Hoppa yfir valmynd
Ministry for Foreign Affairs

Foreign Affairs Address to the Althing

Foreign Affairs Address to the Althing, November 5, 1998
Mr. Halldór Ásgrímsson, Minister for Foreign Affairs and External Trade
Unofficial Translation


Table of Contents
Increased Relevance of Global Affairs
Nordic Co-operation and Regional Affairs
The Council of Europe
The Organisation for Security and Co-operation in Europe (OSCE)
The United Nations
Resources and Environmental Affairs
Development Aid
Economy and Trade
The North Atlantic Treaty Organisation (NATO)
Defence
Conclusion


In a time of rapid changes and increasing globalisation, affecting all the principal aspects of Icelandic society, its work and culture, a strong foreign service is a necessity. Icelanders are more dependent on the surrounding world than most other countries. There are few countries in the world which export a greater proportion of their total production of goods and services. The boundaries between domestic and foreign affairs are becoming more and more vague. Relations between the foreign service and the country's industries have been systematically strengthened over the past months and years, as the foreign service is a natural partner in marketing Icelandic products abroad, and comprehensive relations with the Icelandic industries are important to enable such support.

Increased Relevance of Global Affairs
An estimated one hundred million people now have access to the Internet. It is projected that by 2005 the number of Internet users will have grown go about one thousand million people. The distances between users are getting shorter regardless of where they live. This has opened new opportunities for us, as Icelanders are among the most advanced nations in the world in this regard, and innovators and entrepreneurs in this area have generated substantial revenues for our economy. It should be borne in mind, however, that three quarters of mankind do not have a telephone, let alone a computer and an Internet connection. Far too great a proportion of the so-called Global Village endures abject poverty and has no possibility of enjoying even a small fraction of the benefits of life that we take for granted. The industrialised countries have a duty to assist the developing countries, and in fact the Icelandic Government has made the decision to increase development aid.

Natural resources and environmental affairs are an increasingly important element of international relations. The establishment of a separate Department of Environment and Natural Resources in the Ministry of Foreign Affairs to attend to these matters reflects their growing importance and an extensive effort is being made to gain international support for the Icelandic position on these issues. The main substance of my address to the 53d General Assembly of the United Nations was devoted to the utilisation of marine resources on the occasion of the international Year of the Ocean.

Yesterday, Iceland took over the vice-chairmanship of the Council of Europe, and in May of next year, Iceland will take the Chair of that institution for the first time.

Next year, Iceland will hold the Chair of the Nordic Committee of Ministers and, among other things, will be responsible for the co-ordination of Nordic intergovernmental co-operation and take the initiative on issues requiring attention. Co-operation between the Nordic States has probably never been as vigorous as it is now despite the membership of three Nordic countries in the European Union. It is interesting also to observe how actively all the Nordic countries are participating in international and European co-operation. While Iceland holds the Chair of the Nordic Committee of Ministers and the of Council of Europe next year, Norway will hold the Chair of the Organisation for Security and Co-operation in Europe (OSCE) while Finland will lead the work of the European Union in the second half of the year.

In six months' time, we will celebrate, in Washington D.C., the fiftieth anniversary of the foundation of the North Atlantic Treaty Organisation (NATO). The successful history of this organisation is the clearest justification of the far-sighted security policy established by the leaders of the two parties currently in government, as well as the Social Democratic Party, when Iceland became a founding member of the organisation.

In my speech today, I will go into some detail on the main aspects of our foreign policy, the United Nations, natural resources, Nordic co-operation, foreign trade, the Council of Europe, the OSCE, development aid and numerous other issues. Needless to say, it will not be possible to give a comprehensive overview of all these matters in this speech, nor to address all the various matters which come under the terms of reference of the Foreign Service.

Nordic Co-operation and Regional Affairs
The focus will be on Nordic co-operation in Iceland in 1999, when Iceland takes over the Chair of the Nordic Committee of Ministers. The Nordic co-operation, which has a long history, is extensive and has been useful to us at virtually all levels of society, at the ministerial, parliamentarian, official, institutional and non-governmental level. The traditional Nordic co-operation extends to culture, education and research, economy, social affairs, legislation, employment and environmental matters, as well as agriculture, communications and fisheries. It is beyond any doubt that Nordic co-operation is one of the cornerstones of Icelandic foreign policy.

Nordic co-operation has increased with the new trend toward globalisation. There were those who believed that Nordic co-operation would lose all meaning when three Nordic countries joined the EU. In reality, however, the consultation among the Nordic countries is much more important than ever before and has in fact increased in many areas. There is hardly any doubt that the enlargement of the EU will lead to greatly increased regional co-operation. The Nordic countries, with their firmly established Nordic co-operation and Nordic institutions, are in a good position to meet this new challenge.

It will be necessary for Iceland to take stock of the Nordic co-operation when we take the Chair of the Nordic Committee of Ministers at the turn of the year. During the year of our Chairmanship will have the opportunity to emphasise issues which we regard as particularly important and which will benefit all the Nordic countries. Environmental affairs will be at the top of the agenda, particularly the sustainable utilisation of the living resources of the Northern oceans, not least in connection with the Year of the Ocean and the ongoing work on those issues in the United Nations. The emphasis will be on co-operation designed to prevent pollution and ensure the rational utilisation of marine resources, including marine mammals.

