agreement.

It has come as a particular surprise to the Icelandic Government that the European Commission should seek to reason the demands on the EFTA states by citing potential contributions of these states to the structural funds of the European Union. Calculations of this kind have no place in the discussions of the enlargement of the European Economic Area. Arguably, these assertions of the European Commission could elicit the response that, owing to the geographical position of Iceland, we should in fact receive more from these funds than we would pay into them. It is quite impossible to say when the discussions on the enlargement of the EEA will be concluded. The Foreign Service will, of course, use all its efforts, in co-operation with other Ministries and Government agencies involved, to bring the matter to a satisfactory conclusion.


NORTHWESTERN EUROPE

Mr. Speaker.
Notwithstanding the fact that the European Union as a whole is by far our most important market area, we must not forget our nearest neighbours. We have not neglected this important matter, and increasing stress has been placed on strengthening and improving Iceland's relations with the Faeroes and Greenland.

It is safe to say that the Faeroes enjoy a special position in the minds of Icelanders. We feel that we speak virtually the same language and that they are more or less our countrymen. We have granted them greater access to our fishing grounds than other nations, and we have co-operated closely with them in fisheries matters. An agreement has been reached with both the Faeroe Islands and Greenland concerning the boundaries of their exclusive economic zones, in good co-operation with Denmark. Trade between Iceland, Greenland and the Faeroes has been growing rapidly in recent years, and that trend may be expected to continue.

Not everyone will realise that the Faeroe Islands are among Iceland's more important trading partners. Despite the small size of the Faeroes, the fact is that trade between Iceland and the Faeroes exceeds our trade with much larger nations. For example, while exports to the Faeroe Islands in 2001 amounted to ISK 2.5 billion, the combined total exports to China and Russia during the same period amounted to ISK 1.6 billion, exports to Finland amounted to 1.3 billion and exports to Canada and Sweden amounted to ISK 2 billion.

In recent years, various technical difficulties have come up in connection with our trade in agricultural products with the Faeroe Islands. Work has been in progress on finding a solution to these problems, but it is clear that it will be necessary to strengthen the legal foundations of the trade relations between the two countries.

For this reason, the Governments of Iceland and the Faeroe Islands decided to take up talks on expanding the current free trade agreement. In fact, the plan is for the agreement to be even more extensive in scope than the EEA Agreement, in that it will include trade in agricultural products. At the same time, the agreement will cover co-operation in the fields of education, culture, communications and tourism. In this way, the agreement could have the effect of strengthening and deepening the co-operation between Iceland and the Faeroe Islands in many areas, for the benefit of both countries.

An agreement of this kind might also be the first step toward closer co-operation with other nations in the North-western Atlantic. In fact, it is quite possible that co-operation of this kind could be expanded still further in some areas, and Iceland could join forces with the Faeroes, Greenland and the people of Western Norway, and even the Shetland Islands and Orkneys, to strengthen the trade and economy in the entire region. Close co-operation at Government level in this region could strengthen the foundations of various economic sectors, such as tourism, research and development, thereby strengthening the economy of the region in the face of growing globalisation.

The people of this region base their existence to a large extent on the utilisation of marine resources, and in addition they share a common history and culture. These common features should provide a sound basis for extensive and varied co-operation extending to the entire area. Accession by the nations in this region to the European Union has not been regarded as a feasible option, owing to the EU Common Fisheries Policy. Sensible management of resources in the area is a prerequisite for a healthy economy in this region and thereby for the welfare of the people who live there.

Increased co-operation among the peoples of North-western Europe in the field of resource management would strengthen their position as regards the control of their own resources, and for this reason their unity and special position in this regard should be stressed. This would enable these nations to strengthen their position as regards control of their natural resources.

In recent years, the countries in this region have made great progress in concluding fisheries agreements concerning the management of fisheries from fish stocks, which to a greater or lesser extent remain outside the jurisdiction of individual countries in the region. This has not always been easy, however, owing to the enormous interests at stake in many cases. In the end, we have always succeeded in coming to an agreement, and I hope the same will be true in the current negotiations, even though the prospects are none too good. It is in the interests of all the parties concerned to reach a consensus on the utilisation of all the fish stocks in the region and their division. Failing this, their sustainable utilisation may be placed in jeopardy.


