ICELAND

• Document Type: CREST
• Collection: General CIA Records
• Document Number (FOIA) /ESDN (CREST): CIA-RDP78-01617A001500060001-8
• Release Decision: RIFPUB
• Original Classification: S
• Document Page Count: 40
• Document Creation Date: December 27, 2016
• Document Release Date: January 30, 2013
• Sequence Number: 1
• Publication Date: July 13, 1948
• Content Type: REPORT

r COPY NO.67
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8 CHIEF,
9
iftfitair
ACQUISITION S DISMIBUlION DIVISION.
OFFICE OF INTELLI1E!:CF COLLFC1ION
AND DISSEMINATION
EPARIIINT OF STATE
<
con
LIGENCE AGENCY
A?L, 1?.7UI1
Declassified and Approved For Release 2013/01/30 : ClaDP78-01617A001500060001-8
I. ?_ - -
Declassified and Approved For Release 2013/01/30: CIA-R6F'78-01617A001500060001-8
DISSEMINATION NOTICE
1. This copy of this publication is for the information and use of the recipient
designated on the front cover and of individuals under the jurisdiction of the recipient's
office who require the information for the performance of their official duties. Further
dissemination elsewhere in the department to other offices which require the informa-
tion for the performance of official duties may be authorized by the following:
a. Special Assistant to the Secretary of State for Research and Intelligence, for
the Department of State
b. Director of Intelligence, GS, USA, for the Department of the Army
c. Chief, Naval Intelligence, for the Department of the Navy
d. Director of Intelligence, USAF, for the Department of the Air Force
e. Director of Security and Intelligence, AEC, for the Atomic Energy Com-
mission
f. Deputy Director for Intelligence, Joint Staff, for the Joint Staff
g. Assistant Director for Collection and Dissemination, CIA, for any other
Department or Agency
2. This copy may be either retained or destroyed by burning in accordance with
applicable security regulations, or returned to the Central Intelligence Agency by
arrangement with the Office of Collection and Dissemination, CIA.
WARNING
This document contains information affecting the national
defense of the United States within the meaning of the
Espionage Act, 50 U.S.C., 91 and 32, as amended. Its trans-
mission or the revelation of its contents in any manner to
an unauthorized person is prohibited by law.
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 :_CIA-RDP78-01617A001500060001-8
[Published June 1948
JUL 13 1948
CIA - MAP SUCH
SR-14
ICELAND
TABLE OF CONTENTS
SUMMARY
SECTION I ? POLITICAL SITUATION
SECRET
1. GENESIS OF THE PRESENT POLITICAL SITUATION I-1
2. PRESENT GOVERNMENTAL STRUCTURE 1-2
3. POLITICAL PARTIES 1-4
a. Conservative Party 1-5
b. Progressive Party 1-5
c. Social Democratic Party I-5
d. Communist Party ? (Amalgamated Workers Party ? The Socialist Party) 1-6
4. OTHER INFLUENTIAL GROUPS . .. 1-7
5. CURRENT ISSUES ..... 1-8
6. STABILITY OF THE PRESENT ADMINISTRATION . 1-9
SECTION II ? ECONOMIC SITUATION
1. DEVELOPMENT OF THE PRESENT ECONOIVIIC SYSTEM II-1
2. DESCRIPTION OF PRESENT ECONOMIC SITUATION II-1
a. Agriculture II-1
b. Natural Resources 11-2
c. Industry 11-2
d. Finance and Foreign Exchange Position II-3
e. International Trade 11-3
f. Cooperative Societies and State Monopolies 11-4
3. ECONOMIC STABILITY 11-4
SECTION III ? FOREIGN AFFAIRS
1. GENESIS OF ICELAND'S FOREIGN POLICY
2. SIGNIFICANT RELATIONS WITH OTHER NATIONS
a. United States
b. Scandinavian Countries
c. The United Kingdom
d. USSR
e. International Organizations
SECTION IV ? MILITARY SITUATION
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
r 44?w- - Ir -? r...1"15KI
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
C 1 RP.
