Iceland may be small, but its strategic importance is vast. As Trump questions NATO commitments, European allies must step up before the Arctic becomes the next geopolitical flashpoint

Image by picture alliance / Anadolu | Evrim Aydin ©
Donald Trump’s return to the US presidency has been a geopolitical whirlwind, ranging from threatening to buy Greenland to branding the Ukrainian president a “dictator”. He has also cast doubts on America’s commitment to European security, going so far as to consider not defending NATO members that do not reach the defence spending target. As European countries frantically reassess their defences in response, they should not forget one country in particular: Iceland.
A country of fewer than 400,000 inhabitants, Iceland is a founding member of NATO and the only alliance member without its own military. The cornerstones of its security strategy are NATO membership and a bilateral defence agreement with the United States. As it partially depends on America for its security and spends nothing on defence (at least not in the traditional sense), Iceland would be left particularly vulnerable if Trump scrapped their defence agreement or reduced American commitments to NATO. Both of which would ultimately weaken European countries’ security in the Arctic.
Strategic Iceland
Iceland sits at a strategic point. Its location between Greenland and the United Kingdom helps NATO defend the maritime channels where the Arctic Ocean and Norwegian Sea feed into the Atlantic Ocean. This area is known as the GIUK gap—its name an acronym for the space between Greenland, Iceland, and the United Kingdom.
During the cold war, these passages were the only way for Russian submarines to access the Atlantic from Russia’s northern bases. It is for this reason Winston Churchill, quoting German general Karl Haushofer, once said, “whoever possesses Iceland holds a pistol firmly pointed at England, America, and Canada.”
Just like during the cold war, Iceland’s Keflavik base serves as a NATO outpost for monitoring Russian military movements in the Arctic. Iceland operates an Air Defence and Surveillance System that scrutinises hundreds of square kilometres of airspace, which supports NATO air surveillance missions. Iceland also plays a key role in undersea submarine surveillance in the Arctic, though it largely relies on the US for support in this domain. Thus, from Iceland, it is possible look out for potential threats and signs of escalation.
Iceland’s strategic importance will therefore increase as the defence climate changes—and as the climate itself changes. Rising global temperatures have caused the permafrost covering the Arctic Ocean to melt at a rapid rate. This is opening new commercial opportunities for exploring the largest untapped hydrocarbon reserves in the world and developing the Northern Sea Route—the shortest maritime shipping route connecting Europe and Asia. Russia has the largest claim to these because it controls over half the Arctic coastline, and the majority of the region’s undiscovered oil reserves fall within Russia’s exclusive economic zone. The Arctic is also home to Russia’s Northern Fleet and hosts the majority of its nuclear missile-carrying strategic submarines. Together, these developments are reshaping the geopolitical importance of the Arctic, of which Iceland is stuck in the middle.
Should tensions from other conflicts spill into the Arctic, NATO and European Arctic allies must ensure Iceland’s security remains intact
Before the war in Ukraine, Russia tended to abide by the norms governing the Arctic and engaged in the Arctic Council, the foremost forum for international cooperation in the region. Yet, since Russia’s invasion of Ukraine in February 2022, cooperation via this forum has effectively halted and Moscow has ramped up hybrid attacks against Arctic actors. Should tensions from other conflicts spill into the Arctic, NATO and European Arctic allies must ensure Iceland’s security remains intact. If not, and Iceland loses its ability to monitor and deter threats, Europeans face a higher risk of conflict in the Arctic.
Iceland as part of European security
Iceland is more vulnerable than it was three years ago—or even three weeks ago. The US administration’s rhetoric has called into question Iceland’s defence strategy amid Russia’s incursions in the region. Greater Arctic instability would have ramifications for other European Arctic actors like Norway, Sweden, Finland, and Denmark, whose resultant vulnerability would weaken European security at large.
In the face of these challenges, Europe needs to increase defence spending and invest more in Arctic monitoring and policing capabilities. Iceland must be part of any Arctic defence strategy going forward.
European Arctic allies should take greater responsibility for Iceland’s defence in NATO exercises. In particular, European militaries should lead in defence drills like the Northern Viking, which has typically been led by the US in the past. NATO member states like Denmark and the UK can also work closely with Iceland to ensure there is a strategy in place for securing the GIUK gap. The UK recently announced a new defence agreement with Norway to boost European security in the Arctic, and there is an opportunity to pursue a similar action in Iceland as well. Denmark’s plan to spend $2.05bn to boost its military strength in the Arctic is also a welcome development. In the face of a less engaged, or even antagonistic US, Denmark should build on this by also investing in surveillance capabilities and enlisting its Nordic neighbours to do the same.
In the future, Europeans might also be able to strengthen Iceland’s security via the European Union. Although Iceland has been ambivalent about joining the bloc, its government said it aims to put the question to a referendum by 2027. If Icelanders vote to join the EU, then the bloc would do well to make provisions for the island’s economic and security interests as well as potentially prepare for a more strategic role in the Arctic.
Ultimately, NATO is as weak as its weakest link. And if the US is no longer willing to defend members that do not spend enough of their GDP on defence, it may be time for Iceland to reassess its long-standing defence strategy. In the meantime, Europeans must take up the torch for defending the island that sits stranded between Europe and North America.
Average Rating