by Prime Minister Halldór Ásgrímsson
at Bessastaðir, March 24th 2006
Mr. President, Madame Moussaieff. Honoured guests, ladies and gentlemen.
I am certain that I speak for all of us as I thank the President and his wife for their hospitality and this magnificent dinner here at Bessastaðir tonight. That reminds me of the recent remarks by the President, where he asserted that distinguished guests that visited Bessastaðir, diplomats among them, greatly appreciated traditional Icelandic food, particularly skyr but also the so-called Thorri cuisine, which includes mutton cured in sour milk, cured shark and ram’s testicles.
When I heard these remarks of our host I was reminded of John Steinbeck, the American novelist, who said that a true diplomat was a gentleman who reflected twice before he said nothing. I shall let it be unsaid whether foreign diplomats and other distinguished guests have attained new highs in tact and courage or whether the popularity of the Thorri cuisine is one more example of the powers of globalisation. But I would consider it a remarkable achievement in marketing if sheep heads became a popular food in foreign lands.
In any case, we often speak of globalisation when we describe the currents that prevail in world events today. Icelandic companies have been active in participating in the international marketplace and their achievements have been nothing less than phenomenal. Let me say that I am proud of Icelandic entrepreneurs and I regret the negative commentary abroad as well as here at home, where our banking system and even or national economy are being called into question. The debate is generally unbalanced and full of misconceptions. The criticism of the banks often stems from their competitors. The simple fact is that the state of the banks is sound. This is not only my opinion but also that of the Central Bank, the Financial Supervisory Authority and all the major international credit rating agencies. The economy is also sound. Economic growth has been about 5 per cent a year in recent years, unemployment has been one of the lowest in the world, Treasury finances are in goods shape and public debt is low relative to other countries. Household debt has on the other hand increased but this is mirrored in rising assets, and household purchasing power has actually increased by 60 per cent for the last ten year.
The criticism emanating from abroad stems in part from a lack of understanding of Icelandic special circumstances. In a small economy, ratios can be deceiving. For example, we are currently in the midst of the largest construction project in Icelandic history in the eastern part of the country. This project has a large but temporary impact on our small economy. This is understandable, but not to one and all. It took us a long time and protracted negotiations to achieve recognition for Iceland’s special position that led to the Kyoto Protocol. A special clause relating to Iceland was finally agreed to, which enables us to harness environmentally friendly energy for our industries. These are large and important figures for our economy but hardly measurable in a global context. The same may be said of the activities of the banks here. Their operations are large in an Icelandic context but small in an international setting. A discussion of the state of the banks generally centres on their debts but speaks little of their assets.
It is often stated that we are skating on thin ice. But let us bear in mind that diplomacy is the art of skating on thin ice without getting into deep water. And there is no reason to think that we are getting into deep water. The events of these past few days have, however, clearly demonstrated to us how a small currency can be vulnerable in the free flow of international financial markets. We will of course learn our lesson in this regard.
It is always the duty of the Government to review Iceland’s position in an ever-changing world, and how our interest can best be preserved in the present and for the future. Iceland has always supported the trans-Atlantic relations. We believe that a close co-operation between Europe and North America has been crucial for security on both sides of the Atlantic. During the Second World War, close relations were created between Iceland on one hand and Britain and the United States on the other. We have appreciated and sought to foster these relationships ever since. The Icelandic nation is truly small, much dependent upon international co-operation in most areas, especially in commerce, defence and security. We have, therefore, emphasised our co-operation with the nations of the world, especially in Europe and North America, but with an ever-changing global environment we are developing ties with an increasing number of nations. Our opening of embassies in China, Japan, South Africa and most recently in India should be seen as part of our endeavour in this direction.
It is also evident that we need co-operation to ensure sufficient security in the North Atlantic. There are about 91,000 flights that go through Icelandic airspace every year and 61,000 take-offs and landings in Keflavik Airport. Some 1,600 ships arrive in Icelandic ports from abroad annually. The security of Keflavik Airport is therefore closely related to the security of those who cross the Atlantic, which we are determined to secure.
Our partnership within NATO has always been satisfactory, especially our co-operation with the United States. At present, the United States has decided to considerably reduce its defence presence at Keflavik Airport. There are tasks ahead of us that we must address quickly. For example, we must probably undertake short-term measures to ensure a sufficient search and rescue capability around Iceland. We would have preferred to solve this permanently at the outset with the purchase of new helicopters and crew training. This is hardly possible now because of how fast events are unfolding.
One thing is, however, certain. Iceland is in the middle of the Atlantic Ocean and we have equally looked towards Europe and North America in order to safeguard our interests, and we will always be spokesmen for close relations across the Atlantic. Still, we are a European nation, and the decision of the United States to greatly reduce its defence presence at Keflavik will bring Iceland closer to Europe, and further away from North America.
We certainly live in a changing world. NATO is and will be important to us. We fully support its efforts in the cause of peace and democracy. We are more than prepared to contribute our part in order to strengthen its role in changing circumstances, also in new areas. But the fact remains that the Alliance is an Atlantic alliance, and around the Atlantic is where it primarily belongs. The Atlantic Ocean surrounds Iceland more than any other country and this same ocean connects Europe with North America. I hope the time will never come when the view becomes prevalent that the ocean separates us. In that case, it would be the beginning to the end of trans-Atlantic relations and of NATO.
Finally, I would like to thank the good and productive co-operation with those foreign representatives that are present here tonight. Mr. President, Dorrit, I speak on behalf of us all when I thank you again for a most enjoyable evening. Honoured guests, I ask you to stand up and drink a toast in honour of our hosts.