ICELANDIC DEFENSE AGENCY TO BE INTEGRATED INTO NEW

C O N F I D E N T I A L SECTION 01 OF 02 REYKJAVIK 000221

SIPDIS

SECDEF FOR A.M. FENTON, OSLO FOR R. SMITH

E.O. 12958: DECL: 12/18/2019
TAGS: NATO PREL PGOV IC
SUBJECT: ICELANDIC DEFENSE AGENCY TO BE INTEGRATED INTO NEW
MINISTRY

REF: REYKJAVIK 158

Classified By: CDA SAM WATSON FOR REASONS 1.4 (B) AND (D)


1. (C) Summary. On December 4, the Government of Iceland
announced plans to dissolve the Icelandic Defense Agency
(IDA) and to integrate its duties into a new Ministry of the
Interior. The Minister of Foreign Affairs and Permanent
Secretary at the MFA later offered assurances that the merger
will be carried out in a responsible manner and that Iceland
will continue to meet all of its NATO commitments. The
current director of the IDA, Tinna Vidisdottir, however,
expressed grave reservations about the idea. She said the
government was playing politics with defense issues and that
key commitments could fall through the cracks in this
government reshuffling. Two government officials have said
that this step was an effort to placate the Left Greens. The
discussion on the new ministry will avoid the broad topic of
defense lest it spur debate on whether Iceland belongs in
NATO. For this reason, the working group will focus on safer
operational decisions, rather than strategic ones. End
summary.

The Creation of a New Ministry of the Interior
-------------- ---
2.(U) On December 4, the Government of Iceland announced its
plans to dissolve the Icelandic Defense Agency (IDA) and to
integrate its duties into a new Ministry of the Interior.
The new ministry will merge two current ministries - the
Ministry of Transportation, Communications and Local
Government and the Ministry of Justice and Human Rights. The
ministry will also incorporate portions of other public
agencies, such as the IDA, which currently falls under the
Ministry of Foreign Affairs.


3. (U) The MFA, in a public statement, tasked a five person
committee with organizing the merger and ensuring that it
occurs in a responsible manner. The committee will consist
of one member from each of five government entities (the
Ministries of Justice, Transportation, Finance and Foreign
Affairs, and the Office of the Prime Minister). The
committee is expected to reach a decision on the logistics of
the merger by February and the task should be completed by
the end of 2010. (Comment. The committee includes members of
entities directly affected by the merger and also those with
political interests in the matter, i.e. the Ministry of
Finance. End comment.)


4. (C) The general approach to this reorganization is
largely consistent with what Foreign Minister Ossur
Skarpedinsson described to us in September (reftel). At that
time, the Minister indicated that the plan would be set in
motion by the end of the year. In recent weeks, however, key
MFA contacts had not indicated that the announcement was
imminent, no doubt because it was with the Minister. The
Minister's Political Advisor told Charge on December 10 that
three people had made this decision: the Prime Minister, the
Foreign Minister and the Finance Minister (who is chairman of
the Left Greens). (Note: Given the Prime Minister's general
deference to the Foreign Minister on such matters, it is
likely that the latter was the real decision maker and that
he sought to move the issue forward quickly. End note.)

A Pledge to Continue NATO Commitments
--------------

5. (C) The Permanent Secretary at the Icelandic Ministry of
Foreign Affairs, Einar Gunnarsson, told Charge and Poloff on
December 11 that the creation of the new ministry is, first
and foremost, the coalition fulfilling its promise to
streamline the government and make it more efficient. The
government, he said, had pledged to reduce the total number
of ministries from twelve to eight and is now fulfilling this
campaign promise. Gunnarsson acknowledged that there is also
a modicum of politics involved in the decision and did not
dispute the idea that the Left Greens, the junior partners in
the government coalition, have supported the dissolution of
the IDA for quite some time. Nonetheless, he stated that the
process would occur responsibly and transparently.