We will attempt to establish a common Nordic policy on the northern dimension; this involves a proposal submitted by Finland within the European Union calling for the EU to formulate a strategy for the northerly regions of Europe similar to the strategy established for the Mediterranean area. Increased emphasis by the European Union on the northern dimension could have great significance for the environmental, industrial and economic affairs of the Arctic Region, and in particular co-operation with Russia. Finland's areas of interest will be prominent next year when they assume the Presidency of the EU for the first time. During Iceland's year of Nordic Chairmanship there are also plans to formulate Nordic consultation regarding the monetary union and to monitor closely the experience of Finland in that respect. We also feel it is important to link Nordic co-operation with the new century and the millennium of the discovery of the New World. This will provide a good opportunity to turn the spotlight on Iceland and the other countries forming the western part of the Nordic Region.

These points of emphasis in the Nordic co-operation illustrate the desire of the Icelandic government to relate Nordic co-operation to international co-operation in a wider context. There was a time when discussion of foreign affairs was virtually prohibited in the Nordic forum, but now foreign affairs form a natural part of adapting Nordic co-operation to the rapid global developments. The threefold division of the Nordic co-operation into traditional Nordic affairs, regional affairs and European affairs has proven a success.

The co-operation between the Nordic foreign ministers is close and communication is frequent, both formal and informal. The areas of co-operation include the European Union, the United Nations, the Arctic Region, development aid, defence and security and human rights, to name the most important. This consultation is extremely important for Iceland and gives us insights into various matters which we would be unable to cover on our own.

A report was produced by the Nordic foreign ministers last August on Nordic co-operation. The conclusion of the report is that Nordic co-operation has never been as close, or as important, as it is now.

Two meetings of Nordic foreign ministers will be held in Iceland during the term of our Chairmanship next year. In connection with the second meeting, a meeting will also be held with the foreign ministers of the three Baltic States.

The activities of the Baltic Council, the Barents Council and the Arctic Council are promoting positive developments in the relations of the member states in various areas such as the environment, sustainable utilisation of natural resources, economic co-operation and human rights. The Foreign Ministry has, in co-operation with the Directorate of Civil Aviation invited two experts from each of the Baltic States for training at the Directorate of Civil Aviation. This is a good example of practical assistance in an area where Iceland possesses expertise.

At a meeting of foreign ministers in the Arctic Council last September, a policy was established for the activities of the Council over the next two years, and a plan of action was approved on the protection of the northern seas from pollution from land-based sources. The plan is ambitious, requiring close co-operation among the member states in its implementation. In order to promote the implementation of the plan and co-ordinate actions, the Icelandic government has offered to host a secretariat in this country and pay half of its running costs. This offer has been accepted and the secretariat will be opened at the beginning of next year.

The Council of Europe
The Council of Europe in Strasbourg has the purpose of promoting co-operation and a common identity among the countries of Europe, defend human rights, strengthen democratic forms of government and increase stability. In its pursuit of these goals, the Council of Europe addresses issues such as local government, social affairs, environmental affairs, culture, education and legislative co-operation. It is clear that through its preventive measures, the Council of Europe plays an important role in the new security architecture of Europe, which is still being moulded. The varied co-operation among the member states, local governments and parliamentarians of the Council's Parliamentary Assembly is important to the relations between the nations of Europe.

The Council of Europe is open to all the states of Europe which recognise the rule of law and guarantee human rights and basic freedom for their citizens. Membership of the Council amounts to recognition of the fact that the state in question meets the minimum requirements regarding these important values.

The Council of Europe has grown in importance following the end of the Cold War. The Council now plays an important role in the adaptation of the countries of Central and Eastern Europe to democratic traditions in government. Sixteen states formerly under communist rule have been granted membership of the Council, and there are new forty member states. Most of the new member states formerly endured undemocratic government and were unfamiliar with the modern principles of the rule of law. The Council of Europe has helped these countries to change this. Membership of the Council of Europe has also made it possible for these countries to participate in European co-operation and supported them in other international co-operation.

At a meeting of foreign ministers of the Council of Europe held yesterday, I emphasised especially that all the member states should comply with the commitments arising from membership. In this respect there must be equality among the member states. The enlargement of the Council of Europe must not lead to lowered standards in the areas in which the Council is involved. Respect for human rights is a basic premise of security and stability in Europe.

Monitoring of the member states' fulfilment of their obligations is an important element in the work of the Council of Europe. A new Court of Human Rights commenced work last Tuesday, replacing the Human Rights Commission and the former court. This change was effected in order to speed up proceedings and improve effectiveness due to the increased workload following the increase in the number of member states. The Committee of Ministers and the Parliamentary Assembly of the Council of Europe also play an important role in the monitoring system of the Council. There are plans to establish a separate office of Commissioner of Human Rights at the Council of Europe. Iceland has wholeheartedly supported these developments in the activities of the Council.

At a meeting of Foreign Ministers of the Council of Europe yesterday, Iceland took over Vice-Chairmanship of the Council. Iceland will subsequently take the Chair of the Council of Europe for the first time in May of next year, on the fiftieth anniversary of the Council. Preparations for taking the Chair are already in progress and the Icelandic Permanent Delegation at the Council has been reinforced.

