Icelandic Foreign Policy: Challenges and opportunities

Address by the Minister for Foreign Affairs, Halldór Ásgrímsson,
on the occasion of the Fifth Consular Conference,
Reykjavik, 2-5 September 2001

Ladies and Gentlemen,

It gives me great pleasure to welcome all of you to the Fifth Consular Conference. Your tireless and devoted work as Consuls on behalf of Iceland is deeply appreciated by the Foreign Ministry and by the Government of Iceland. It is my sincere hope that you will have an enjoyable stay here and that you will find the programme interesting and rewarding.

I spoke to many of you at the 4th Consular Conference six years ago in October 1995. The Government retained its mandate in the elections of spring 1999 and our foreign policy has remained broadly the same. Its basic pillars are Nordic co-operation, NATO membership, close ties with the European Union through the Agreement on a European Economic Area (the EEA), meaningful participation on specific UN issues and the continuation of the defence relationship with the United States.


Nordic co-operation today
The close historic and cultural links between the Nordic countries are well known. I regularly meet my Nordic colleagues to discuss common foreign policy concerns. Indeed, I have just returned from such a meeting in Helsinki. This co-operation is of great importance to Iceland. Nordic co-operation has been strengthened in recent years as many aspects have been extended to the three Baltic nations, Estonia, Latvia and Lithuania. Just over one week ago we held a meeting here in Reykjavik with the foreign ministers of these three countries to mark the tenth anniversary of diplomatic relations between us. As you may know, Iceland was the first country to recognise the Baltic nations as independent states following the collapse of the Soviet system.

NATO
As a founder member of NATO we support its enlargement eastwards in order to ensure continued peace and stability in Europe. Poland, the Czech Republic and Hungary have already become members and we expect a further wave of enlargement to be decided next near, possibly at the NATO ministerial meeting here in Reykjavik.

We have been keen to find ways of making an active contribution to peacekeeping efforts, within the framework of NATO, the United Nations and the Organisation for Security and Co-operation in Europe (OSCE). Already next month we plan to establish a register of up to 100 volunteer experts, such as police officers, health workers, engineers and search-and-rescue experts, from which we will contribute civilian personnel to peace-keeping missions. We plan to have up to 25 experts on the ground by the end of the year 2003. Although this number may seem modest in comparison with bigger nations, this will mean more than a threefold increase in Iceland's participation in international peacekeeping. It is a clear sign of our political will to participate directly in the development of European security.

NATO is working towards strengthening Europe's security component by co-operating with the European Union in the establishment of a European Security and Defence Policy (ESDP). This we support as long as NATO's role is not compromised.

Participation in European integration
The pace of change in Europe since 1989 has been remarkable. Although Iceland is not part of mainland Europe, we have close trade, political and economic links through the EEA Agreement from 1994. The Foreign Ministry, therefore, follows very closely the progress of enlargement of the EU. I am in regular contact with colleagues in Europe and had a meeting with Belgian Foreign Minister Louis Michel two weeks ago here in Reykjavik. Belgium holds the Presidency of the EU at present. Among other things, we discussed developments in the European Union and the updating of the EEA Agreement in light of many changes in the basic EU treaties over the past 7 years. I will expand on these matters later in my address.

US-Iceland Defence Agreement and co-operation
We celebrated this spring the fiftieth anniversary of the defence agreement between the USA and Iceland. This agreement reflects the very close relationship we have to the USA and is fundamental to our security and our participation in NATO. The strong ties between Iceland and the US extend also to trade and economic issues, tourism and co-operation in international organisations. Our two countries have in place a special relationship of trust and mutual appreciation.

UN
We are active members of the United Nations. Iceland has announced its candidature for the first time for a non-permanent seat on the Security Council of the United Nations for the period 2009-2010. The Nordic countries endorse our candidature.

It has been my view that Iceland should take on larger responsibilities in the organisations of which it is a member. This we have put into practice, as is evident from our more active participation in recent years.

· On behalf of Iceland, I chaired the Committee of Ministers of the Council of Europe in 1999.

· Iceland has for the second time been elected to the United Nations Commission on Sustainable Development.

· Iceland currently sits on the Council of the Food and Agriculture Organisation (FAO) on the behalf of the Nordic countries.

· Iceland is a candidate for the Executive Board of UNESCO for the period 2001-2005

· Next year Iceland will assume the chairmanship of the Arctic Council, which is composed of the five Nordic countries together with Canada, Russia and the United States.