SECTION V ? STRATEGIC CONSIDERATIONS AFFECTING US SECURITY
" a--1)
SECTION VI ?PROBABLE FUTURE DEVELOPMENTS AFFECTING US SECURITY
APPENDIX A ? Topography and Climate
APPENDIX B ? Significant Communications Facilities
APPENDIX C ?Population: Statistics, Characteristics, and Institutions
APPENDIX D ?Significant Personalities
APPENDIX E ? Chronology of Significant Events
MAPS
Iceland (General Orientation)
Iceland (Iceland and the Northern Hemisphere)
SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
SUMMARY
So far as US security is concerned, Iceland represents an arctic base strategically
located on the flank of north Atlantic shipping lanes and having two well developed
airfields suitable for trans-Atlantic planes. The island was utilized extensively by
US forces during the recent war and undoubtedly would become an important US base
again in time of war if only to deny its use to enemy forces. The chief obstacle to US
strategy in this regard is the parochial, highly nationalistic attitude of the Icelandic
people who resent any foreign influence. Though the Icelanders could not and would
not defend the island, they can and do impose obstacles to activities in Iceland by
foreign powers. For these reasons the negotiations which resulted in the present US-
Iceland Airport Agreement were protracted and delicate while the presence of US per-
sonnel at the Keflavik Airport today is largely due to favorable but unpublicized support
from a few influential members of the present Icelandic government.
The government of Iceland, sovereign only since 1944, cannot be considered stable
because the present coalition is composed of varied elements which disagree on certain
basic issues, and is furthermore opposed by a strong Communist Party which can wield
the strike threat against the government through its domination of the Icelandic
Federation of Trade and Labor Unions.
The opposition's main criticism of the government has been concentrated on the
issues of domestic inflation and the US-Iceland Airport Agreement. Control measures
taken against inflation have been only partially effective because of fears of the co-
alition government that the Communists, by exploiting the resultant labor dissatis-
faction, might be able to eliminate the present cabinet and to secure participation in
the new government if such measures were taken. Though the US-Iceland Airport
Agreement, conclusion of which caused the dissolution of the previous government,
is still the object of considerable opposition, its supporters in the present cabinet have
so far succeeded in averting a political impasse over its implementation.
The present difficulty of replenishing rapidly dwindling US dollar reserves is also
plaguing Iceland's economic well-being. Iceland's abnormally large postwar reserve
of US dollars was rapidly expended for capital goods, largely to modernize its fishing
industry, and in part to satisfy the war-acquired demand for luxury imports. Modern-
ization of the fishing industry had been considered justifiable in view of the anticipation
that reduced production costs would enable Iceland to compete profitably in world
markets which were again becoming competitive. Production costs continued to rise,
however, and production decreased simultaneously because of three successive disap-
pointing summer herring catches. The reduced exports of Iceland's fishing industry
Note: The information in this paper is as of April 1948.
The intelligence organizations of the Departmerits of State, Army, Navy, and the Air Force
have concurred In this report.
SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
provided neither sufficient hard currency nor essential goods in exchange, so rapidly
dwindling dollar reserves were further reduced by purchases of essential imports.
Iceland's difficulty in disposing of its postwar production of fish and fish products
attracted the attention of the USSR which, with an obvious view to propitious timing,
negotiated the purchase of substantial portions of the 1946 and 1947 production on terms
very favorable to Iceland. The political implications of this postwar trade are especi-
ally apparent when it is considered that USSR-Iceland trade for 1946 alone was 33
times greater than it had been for the entire sixteen-year period 1930-45. This in-
creased trade may be partially attributed to Russian need for herring oil but political
motives were certainly predominant.
In foreign relations, which it must conduct without benefit of armed forces,
Iceland vigorously resists any deviation from the "independent" course to which it
feels entitled. Iceland is hesitant to take sides in the controversy between the West
(with which Icelanders' essential sympathies lie) and the East, which they regard as
a potentially important market for their products and, therefore, not to be offended.
Iceland's future orientation, although presently pro-Western, may incline toward the
USSR if the Soviets continue giving favorable consideration to Icelandic economic and
foreign trade difficulties without concurrently seeking strategic advantage or endanger-
ing the nation's independence.
eTh
SECRET ii
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
SECTION I
POLITICAL SITUATION
1. GENESIS OF THE PRESENT POLITICAL SITUATION.
Iceland, one of the world's youngest sovereign nations, now comprising a popu-
lation of 133,000, was colonized by Norsemen late in the ninth century and the first
Icelandic republic was established in 930. The republic endured until 1262 when the
Icelanders swore allegiance to the Norwegian throne. The union with Norway ended
in 1534 when Norway was made a dependency of Denmark and the Danish king became
absolute monarch of Denmark, Norway, and Iceland. It was not until 1918 that Ice-
land regained virtual independence, but it still remained united with Denmark under
a common king. In 1944 the Icelandic people voted for dissolution of the union with
Denmark, a course of action authorized by the Act of Union of 1918; and Iceland again,
after almost 700 years, became an independent, sovereign republic.