Chairmanship of the Council involves conducting the meetings of the Committee of Ministers, taking the initiative in the work of the Council and representing the Council in relations with other international organisations such as the OSCE, EU, NATO and UN.

Chairmanship of the Council of Europe on the occasion of its fiftieth anniversary provides us with a welcome opportunity to reiterate our commitment to democratic progress, preservation of human rights and the peaceful settlement of disputes in Europe.
The Organisation for Security and Co-operation in Europe (OSCE)
The Organisation for Security and Co-operation in Europe is the only co-operative forum where all the states of Europe are participants, along with the countries of North America, a total of 54 countries. For twenty years, the Conference on Security and Co-operation in Europe, CSCE, was a forum for political discussion, but at the beginning of 1995, the Conference was changed into an Organisation with headquarters in Vienna.

The Final Act of Helsinki 1975 laid down rules on the fundamentals in relations among states and on measures to bring about mutual confidence in military affairs. At the same time, the document addressed fundamental freedom and human rights as well as economic, cultural, technological and scientific matters. Without a doubt, the CSCE played a key role in bringing the Cold War to an end.

In recent years, the OSCE has assumed an ever growing role in the new security structure in Europe. This includes numerous measures to prevent conflict, the work of special envoys and missions to discover peaceful solutions to disputes, peacekeeping work, work directed at protecting human rights and arms limitation. The work of the OSCE in the emerging countries, including the Baltic States and other parts of the former Soviet Union all the way to Central Asia, has given them invaluable support. The OSCE has an office in Vienna which specialises in conflict prevention. Warsaw is host to the OSCE human rights office and in the Hague there is an office of the special OSCE representative for ethnic minorities.

The bond between NATO and the OSCE is becoming ever stronger. This is evidenced most clearly by the decision to send a 2000-person mission to monitor compliance with the Kosovo agreement.

For some time, Iceland has been the only country in Europe without a permanent delegation to the OSCE in Vienna. It has now been decided to reopen the office of the Icelandic permanent delegation at the beginning of next year. A permanent delegation in Vienna is no less important to Iceland than the permanent delegation in Strasbourg.

The next OSCE meeting of foreign minister will be held in Oslo in early December, and a Summit meeting is scheduled for next year.

The United Nations
Although our participation in the work of the United Nations has been one of the cornerstones of our foreign policy, and although we have participated in most areas of activity of that organisation, we have never taken a seat on the Security Council. Participation in the work of the Council is among the most important contributions a member state can make to the most important objectives of the organisation, the preservation of peace and security in the world. In light of this, a decision has been made to prepare a candidature for a seat on the Security Council. Iceland is prepared to accept this responsibility like other states and contribute to the strengthening of the role of the Security Council and promoting the trust that it must enjoy in order to settle disputes and serve as a common forum for the international community when there is a need to enforce the peace.

The Nordic countries consult closely on candidatures to the Council, and they have emphasised the pan-Nordic nature of their candidatures. I have spoken to my Nordic colleagues regarding Iceland's candidature and received their unanimous support for such a candidature. It is clear that several years will pass before the candidature can become a reality, and this time will be useful to prepare and to strengthen the Political Department of the Foreign Ministry and the Permanent Delegation in New York. In a way, the candidature for a seat on the Security Council is the next major undertaking of the Foreign Ministry. In the past few years, the member states have been working on arriving at a consensus on improving the work of the Security Council and increasing the number of member states. In the event that the number of member states is increased, Iceland's candidature could become a reality sooner than expected.

On next December 10th the General Assembly of the UN will commemorate the 50th anniversary of the Human Rights Convention, the banner of the world's struggle for human rights. Human rights are an inseparable part of international politics. They are for all and without distinction and it is the responsibility of the international community to ensure that they are respected. This general principle is being met with increased understanding among the nations of the world, and in this context it is applauded that China intends soon to ratify the International Covenant on Civil and Political Rights. Iceland will not tolerate any encroachment on human rights in the name of religion, culture or any other tradition. We must spare no effort in the work to ensure human rights.

Iceland has for some time participated in peacekeeping and peacemaking efforts in Bosnia where three Icelandic police officers have been stationed on a regular basis with a UN Police force engaged in monitoring activities and training of domestic police forces. Together with the medical and nursing team working in the international peacekeeping force under NATO command in Bosnia, the Icelandic police officers have demonstrated that there are Icelandic professionals capable of contributing to international peace co-operation.

Iceland has also attempted to make a contribution to emergency aid and to solve refugee problems; this is clearly an enormous problem, and every country must pull its weight. The Icelandic government has co-operated with the Office of the United Nations High Commissioner for Refugees in Geneva on hosting several groups of refugees. Last summer saw the arrival of the third group of refugees from former Yugoslavia, who settled in the town of Blönuduós. The Icelandic Refugee Council is responsible for the reception of these groups in co-operation with numerous other parties, such as the Red Cross and local authorities. Preparations are now under way to receive yet another group of refugees next year.

Great hopes are attached to the recent agreement between Israel and the Palestinians which was reached in Maryland. The agreement raises optimism that the Oslo peace process will get back on track in spite of the reservations of hard-liners in the ranks of both parties.

