Iceland, the only country in the world integrated into a military alliance without having a single soldier, is redefining its defense policy. The war in Ukraine, the cooling of relations between the two shores of the North Atlantic, the growing interest of Russia and China in the Arctic, and Washington’s threat to annex Greenland have sparked a profound debate in Icelandic politics. Although the creation of an army does not appear to be on the table, the Icelandic government has made a committment to its NATO allies to invest significantly more in defense — in 2024 it allocated just 0.01% of GDP — and is negotiating with Brussels on a bilateral agreement to strengthen its security.

Iceland’s case is an anomaly: a founding member of NATO, it is the only one without an army, lacks an intelligence service, is exempt from the Alliance’s spending commitments, and, with just under 400,000 inhabitants, is the partner with the smallest population. The Coast Guard, which has traditionally been dedicated to protecting fishing waters, is playing an increasingly important role, including managing an air defense system. The pillars of the Atlantic island’s security strategy are its membership in the transatlantic organization and a bilateral agreement with the United States, signed in the 1950s.

Despite the improvement in its defense, Valur Ingimundarson, a professor at the University of Reykjavik’s School of History, rules out the possibility of Iceland ever forming an Armed Forces. “Iceland hasn’t had an army for centuries, and the status of an unarmed country is sacrosanct for most of society and part of the national identity,” he explains.

Located south of the Arctic Circle, between Greenland and the United Kingdom, and about the size of Cuba or Portugal, Iceland has contributed to NATO for decades by offering its strategic location to monitor the movements of Soviet — and later Russian — submarines in the North Atlantic. During World War II, it was occupied by British and later American troops to prevent it from falling into German hands and to use it for logistical purposes. Shortly after the end of the war, Winston Churchill wrote: “Whoever possesses Iceland holds a pistol firmly pointed at England, America, and Canada.”

When the United States promoted the founding of NATO in 1949, it considered Iceland’s location vital to its interests and integrated it into the Alliance. Washington maintained a military base in Keflavik, in the southwest of the island, from 1951 — the year the bilateral defense agreement was signed — until it abandoned it in 2006 at a time when it was much more focused on Iraq and Afghanistan than on Russian submarines.

After losing much of its strategic value with the end of the Cold War, Iceland demonstrated its commitment to the Alliance by, for example, sending doctors to missions in the Balkans or civilian personnel to manage Afghanistan’s main airport. Russia’s annexation of the Crimean peninsula and the outbreak of fighting in the Ukrainian region of Donbas in 2014 revived Washington’s interest in Iceland; troops from the world’s leading power returned to Keflavik, and the island’s geostrategic value began to reemerge.

Since the Russian occupation of Crimea, NATO military exercises such as Dynamic Mongoose, its largest anti-submarine warfare maneuvers, have been held regularly in Iceland, which hosts allied detachments on a rotating basis to protect its airspace. Last Monday, an advance party of 44 Spanish military aviators arrived in Keflavik as part of Spain’s first participation in this air policing mission.

The war in Ukraine and the growing presence of Russia and China in the Arctic in the face of new commercial and military opportunities in the region resulting from the melting of the ice caused by climate change have generated a certain sense of insecurity in peaceful Iceland. This unease has been accentuated by the return of Donald Trump to the White House. The U.S. president’s demands on his allies regarding defense spending and his insistence on taking control of Greenland — an autonomous territory of the Kingdom of Denmark, a NATO member — have motivated Iceland to adopt a much more proactive stance on defense matters.

Increase in spending

“We are developing a new security and defense policy focused on our specific strategic position within NATO,” declared Icelandic Prime Minister Kristrún Frostadóttir after meeting with Mark Rutte, the alliance’s Secretary General, in Brussels in May. Frostadóttir, who at 37 is the world’s youngest head of government, subsequently pledged to “significantly increase spending on defense-related matters.”

At the NATO summit held in June in The Hague, the allies agreed to increase defense spending to 5% of GDP by 2029. According to the agreement, 3.5% will be allocated to “hard defense,” which includes weapons purchases and troop salaries, while 1.5% will go to related investments, such as infrastructure and cybersecurity.

It is precisely this 1.5% that the Icelandic government is seeking to adopt. Romain Chuffart, director of the Arctic Institute think tank, believes that the exponential increase in defense spending — from 0.014% of GDP — will be achieved by “strengthening cyber defense, reinforcing its national system and more active participation in NATO cyber operations, expanding the surveillance and response capabilities of the Coast Guard, and increasing investment in infrastructure that can be used by allied forces, such as port facilities and hangars.”

In addition to underscoring its commitment to NATO, Iceland — which is already part of the Schengen area and the European Economic Area — is showing interest in strengthening its ties with the EU. Ursula von der Leyen, the president of the European Commission, traveled to the Atlantic island last week and announced the start of negotiations for a security and defense partnership agreement, similar to the one agreed with Canada last June. “The new emphasis on the EU can be interpreted as a hedging strategy in case the United States backtracks on its commitment to defend its European allies,” Ingimundarson notes.

Frostadóttir, who expressed hope that the agreement could be finalized before the end of the year, aims to further strengthen relations between Reykjavik and Brussels and plans to hold an EU membership referendum in 2027.

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