The period of Norwegian-Danish rule was one of political and economic decay
for Iceland. The island suffered while it was alternately ignored or exploited by
its rulers. A series of natural catastrophes ? earthquakes, volcanic eruptions, and
plagues ? in the 14th and 15th centuries reduced the population to extreme poverty.
After six centuries of self-government the Icelanders in 1534 lost all voice in the
administration of their affairs. In the 17th and 18th centuries Iceland was exploited
by a Danish trade monopoly.
After the Napoleonic wars, a revival of national consciousness stimulated the
Icelanders to increased political and economic activity. The low level of living and
culture was contrasted with the achievements of the early independent republic. A
nationalist movement, aimed at the restoration of sovereignty and autonomous, rep-
resentative government, attained increasing degrees of success. In 1843 the Althing
(parliament) was restored, and in 1874 a constitution was granted by the Danish
king.
The movement for political independence was accompanied by an endeavor to
build Iceland into a more prosperous and self-sufficient nation. Towards the end
of the 19th century industrial development began modifying Iceland's heretofore com-
pletely agricultural economy. The first trade union was organized in 1894, and the
Federation of Icelandic Trade and Labor Unions was founded in 1916, commencing its
rapid ascendancy to its present position as a primary factor in the political-economic
balance of the country. The first real cooperative society was established in 1882 and
the Federation of Icelandic Cooperative Societies, which is now one of the major
aggregates of economic power in Iceland, was formed in 1902.
In 1918 when the Danish Rigsdag and a majority of the Icelandic people in a
referendum approved the Act of Union, Iceland attained virtual independence but
was united with Denmark under a common king, its foreign affairs being conducted
by Denmark. The Icelandic constitution, which was revised in 1920 in accordance
I-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
with the Act of Union, established a constitutional monarchy. The Act of Union pro-
vided for its revision after December 1940 and dissolution of the union three years
thereafter if no new agreement had been reached. Taking advantage of the German
occupation of Denmark, the Althing transferred the functions and authority of the
Danish king to the Icelandic government and, in June 1941, elected a regent. The
same year the Althing declared the agreement abrogated, by reason of Denmark's
inability to fulfill its obligations, and announced Iceland's intention to dissolve the
union. On 17 June 1944, after a popular referendum, Iceland declared itself inde-
pendent and established a constitutional republic.
2. PRESENT GOVERNMENTAL STRUCTURE.
The Constitution of 1944 provides for a President who is elected for a four-
year term by direct, popular vote. Succeeding to the functions formerly exercised
by the Danish crown, the President has vested in him the executive and legislative
powers of the government, but they are to be exercised in conjunction with his min-
isters and the Althing. He appoints ministers and presides over the Council of State
(composed of the President and his ministers) which must consider all legislation and
Important acts of the government. He also is empowered to make treaties with foreign
nations, but any transfer of land or territorial waters must be first approved by the
Althing. The President summons and may dissolve the Althing.
The authority of the President is largely nominal. Constitutionally the minis-
ters, not the President, are responsible for all acts of the Government, and the Pres-
ident's signature on legislation or governmental proclamations does not confer va-
lidity unless countersigned by a minister. In practice the ministers exercise most
of the prerogatives assigned to the President. After an election, or the resignation
of a cabinet, the President designates a member of one of the parties represented
in the Althing to form a cabinet. Should the original selectee for the Premiership
prove unsuccessful in forming a cabinet, the President designates another party
leader; if he in turn should fail, a new Althing election must be held. The present
coalition cabinet is composed of six ministers who each hold two ministerial posts.
The ministers have ex-officio seats in the Althing but may not vote unless they also
hold elected seats.