Terrorist bombs in Northern Ireland and the US embassies in Kenya and Tanzania, where numerous innocent civilians lost lives or limbs, demonstrate the need for international co-operation against the criminal activities of terrorist groups. At the beginning of the General Assembly this autumn, I had the opportunity of signing, on behalf of Iceland, an international agreement directed against terrorist bombings.

There is also a need for increased international co-operation to combat international crime and drug trafficking. It is important to follow up the conclusions of the General Assembly last summer on the drug problem.

The conclusion of the agreement in Rome last summer on the establishment of an International Criminal Court demonstrates the clear will of the international community to fight crimes against humanity, such as mass murders and war crimes. The establishment of the Court is without any doubt one of the most important contributions to the protection of human rights and world peace since the foundation of the United Nations. The International Criminal Court, which will be based in the Hague, is a permanent institution with general jurisdiction. It is thus different from the International Criminal Tribunal for the Former Yugoslavia and the International Criminal Tribunal for Rwanda which have limited temporal and spatial jurisdiction. Iceland was among the first states to sign the Rome Statute of the International Criminal Court and preparations are currently under way for its ratification.

A detailed booklet, Iceland and the United Nations ? 53d General Assembly, has been distributed here in the Althing. It contains a wealth of interesting information.
Resources and Environmental Affairs
Natural resources and the environment are increasingly important in international co-operation, especially in the forum of the United Nations. It is necessary to promote the systematic participation of Iceland in this co-operation.

Discussion of fisheries in the forum of the United Nations is increasingly linked with debate on the environment. This is not necessarily a negative development, but for a nation which bases its existence on fisheries to the extent that we do here in Iceland, it is necessary to show some caution. Discussions on total protection of fish stocks or of entire stretches of ocean, and suggestions of entrusting an intergovernmental authority or international organisations with centralised control of the utilisation of marine resources based on environmental considerations affect the vital interests of Iceland. We must guard our interests and acquaint other countries with our success in the sustainable harvesting of fish stocks.

The Year of the Ocean gives us a unique opportunity to renew efforts on the protection of the sea and the sustainable use of its resources. It is clear state subsidies and other undesirable government intervention on behalf of the fisheries industry have contributed to overfishing in numerous areas of the world. Subsidies of this kind are anti-competitive and do not promote sustainable utilisation. The fisheries industries of many countries are orphans where there is little heed of responsible controls. The result is that many fish stocks are overexploited and some have even collapsed entirely. The discontinuation of state subsidies would be an effective contribution to the protection and sustainable utilisation of marine resources around the world.

Various environmental agencies and organisations which exert their influence in the forum of the United Nations maintain that the coastal states have failed to control their fisheries, as is their responsibility under the United Nations Convention on the Law of the Sea. Most of these organisations understand the consequences of overexploiting fish stocks, but they are in error as regards the cause. I have emphasised careful monitoring of developments in the forum of the United Nations where issues concerning the oceans are the subject of ever increasing debate.

The oceans will be the main subject of the meetings of the Committee on Sustainable Development next year. The member states of the UN will have an opportunity to present their policies and their views in the course of the debate, and also in special presentations at the committee meetings and in connection with the meetings. Officials of three ministries, the Foreign Ministry, the Ministry of Fisheries and the Ministry of the Environment, are co-ordinating Iceland's contribution to the meetings of the Committee on Sustainable Development. The meetings of the Committee next April will provide a welcome opportunity to explain to the representatives of governments, interest groups and environmental organisations how Iceland has performed in the conservation of fish stocks.

In my speech at the General Assembly, I drew the attention of the Assembly to an interesting report published by the World Wildlife Fund on the utilisation of fish stocks in the world. The report states unequivocally that only three countries in the world have implemented systems of fisheries control which result in the sustainable and rational utilisation of fish stocks: Australia, New Zealand and Iceland. Some environmental organisations tend to generalise about the poor condition of fish stocks, and the danger is that unfounded allegations will implant the notion in people's heads that all consumption of marine products is undesirable from an environmental point of view. We must oppose this.

An agreement was reached in May between Iceland, Norway and Greenland on the control of fisheries and allocation of capelin catches in the stretch of ocean between Iceland, Greenland and Jan Mayen. A single comprehensive agreement was concluded on the division of the stock and the arrangements for issuing quotas. The conclusion was that Iceland's share rose from 78% to 81%, Greenland's share remained unchanged, and Norway's share was reduced from 11% to 8%. At the same time, bilateral agreements were concluded on mutual access to the jurisdictions of the three countries. In connection with these agreements, a mutual agreement was also reached with Greenland on deep-water redfish fisheries, to the effect that each party may catch 50% of its allocated quota in the jurisdiction of the other. These agreements are effective until the end of April of the year 2001. Through these agreements, we achieved our chief objectives and their importance for Icelandic fisheries and the economy as a whole are self-evident.

Negotiations were recently concluded between Iceland, the Faeroe Islands, Norway, Russia and the European Union on the control of fisheries from the Norwegian-Icelandic herring stock. Our position in these negotiations was that fisheries from this stock should be substantially reduced on the basis of scientific advice and that an agreement should be reached on a long-term utilisation policy to even out cycles and increase the catch in the future. Unfortunately, a consensus could not be reached. Once again the fact was brought home that we still have a long way to go in convincing other countries that decisions on utilisation of marine resources must be based on long-term views and sustainable harvesting.

