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RR RUEHDBU RUEHFL RUEHKW RUEHLA RUEHNP RUEHROV RUEHSL RUEHSR
DE RUEHRK #0221/01 3521658
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FM AMEMBASSY REYKJAVIK
TO RUEHC/SECSTATE WASHDC 4239
INFO RUEHZL/EUROPEAN POLITICAL COLLECTIVE
RUEKJCS/SECDEF WASHDC

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