GLOBALISATION/THE WORLD TRADE ORGANISATION

There are few nations in the world that are as dependent on foreign trade as the Icelanders. Increased freedom of trade between the nations of the world is therefore definitely in our best interest. For this reason, the Icelandic Government supported the launch of a new round of negotiations by the World Trade Organisation last year.

The round is scheduled for conclusion in 2005. Although negotiations have made a good start, there is a long way to go before any agreement can be reached. Among the issues under discussion in this round is increased freedom of trade in services, protection of intellectual property rights, increased market access for marine products and increased freedom in the trade in agricultural products.

Iceland placed special emphasis on the inclusion in the negotiations of tighter restrictions on state aid to fisheries. With good support from the United States and various South American countries we were successful in this effort. However, discussions on the matter have not progressed far.

It is already clear that one of the most difficult tasks in the round will be to reach an agreement on agricultural products. Numerous countries have stressed the need for complete abolition of state aid to agriculture and the reduction of tariffs on agricultural products. Together with other countries, including Switzerland, Norway, Japan, South Korea and the Member States of the European Union, Iceland has stressed the need to proceed with caution. These countries have emphasised that the agricultural sector must be given scope to adapt in stages to the increased global competition. It has also been pointed out that the laws of free trade are not always applicable to trade in agricultural products in light of the importance of agriculture for sparsely populated regions and the important social role played by agriculture.

Recently, the Chairman of the Committee on Agriculture in the round submitted proposals for vastly increased freedom of international trade in agricultural goods. In the opinion of the Icelandic Government, these proposals are unrealistic and unlikely to bring about the consensus needed to satisfy all parties. However, it should be borne in mind that these are only the proposals of the chairman of the committee in question. It is clear that these proposals will be the subject of some dispute as the round wears on, and it is still too early to make any predictions on their outcome. Iceland's delegates will do all they can to exert their influence on the shape of these proposals so that they reflect our viewpoints. But whatever the conclusion of the round, it is clear that Icelandic agriculture must proceed on its current course of increasing efficiency to improve its competitive position. This would benefit both farmers and consumers.


CONCLUSION

Mr. Speaker.

In the last eight years since I took the office of Foreign Minister, the world has gone through profound changes, and we have tried to meet these changes by strengthening Iceland's Foreign Service. The tasks of the Foreign Service have been more clearly defined and long-term targets have been set, to take on increased international responsibilities. The Foreign Service has undertaken various large-scale projects; I mentioned the NATO meetings earlier, the FAO Conference in Iceland was another feat and the chairmanship of the Committee of Ministers of the Council of Europe was a memorable time. We have succeeded in installing Icelandic delegates in various key positions in foreign organisations. Iceland has presided, and will continue to preside, in various committees and agencies. Worth mentioning in this context is our current chairmanship of the Arctic Council, and in fact it was my good fortune to play a role in the work of founding the Arctic Council within the Nordic Council. Also worth mentioning is the fact that next autumn, Iceland will take a seat on the Board of the World Bank for three years, representing the Nordic countries and the Baltic States. Preparations are currently under way for Iceland's candidacy for a seat on the Security Council of the United Nations.

Full participation is a prerequisite for influence. It will no longer do to stand in the wings as an observer. Iceland is not, and will not become, a gate into markets or a bridge between market areas or regions without participating in the international and regional co-operation, which is in progress and in constant formation. Isolationism, whether in security affairs or economic affairs, is the surest way to make Iceland into an insignificant and marginal state on the outskirts of the world. It is important to secure Iceland's position in the environment in which it finds itself at any time, and this is what I have stressed during my term as Foreign Minister.

We will maintain neither our influence nor the respect of the world without active participation. Small size and small populations are no longer a tenable arguments for sitting by or standing aside in the turbulence of international affairs.

" (. . .) it is clear to all men of good sense that no country is so humble that it can afford to do without a foreign service. (. . .)." [Halldór Kiljan Laxness: Vettvangur Dagsins, 3d ed., Reykjavik: Helgafell, 1979, Page 59] Mr. Speaker, these words are from one of the works of Nobel Prize winner Halldór Laxness, ahead of his time as usual. In a certain way it may be said that in the past decade the Foreign Service has become of age and is now better prepared than ever before to take on the tasks of the future. There has been a general consensus in the Althing on the need to strengthen the Foreign Service, which shows a foresight and understanding for which one should be thankful.