The Conference of the Parties to the United Nations Framework Convention on Climate Change is currently in progress in Buenos Aires. It is important for Iceland to participate actively in the global effort to reduce the impact of greenhouse gasses, e.g. through our participation in the Kyoto Protocol. However, the point has repeatedly been made by the Icelandic government that there can be no such participation if it means that Iceland has to carry a proportionally much greater burden than other industrialised countries. The crucial issue here is the adoption of a sensible edition of the provision on the proportional effects of single projects in small economies.

Development Aid
In the recent past, Iceland has increased its activities in development aid, and evidence of this increase can be seen both in the bilateral development co-operation with several African countries and participation in the work of multilateral development organisations.

A year ago, the Government decided to increase substantially Iceland's contribution to bilateral development through the Icelandic International Development Agency (ICEIDA). This is evidenced in the state budget for 1999, where the allocation is increased by a third. This year, the Agency has placed increased emphasis on the preparation of new development projects.

I recently arrived from my first visit as foreign minister to the partner countries of ICEIDA in Southern Africa. The trip was extremely enlightening. Rapid democratic progress and improving economic conditions now characterise many areas of Africa. In order to maintain this the momentum of this progress it will be necessary to increase foreign investment, develop private enterprises, support education and improve health care. Peace must be ensured, as conflict can easily spread and threaten the progress already made.

I am convinced that the employees of ICEIDA are doing good work in southern Africa, and our partners everywhere expressed their satisfaction with the co-operation.

The largest ICEIDA project in these countries, Namibia, Malawi and Mozambique, are in the area of fisheries, and it is important for this aid to continue although a large proportion of new projects will be in the area of health care and education.

For two and a half years now, I have held a seat on the Development Committee of the World Bank on behalf of the Nordic countries and the Baltic States. I also gave a speech on behalf of the Nordic countries at the recent annual meeting of the World Bank and the International Monetary Fund. These sister institutions have rarely been more important than they are now in this time of widespread economic uncertainty. The Bank is the world's largest development agency, while the International Monetary Fund assists the countries of the world to ensure their economic stability and provides crisis loans.

Iceland's participation in the work of the Development Committee is a good example of how we can exert influence in the international sphere. I believe it is necessary for Iceland to play an even greater role in the area of development aid.

At a recent meeting of the committee, there was much discussion of the economic crisis in Asia and Russia. I emphasised that the role of the World Bank was first and foremost to give advice and provide financial assistance for long-term economic development. However, short term measures can be necessary to ensure food security, promote employment and maintain education and health care of the poor.

The President of the World Bank visited Iceland last June, and had a meeting with the ministers of the Nordic and Baltic States. I used this occasion to meet with him and we discussed, among other things, the relationship of Iceland and the Bank. I expressed my satisfaction with our co-operation regarding the development work in Bosnia and Herzegovina, and we also discussed possible co-operation in the area of distance learning, where Icelandic technological expertise could be transferred to the developing countries using modern information technology.

At the meetings of the Economic and Social Council of the United Nations, where development issues have been under discussion, Iceland has emphasised the need for the developing countries to introduce market economies, and at the same time for the industrialised countries to ensure market access for the developing countries so that they can take advantage of the global trends in trade and business. Our participation in the Council has given us a good opportunity to contribute to the discussion of human rights, the environment, development and energy and resources.

A good example of effective co-operation with the development agencies of the United nations is the UNU Fisheries Programme which started operating here in Iceland last autumn with six students from three African countries. Impressive goals have been set for this institution based on the good experience of the UNU Geothermal Programme, where over three hundred experts from the developing countries have graduated over the past years.

The Director of the UNU visited Iceland recently on the occasion of the twentieth anniversary of the Geothermal Programme. At a meeting with the Director, we reiterated our willingness to increase Iceland's participation in the work of the UN development agencies such as the Food and Agriculture Organisation (FAO) and the United Nations Development Programme.

Economy and Trade
Iceland took the Chair of EFTA earlier this year, and was the EFTA spokesman in relations with the European Union. At no time have more decisions been made by the Joint Committee than the first half of this year.

The most important EEA decisions as regards Icelandic interests was made in July, when the Joint Committee decided that common rules should apply within the European Economic Area on the processing of marine products and production controls. In addition, the same rules will apply to the control of imported marine products; that decision will take effect next 1 January. On the basis of this decision, Iceland assumes responsibility for surveillance of compliance with the common rules, both domestically and as regards imports from third countries, such as Russia. The benefit is that exported Icelandic marine products will have greater access to the European market and will not suffer the same delays at borders as they did before.