Ladies and Gentlemen,

Iceland relies heavily on sustainable use of natural resources - whether it be fisheries, hydro- and geothermal energy resources or our rugged natural landscape for tourism and recreation. In simple terms, sustainability means not harvesting more than can be renewed by nature. We intend to attain an even higher level of sustainability in the renewable resources to be found in and around Iceland. We see this as benefiting both ourselves and the world around us.

Fisheries, the mainstay of our economy, have given us one of the highest standards of living in the world. We operate fisheries on a profit basis unlike many other countries. The key to continued profits is, of course, continued renewal of our resources. Modern technology, much of it developed in Iceland, together with science-based management, gives us the most advanced sustainable fishing industry in the world.

Icelandic fisheries know-how has benefited more than just Iceland. Icelandic companies have invested in fishing operations and fish processing industries throughout the world, from South America to Africa. Fisheries know-how is one of the main pillars of our development aid in Africa and will soon be extended to East Timor. We also host here in Iceland the UN University Fisheries Training Programme.

Icelandic companies have also successfully applied their marketing expertise in the international fish trade and are now marketing fish products from many countries.

Icelanders have also developed a powerful support industry for the fishing and the fish-processing industry, building on the most advanced information and computer technology. Indeed, some Icelandic companies have successfully expanded into the global market and are even applying their technology and services to other food-production sectors. They supply for instance their equipment and services to the meat-industry in North-America and Australia.

Our Consuls have on many occasions shown that they have sharp eyes for business opportunities for Icelandic companies in the fishing industry. We would welcome further indications of possible business ventures for Icelandic know-how and commodities.

Responsible fisheries management and FAO
Our extensive experience with science-based, responsible fisheries management has also taught us that effective sustainable fisheries management must take the whole ecosystem into consideration. To assist in advancing this approach internationally, we will host this October a major international Conference on Responsible Fisheries in the Marine Ecosystem. The Conference, which is organised jointly with the UN's Food and Agriculture Organisation and Norway, is the only fisheries-related intergovernmental conference to be held before the World Summit on Sustainable Development in Johannesburg next year, and will thus be a significant event in the preparations for the Summit.

Whaling
I cannot speak about Icelandic fisheries policy without mentioning one important issue - whaling. We intend to resume whaling, but we have not decided when. It is the core of Icelandic fisheries policy that all marine resources should be harvested in a responsible and sustainable manner. This includes marine mammals. We have to treat the ecosystem of the ocean as a whole. Taking out one species, for example whales or seals, is not constructive environmental policy. It can indeed be highly harmful to the marine ecosystem. It is estimated that the growing number of whales in Icelandic waters eat yearly in the range of 6 million tonnes of marine life, compared to the two million tonnes taken by our fishing fleet. It goes without saying that any whaling we carry out will be responsible, sustainable and science based.

Kyoto and energy policy
The global threats of climate change are of great concern to us. Iceland is taking an active part in current negotiations regarding the Kyoto Protocol. But we also contribute in another way to the global task of combating climate change. By harnessing our renewable energy resources, we offer clean electricity to energy-intensive industries that can produce in Iceland such important commodities as aluminium. Similar production in many other countries usually results in massive pollution because the energy is generated by coal or gas. Coal generated plants generate 9 times more emissions than hydro-powered plants.

We are also aiming at using our clean and renewable energy for the production of hydrogen as an alternative to carbon based fuels. The beauty of hydrogen is that when you burn it the only by-product is water. A pilot project is now in progress in Reykjavik involving hydrogen-powered buses -- a joint project between the Government and a company jointly owned by Icelandic parties, Daimler-Chrysler, Shell Hydrogen and Norsk Hydro. In the course of time the project will be extended to cover other vehicles and the fishing fleet. This is looking forward - but even today, 70% of our energy is generated from clean, renewable sources.

In a global economy of increasing energy demand and growing environmental awareness, renewable energy and alternative fuels will be highly valued technologies. Iceland is in a strong position to lead in this sector. Here is an area for our Consuls to explore.

Globalisation

Ladies and Gentlemen,

I think it is true to say that Iceland stands to benefit from globalisation proportionately more than many bigger countries. Think about the problems which a country like Iceland has faced in the past when trying to expand and diversify economically. Our domestic market is very small. We are thousands of kilometres away from other markets. Our workforce is also small and we simply do not have the manpower for large-scale labour-intensive industries, except on a very limited and well-planned basis. Furthermore, there has generally not been the investment capital necessary to support major new enterprises.

Globalisation of the economy hand-in-hand with the phenomenal development of information technology (often referred to as the new economy), has had a fundamental effect on Iceland. In a certain sense we are importing virtual labour. A shoe design company called X-18 selling its wares across Europe has most of its products made in China.