6. (C) Gunnarsson underscored that the new Ministry of the
Interior would maintain Iceland's commitments to NATO.
Iceland, he said, will continue to maintain the Icelandic Air
Defense System (IADS) and all other NATO infrastructure in
the country. According to Gunnarsson, Iceland will also
continue to participate in exercises such as Northern Viking
and the NATO air policing missions. This merger, he said,
represents a change in form, but not in substance, for the
country's defense activities.


REYKJAVIK 00000221 002 OF 002



7. (C) According to the British Ambassador, Foreign Minister
Skarpedinsson offered similar reassurances at a luncheon of
EU member embassies on December 14. He reported to Charge
that the Minister had said the restructuring was a "machinery
of government" issue and not part of coalition horse trading.


Concerns Regarding the Merger
--------------

8. (C) On the other hand, the current Director of the
Icelandic Defense Agency, Tinna Vidisdottir, expressed grave
reservations to Emboffs regarding the decision to dissolve
the IDA and said she doubts that the process will occur in a
responsible manner. The decision, she said, was undertaken
for the sole purpose of mollifying the Left Greens.
Vidisdottir said that the Left Greens have historically
opposed Iceland's involvement in any organization with
military connotations and the dissolution of the IDA is their
reward for going along with their coalition partners, the
Social Democrats, on controversial measures such as EU
membership and the Icesave bill.


9. (C) Vidisdottir opined that the merger would occur in a
reckless manner. The committee tasked with this undertaking,
she posited, will largely be comprised of technocrats who
lack the necessary qualifications to handle the task. She
feared that decisions would be made based upon finances
rather than Iceland's strategic interests and shared with
Emboffs a rumor that, she said, supported this contention.
The responsibility for monitoring the IADS, she said, could
potentially be transferred to Iceland's emergency hotline
system, primarily as a means to pump extra funds into that
cash starved entity. "Can you imagine," she asked, "the 911
dispatchers in the United States taking over the duties of
NORAD?" (Comment: While Vidisdottir is competent, she has
alienated many people with her outspoke style. She may not
be totally objective in assessing this matter. End comment.)

Comment
--------------

10. (C) The truth regarding the merger probably lies
somewhere in between the assurances of Gunnarsson and
Skarpedinsson and Vidisdottir's warnings. There is little
doubt that the merger is politically motivated. It is hard
to say, however, whether this decision followed the
government's original timetable or was a more desperate step
by a weak government confronting tough votes on Icesave, tax
hikes and the budget. The shift of most IDA functions to a
new ministry rather than leaving them at MFA and Justice as
Skarpedinsson had predicted in September, would appear to
indicate the need for the Social Democrats to show some
support for their coalition partner. One former MFA official
who is still in government confirmed that the shape and
timing of the reshuffle was a concession to the Left Greens
to bolster the coalition as it faces key votes. If the
dissolution of the IDA were to occur, it would be the first
issue on which the pacifist Left Greens won support for their
position. So far the Left Greens have yielded to the Social
Democrats on joining the European Union, supporting the
government on Icesave, and lowering taxes on energy use.
Nonetheless, despite the political rationale behind the
decision, there is no reason to suspect that the undertaking
will not be carried out responsibly.


11. (C) We have discussed the matter with like-minded
counterparts in the diplomatic community and agreed to
monitor closely the situation to make sure that no key
commitments fall through the cracks during this government
reshuffling. We have also mentioned to MFA officials the
possibility of inviting strategic experts to come to Iceland
and share their expertise during this transitional period.
MFA officials, however, have cited a lengthy study (2007)
which concludes that Iceland faces no military threats and
needs to consider only nonconventional threats as a basis for
their strategic approach. There is concern on their part
that any discussion, private or public, on the broad topic of
defense could backfire and reopen a debate on whether Iceland
belongs in NATO. For this reason, the working group will
focus on safer operational decisions, rather than strategic
ones. End comment.
WATSON