It is a cause for some concern that one of the member states of the European Union, Spain, has now declared that it will stand in the way of further development of the EEA Agreement if the Spanish demands for continued industrial development aid from the EFTA/EEA states are not met. It is clear that the contractual obligations regarding an Industrial Development Fund operated by EFTA were based on a five-year negotiated term. The EFTA/EEA states have not been prepared to accept proposals to extend this term. However, the provisions on the willingness of the parties to work together on reducing the economic imbalance in the region are not based on any specific term. There is nothing unusual about establishing development funds in connection with free-trade agreements to support the parties who are regarded as being disadvantaged in benefiting from free trade. Thus, Iceland benefited from the Industrial Development Fund which was founded in connection with our membership of EFTA. Such funds, however, are not meant to be permanent. I see no objection to examining whether we can increase co-operation with the countries in question here, i.e. Spain, Portugal. Greece and Ireland, if these countries feel that they are disadvantaged in their trade with us.

A year has now passed since the signing of the Amsterdam Treaty, where it was confirmed that co-operation on the basis of the Schengen Agreement would be placed under the European Union. It took the European Union a long time to discuss in their own ranks how to continue the co-operation with Iceland and Norway under new conditions. Negotiations are now under way, at last. There is a clear willingness, both on the part of Iceland and Norway and on the part of the European Union, to continue the co-operation on passport controls which has been successful since the signing of the Schengen co-operation agreement in Luxembourg in 1996. It appears that it would be easier to set up a system of co-operation with good potential for success than to conclude a binding contract. The main point of emphasis of Iceland and Norway in these negotiations is to ensure full access to all discussions on Schengen within the European Union while ensuring that the agreement maintains all the features of a regular international agreement. The outline of an agreement is beginning to take form, but it is still too early to predict the outcome.

Preparations for membership talks of applicant states with the European Union are well under way, and negotiations with six countries are scheduled to begin this November. Membership of the European Union involves accession to all agreements, including the EEA Agreement. Following the adaptation period, we must expect the free flow of products, capital and services as well as the free passage of people between the new member states and Iceland. It is therefore important to monitor the course of events carefully. It may be added that the present free-trade agreements with these countries ensure full and untariffed market access for our products, including herring. This is not the case within the EEA, so that separate negotiations will be required on this matter when these states become members of the EU.

The ongoing free-trade negotiations between EFTA and Canada are scheduled for completion around the middle of next year. These are the first trans-Atlantic free-trade negotiations, although the EFTA states have concluded free-trade agreements with thirteen states and issued declarations of co-operation with seven other states. Under Iceland's Chairmanship of EFTA earlier this year, this matter was given precedence and was at the top of the agenda of the EFTA ministerial meeting in Reykjavík last June.

EFTA negotiations with the Jordan on free-trade have also begun, and discussions are in progress with Cyprus and Tunisia. Free-trade discussions with Egypt are also in preparation as well as declarations of co-operation with the four MERCOSUR countries, Argentina, Brazil, Paraguay and Uruguay. The signing of a free-trade agreement with the Palestinian Authority is scheduled for an EFTA ministerial meeting next December.

EFTA has succeeded in adapting its activities to an altered environment and enhancing its work on behalf of member states. As before, Iceland's membership of EFTA ensures the necessary access to foreign markets for Icelandic products.

The World Trade Organisation in Geneva (WTO) is now the main forum of the countries of the world to establish and implement rules on world trade. There are now 132 member states. The WTO agreements and the extensive surveillance and notification system they call for restrict the scope for countries to take up trade restrictions and discriminate against specific states by means of trade barriers. In the financial and economic difficulties now afflicting various regions of the world, the WTO and its agreements play an important role in preventing states from taking measures involving departure from free trade and liberal trade practices.

The Icelandic government will have to prepare, in the near future, for more extensive participation in the work of the WTO due to the new round of negotiations which will begin at the end of next year. Those negotiations will involve agriculture and services. The European Union has stressed the importance of extending the negotiations to manufactured goods. Iceland has supported this proposal in light of the fact that in the final round of the Uruguay talks, tariff reductions on marine products were discussed under the heading of manufactured goods. There is a lot of work ahead for the member states of WTO in preparing for this new round of negotiations.

As before, Iceland is an active participant in the complex international co-operation going on within the Organisation for Economic Co-operation and Development, OECD. This work includes extensive co-operation in the area of economy, trade and fiscal matters and, no less importantly, in the area of industry, environment, agriculture, health and education. Many reports published by the OECD have proven extremely useful to the Icelandic government in policy work. Advice from the OECD has proven invaluable in economising and restructuring government services in Iceland. Most of the ministries, as well as the National Economic Institute, Central Bank and Bureau of Statistics, participate directly in the work of the OECD.

The economic straits being experienced by Iceland's main trading partners in Asia have resulted in considerably reduced exports to these countries, especially Japan. Increased exports to other markets and high prices in those markets have offset these reductions so that the overall effect on the Icelandic economy has been small. The important fact is that China has so far been able to maintain the stability of the Yuan. The general opinion is that a devaluation of the Yuan would add to the economic difficulties in the area and no doubt induce further drops in the currencies of other Asian countries.

It may be assumed that the Asian countries will extract themselves from their difficulties and that our trade with the region will increase substantially in the future. A growing proportion of our imports originate in Asia with the improvement in product quality and improved shipment efficiency. Restructuring of the economies of the countries of South-eastern Asia will provide new opportunities for Icelandic enterprises to gain a foothold. There is every reason to pay close attention to the opportunities available in Asia. For this reason, I am planning a trip to several Asian countries early next year. The purpose of the trip is mainly to pave the way for Icelandic companies in a similar fashion as has been done before in other markets.