The legislative power is vested in the President and a parliament of not more
than 52 members, the latter, chosen for a four-year term, being the real legislative
authority. Forty-one members are chosen by direct? popular ballot, and after the
elections additional seats, not to exceed eleven, are distributed among the parties
so that each party receives parliamentary representation in proportion to its votes
in the general election. The constitution directs members to act solely on their con-
victions, and they cannot be held accountable outside the Althing for any statements
made therein.
The Althing assembles for its regular session on 1 October each year, and divides
itself into an upper house (efri dead) and a lower house (nedri deild) composed of
? (Conservative, Progressive, Social Democrat) .
SECRET 1-2
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
one-third and two-thirds of the members respectively. There is no difference in the
functions of the two houses. Bills may be introduced in either house or by the
President but may not become law unless approved by both houses, signed by the
President and countersigned by a cabinet minister. If the houses do not agree in
separate session, they meet in joint session where passage of a bill or resolution
requires a two-thirds majority. In the event that the President refuses to approve
a bill, it is referred to the electorate for acceptance or rejection by secret ballot.
Changes in the constitution can be made by the Althing, but when such changes
are approved, the assembly must be dissolved and a general election must take place.
If the changes are voted by the new Althing, they become law upon the approval of
the President.
The Icelandic legal system is almost entirely of foreign origin. The basis of
Iceland's jurisprudence is Scandinavian (principally Norwegian and Danish) with
only fragments of Roman or Canon law appearing in the legal code. The system of
laws is composed of separate acts passed since the re-establishment of the Althing
in 1843, which have been strongly influenced by the codes of Denmark.
The administration of justice is exercised by judges whose decisions on the
interpretation and constitutionality of laws are final. The constitution has set up
safeguards for the political independence of judges by stipulating that after appoint-
ment by the President they cannot be relieved of their judicial duties except by legal
action. In most cases, however, judges also hold administrative office, often of a
political nature. Juries are not employed.
The judicial machinery is composed of a system of courts which handle "ordi-
nary" and "special" lawsuits. There are 24 "ordinary" courts of first instance, pre-
sided over by sheriffs in the rural areas, and an "ordinary" appellate court in Reykjavik.
These courts have jurisdiction in all cases not specifically excepted to them by law.
The "special" courts are set up to try precise types of lawsuits and interpret special
types of law, including ecclesiastical and maritime law. The most important of the
"special" courts is the High Court of the Realm, which hears cases brought against
ministers for the improper discharge of their official duties.
The constitution maintains the principle of universal suffrage which was intro-
duced in 1915. The franchise is extended to all citizens over 21 who are "financially
independent", and who have been residents of the country for at least five years prior
to the election. During recent elections an unusually large proportion (over 90%)
of the eligible voters exercised their franchise. The civil liberties characteristically
accorded to citizens in a democracy are guaranteed by the Icelandic constitution and
are enforced by the judiciary.
For the purposes of administration Iceland is divided into 21 districts and 10
townships, each administered by a government-appointed sheriff, whose principal du-
ties are the collection of taxes and maintenance of order. There is no constitutional
division of power between the central government and local units, the national gov-
ernment being the supreme authority in cases of jurisdictional dispute. The State
provides officials for each of 207 parishes, to aid the sheriff in fulfilling his functions
1-3 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
on the local level. For the administration of purely local affairs, such as poor-relief
and maintenance of roads, each of the parishes and towns has an elected council.
Parish councils are responsible to the district councils, composed of one elected repre-
sentative from each parish.
3. POLITICAL PARTIES.
The parliamentary strength of the political parties has special significance in Ice-
land because, except for the trade unions, there are no other effective centers of in-
fluence and power at present. Iceland has no armed forces and the police force is
too small to be influential. The bureaucracy hardly possesses influence independent of
the politicians who name the incumbents to their posts. The press is completely identi-
fied with the parties. The church is without political influence. Political interest
tends to be manifest almost exclusively in terms of personal loyalties and enmities.
The idealism of the average Icelander is coupled with a fanatical stubbornness which
makes compromise difficult and generally results in bitter political campaigns. The
party organs and spokesmen, especially at election time, engage in political invective
that is seldom surpassed in other countries.
Prior to 1918 the political field was dominated by the Independence and Home
Rule parties, and political alignments were based on the issue of independence and
separation from Denmark. The Act of Union partially removed this issue, and the
increased importance of economic problems resulted in a new orientation of the Ice-
landic political parties. The division of political power in Iceland today is based on the
incidence of economic influence, the major aggregates of which are organized into four
political parties: Conservative, Progressive, Communist, and Social Democratic.