Software design is a fast growing sector and we have scored a number of successes internationally. For example, an Icelandic founded company called Degasoft provides software for Virgin Records for their internet site. Another company called HB International provides stores around the world with software for checkouts.

As to capital, the capital markets of Iceland are run on rules which match those of the EU and other major economies. The increasing freedom to move and invest capital anywhere in the world has given Icelanders more freedom to invest outwardly, a freedom which they have used increasingly both in the fisheries sector and elsewhere. It has also given Icelandic companies access to large sums of money to finance enterprises here - one good example is DeCode Genetics, which you will hear more about later today. Decode has been able to attract millions of dollars of investment from international companies to finance its genetic research aimed at improving pharmaceuticals and treatments for disease.
I hope that the exhibition here at Grand Hotel, which has been arranged by the Icelandic Trade Council, will give you an idea of the exceptional range of Icelandic enterprises. There are some 45 companies taking part.

What is the role of governments, politicians and diplomats in this context? Among other things, it is our job to ensure that the internal and external legal frameworks are available to ensure that the advantages of technology and the ideas of entrepreneurs can be exploited to the full, and that their advantages extend to as many people as possible. A case in point is the good work carried out by the Ministry for Foreign Affairs and other ministries in preparation and continued management of the EEA Agreement, which has brought great benefits to Iceland. You cannot have an effective game unless you have effective rules and all play by those rules. Again this is more important for small countries, which cannot throw their weight around.

Most of all it is our task to make it possible for our nations to be full partners in globalisation. Globalisation that brings us and the rest of the world economic growth, more freedom, better access to technological progress, to information, education, democracy and human rights. Globalisation that makes us better able to fight pollution, poverty, crime and to work for peace. Like every powerful force, globalisation also has its dark sides. It is also the responsibility of governments and politicians to maximise the benefits and minimise the negative aspects.

Our participation in globalisation is through multilateral co-operation in a wide range of international structures, including the UN, the WTO, the EEA, EFTA and the OECD. Globalisation should develop for the benefit of all. We can best influence its course through participation with like-minded countries in larger structures.

It is clear that Iceland must be properly represented in this globalised world. This is why we have opened just in the past few months embassies in Canada and our first in Africa in Mozambique, and we will open in Tokyo next month. Our embassy in Tokyo, together with the embassy in Beijing, will put us in a much stronger position to take advantage of opportunities that Asia has to offer in abundance. And a further key to ensuring representation where we need it is, of course, the very important network of Honorary Consuls around the world.

The European Union
As I remarked in my introduction, Europe has undergone astounding changes in the last 12 years. In the words of my Estonian colleague Foreign Minister Toomas Ilves, the legacy of Yalta has been wiped out. And a bit like the bursting of a damn, the river of history has been able to flow on freely. But we have not arrived down the river into a calm lake. We are navigating a river which is, all the time, being joined by smaller rivers and streams, and which is rushing onwards at an ever-increasing pace. History is driving us downstream and we had better keep a good look out and a firm hand on the tiller if we do not want to end up on the rocks.

EU and EEA enlargement
This is why I have been determined to assess on a continuous basis Iceland's position in Europe. The EU is expanding and could reach 22 members, even 26, in the not too distant future. Countries which may well be EU members by the end of 2005, just 4 years from now, are Poland, Estonia, Malta, Cyprus, Slovenia, the Czech Republic and Hungary. Other countries such as Lithuania and Latvia may well join that group.

In joining the EU these countries will also join the EEA Agreement and move into a much closer relationship with Iceland, Norway and Liechtenstein. Individuals and economic operators in these countries will have new rights and obligations that affect us - a Polish worker will no longer have to seek a work permit in Iceland (Polish workers are about 1% of our workforce, and make a very valuable contribution to the economy). A Hungarian bank will have the right to operate in Iceland.

This is all very positive and Iceland has all along supported enlargement. We share the view that the enlargement of the EU will promote political stability and strengthen European integration. We do not believe that the enlargement of the EEA will pose any major problems for us and we do not expect to need the adjustment periods for free movement of workers that have been requested on the EU side.

Final words
Ladies and Gentlemen,

Finally, I would like to express thanks to all our Honorary Consuls for their selfless commitment to Iceland over the years and for making the journey, in some cases a very long journey, to be here at this conference. The old Viking poetry of Hávamál, the Wisdom of Odin, has some wise things to say about the nature of friendship:

"A bad friend
is far away
though his cottage is close.
To a true friend
lies a trodden road
though his farm lies far away."

You are true friends of Iceland!


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