In recent years, trade between Iceland and Russia has been growing rapidly. In spite of the current setbacks, there is little doubt that the importance of the Russian market will continue. For this reason it is necessary for us to reinforce the foundations of good relations. Efforts must be made to conclude and implement agreements on investments, double taxation avoidance, airspace and fisheries co-operation.

It is important to strengthen Russia's relations with the West in the context of regional co-operation and international organisations, and we support such actions. In addition, Iceland will attempt to strengthen still further our bilateral relations with Russia.

In the current situation, it is our duty to aid those who are suffering the most in this neighbour country. In light of this, the Icelandic government decided to offer emergency aid amounting to ISK 14 million. The assistance will be provided to the inhabitants of the north-western regions of Russia. It will be delivered with the assistance of the Red Cross, which will contribute an additional ISK 10 million to the emergency aid.

It is appropriate for us in this year to demonstrate our sincere regard for the Russian people, as it is now 55 years since diplomatic ties were established between Iceland and the former Soviet Union. Those ties were extremely important to us at a time when we were in need of recognition of our status as an independent nation.

The activities of the trade service of the Foreign Ministry have been vigorous over the past months. Export companies now have access to expert assistance in marketing their products in all the Icelandic embassies. Employees with special skills, Icelandic and non-Icelandic, have been hired at six embassies, and there are plans to increase this number as the Overseas Trade Service expands its activities.

The North Atlantic Treaty Organisation (NATO)
Attention has been focussed on the security and defence of Europe in the recent past. The brutal violence perpetrated by Yugoslav President Milosevic against the Kosovo Albanians compelled NATO to set a clear ultimatum for the President to observe the demands of the international community or face the consequences of NATO military action.

It must be emphasised that the threat of military action made by NATO against Belgrade were designed to force a peaceful resolution of the dispute between the Serbs and the Albanians. The legal basis of the threatened military action has been stressed, as it is an urgent matter to prevent further catastrophes to the numerous inhabitants of the region who have abandoned their homes and could lose their lives when the winter arrives.

The agreement between the Special Envoy of the United States government and President Milosevic, reached against the backdrop of NATO steadfastness, gives cause for optimism that further military conflict in the region can be avoided. The assumption is that the OSCE will take responsibility for certain aspects of monitoring observance of the agreement. The monitoring activities are intended to ensure the full observance of the UN Security Council resolution on the withdrawal of Serbian troops and security forces from Kosovo. NATO itself will monitor the implementation of the agreement from the air.

The peacekeeping forces of NATO and its partner states, SFOR, will continue to play an important role in the implementation of the peace agreement in Bosnia Herzegovina. The forces were instrumental in ensuring the more or less normal elections in the country on September 12 and 13, although the OSCE was responsible for the conduct itself of the elections. The co-operation between the forces and other international organisations is close, and SFOR provides important support to the International Criminal Tribunal for the Former Yugoslavia and the international UN police force.

In many ways, NATO is at a crossroads. A NATO summit meeting in April next year will commemorate the fiftieth anniversary of the signing of the North Atlantic Treaty. An important milestone will be reached in the inward and outward adaptation of the organisation. Three new member states will formally join the Alliance, the review of the security policy of the Alliance will be concluded and further steps will be taken to strengthen European defence and security co-operation.

The representatives of Poland, the Czech Republic and Hungary will participate in the summit as full members. When it was agreed in Madrid to invite these three countries to join, the decision was also made to review the enlargement process at the next summit of the Alliance. All the member states have repeatedly said that the gates of the Alliance are open to the states of Europe. The Icelandic government, as before, will stress the membership of the Baltic States in the event that individual countries are singled out.

The current NATO security policy was approved in 1991, but since that time there have been obvious and momentous changes in the security affairs of Europe and in the procedures of the Alliance. In view of this fact, it had become urgent to review the security policy of the alliance. The review process began earlier this year and will remain in progress until the summit meeting. It is the view of the Icelandic government that the strength of the Alliance lies first and foremost in the joint defence commitments and the transatlantic link, and that above all the Alliance should continue to involve itself in the common security of its member states. Furthermore, and in support of this objective, it is necessary for the Alliance to improve its peacekeeping and peacemaking capabilities and to expand its co-operation and consultation with partner states, especially as the concept of security is now wider than it was before. Parallel to the reviewing of the security policy of the Alliance, the Icelandic government will work on adapting Icelandic security and defence policy as required.

As far as Iceland is concerned, we have not only discussed necessary adaptation, but also reacted to the changed circumstances. This is reflected in Iceland's contribution to SFOR and the international police force, which has attracted deserved attention and demonstrated that Iceland, like other countries, can participate in the peacekeeping and peacemaking activities carried out by the Alliance. It is important to make use of this experience in order to be able to react quickly at short notice.

The recent discussions on the left wing of Icelandic politics regarding NATO membership have come as a surprise. The impression had been that there was a greater consensus than ever before on our participation in the Alliance, especially in light of its indisputable importance to the security of the continent and not least in light of our increased and more visible participation in the new security architecture.

Our participation in the Alliance is, and will remain, one of the cornerstones of Icelandic foreign policy. Active Icelandic participation in the work of the Alliance has been stressed and the Icelandic permanent delegation in Brussels has been reinforced for this purpose.

Numerous events relating to the Alliance have taken place here in Iceland this year. The Policy Committee, APAG, met in Egilsstaðir last September for informal discussions of future developments in the main areas of security. An APAG meeting has never been held in Iceland before. In October, a meeting was held in Reykjavík of the NATO CCMS Committee, where Iceland has participated actively, although meetings of the committee have not been hosted by Iceland before. And finally, a conference was held on the work of health personnel in peacekeeping, where Icelandic members of peacekeeping missions met with their colleagues from Norway and the United Kingdom to share their experiences. There was a considerable number of visits over the year, and the visitors included the Deputy Secretary General of the Alliance, the Deputy Director of the NATO Political Department and the head of SACLANT. Almost a hundred students from the NATO Defence College in Rome came to Iceland on a research trip, met with members of parliament and officials and acquainted themselves with the views of the Icelandic government on security and defence affairs.

The fiftieth anniversary of the Alliance will be celebrated, among other things, with a conference on the participation of Iceland in various activities within the Alliance. A conference is also planned in co-operation with SACLANT in the year 2000.

Defence
The future of our defence co-operation with the United States has been the subject of some discussion in the past months. The security environment in our region has changed tremendously in recent years and defence spending has been reduced accordingly. In the United States, defence spending is down by 40% since the mid eighties and the NATO defence station in Keflavik has not been immune from the cutbacks. From a military point of view, the cutbacks are normal, as armed conflict of the kind that was feared in the days of the Cold War is now inconceivable.

The presence of the defence force in Iceland is consistent with the defence needs of both countries; it ensures the security of Iceland and at the same time it ensures stability in the North Atlantic, the most important line of communication in the world, whether in peacetime or wartime. The political strength of NATO lies in the common interests at stake, the co-ordinated policy of the parties regarding security and mutual defence commitments. The defence station in Keflavik is an integral part of this system. The bond between the political and military aspects make the Alliance an anchor of stability in the troubled sea of changes in the security environment of Europe. This is the context in which we must assess the future of the defence co-operation of Iceland and the United States.

One of the main strengths of the defence co-operation of Iceland and the United States is the reciprocity and transparency in the relations of the two countries. The United States will not, without the consent of Icelandic government, change the defence capability in Iceland. In the same way, the Icelandic government must adapt to the changed security environment and reach a compromise with Iceland's principal ally, especially in times of cutbacks. In this context, cost reductions are the key.

The system of contracting for construction work on the Base has been modernised. Projects paid for by the NATO Construction Fund are already tendered, and projects paid for by the US Government will be tendered in stages, starting next year, but contracting will be fully liberalised in 2004. It is worth mentioning that projects amounting to over USD 40 million have been contracted annually for the past six years. A large proportion of the service trade is now tendered by the Defence Force following pre-selection by the Foreign Ministry.

Good work has been done in the marketing and financial affairs of the Leif Eiriksson Air Terminal following last year's restructuring. Up to that time there had been a great accumulation of debt. The projected increase in revenues for this year is ISK 245 million which corresponds to a 70% increase between years. Preparations are being made for the first stage of the enlargement of the terminal, and the first call for tenders for the enlargement of the apron has already been advertised. Next year, work will begin on the south wing of the terminal, and the work is scheduled for completion at the beginning of 2001. This is a large-scale project costing about ISK two billion. This stage will enlarge the terminal by seven additional parks with ramps, and in addition a connecting building of 4000 square metres will be built. The project is urgent, as the present terminal is designed to handle about one million passengers a year. Passenger statistics for September showed that by that time slightly less than a million passengers had already passed through the terminal.

Conclusion
I would, in conclusion, like to thank the honourable members of Parliament, the public and the industries for the increased understanding they have shown the Foreign Service. This support has strengthened the Foreign Service and contributed to its permanence. A Permanent Delegation has been established in Strasbourg, an embassy was established in Helsinki last year, and the Budget Bill for next year contains a proposal for the establishment of a Permanent Delegation at the OSCE in Vienna, as I mentioned earlier. In addition, the infrastructure of the Head Office of the Ministry has been reinforced. Work is in progress on improving the computer system of the Foreign Service, which will make all communication and information processing more efficient. But there are still problems in some areas. Thus, it would appear to be necessary to increase our efforts in European affairs and the participation of other ministries in the implementation of the EEA Agreement. Finally, an effort needs to be made to enable the Ministry to give greater attention to cultural matters and information services to other countries.

I believe that anyone who concerns himself with international affairs must agree on the importance of a modern and effective foreign service in Iceland. We must look forward and open new embassies where there is a need for them, for example in Ottawa and Tokyo as suggested in the report submitted by a Committee on the future of the foreign service, which returned its opinion in March of this year.

Mr. Speaker.
I have now covered some of the main aspects of our Foreign and Security affairs. Our policy in these important matters has been realistic and free of sudden turns since the foundation of the Republic. The policy has reflected a spirit of peace, friendship and trade with all nations with a view to the security and well-being of the Icelandic nation. This policy has been successful, and it is our duty to ensure its continuation, prudently and without prejudice.

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