The relative strength of the four political parties in terms of their parliamentary
representation and popular support in the last national election (7 June 1946) is
as follows:
PARTY
SEATS IN
ALTHING
PERCENTAGE
OF TOTAL SEATS
PERCENTAGE
OF TOTAL VOTE
Conservative
20 ?
38.5
39.73
Progressive
13 ?
25.0
22.64
Communist
10
19.2
19.72
Social Democrat
9
17.3
17.91
52
100.0
100.0
*Currently 19 Conservatives, 14 Progressives. A by-election in July 1947 to fill a vacancy cre-
ated by the resignation of a Conservative member resulted in a Progressive victory.
The present three-party coalition cabinet, formed on 6 February 1947, is composed
of Conservatives, Progressives, and Social Democrats under the Prime Ministership
of Stefan Johann Stefansson (Soc. Dem.).
SECRET 1-4
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
a. Conservative Party.
The control of the Conservatives by the Thors family, representing the large
fishing interests, is buttressed by wealth, ability, and family connections. Since 1938,
the Thors family has been the major influence in the economic life of Iceland, and
since 1942 it has dominated Iceland's political life as well. Olafur Thors is the leader
of the Conservative Party which also accommodates certain small agrarian interests
and the Reykjavik merchant group.
The Conservative Party, formed in 1924, has polled the greatest number of votes
in each national election since 1931 and has held the largest number of Althing seats
since 1942. The actual membership is about 6,000; it polled 26,000 votes in 1946.
Although the Conservatives support such measures as social security and old
age pensions, their economic platform, by Icelandic standards, is definitely "conser-
vative". Conservative party leaders see the United States as the defender of cap-
italism and free enterprise and are generally pro-American on the grounds of what
they conceive to be Iceland's or their own interests. Olafur Thors, although opposed
to Communism on ideological grounds, previously considered Communist collabora-
tion in the government essential to political stability, and he believed he could control
the Communists if they were admitted. His present attitude may be less positive
toward the necessity for including them. The extreme right wing, which has its own
press, opposes cooperation with the Communists and is as pro-American as any Ice-
landic political group can afford to be.
b. Progressive Party.
The Progressive Party, the second strongest in Iceland, was founded in 1916
and now has a membership of about 4,000. The Progressives dominated the political
scene from 1927 to 1942, and governed the country largely for the benefit of their
constituents, the farmers and the cooperative interests.
During the period of Progressive rule, the party developed into a formidable
drganization based on a personal following whose loyalty was cemented by patronage.
The Progressives are basically a center party, but there are left and right (moderate)
wings, led by Herman Jonasson and Eysteinn Jonsson, respectively.
The economic policy advocated by the Progressives is one of large state expend-
itures on behalf of the farmers, a state import monopoly, a privileged position for
the cooperatives, and soak-the-rich taxation.
c. Social Democratic Party.
The Social Democratic Party has the smallest representation in the Althing.
Founded in 1917 by the working-class and seamen's groups, the party has suffered
since 1930 from the competition of the Communists and from weak leadership, but
it gained a substantial proportional increase in its voting strength in the 1946 elec-
tions when it polled 11,914 votes. The right wing, under the leadership of Stefan
J. Stefansson, dominates the party. Although ostensibly espousing socialism, the
Social Democrats have receded from their early radicalism. The leadership presently
pursues a policy of idealistic, equitable government rather than urging legislation
I-5 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
which benefits primarily their constituents. The party, therefore, has lost adherents
who have shifted their allegiance to the more aggressive Communist Party.
d. Communist Party ? (Amalgamated Workers Party?The Socialist Party).
The Communist Party, organized in 1930, has a membership of about 1,500,
of which approximately 400 are active party workers. It has 10 seats in the Althing,
29 representatives on 13 city councils, and polled 13,049 votes in the 1946 election.
The party obtained its first Althing seats in 1938 when the diminishing radical-
ism of the Social Democrats caused the dissident left wing of that party to join the Com-
munists. The "new" party was called the "Amalgamated Workers Party ? The So-
cialist Party", still the official designation of the Icelandic Communists. The growth
of this group is illustrated by the following table, showing Communist gains in terms
of popular vote and Althing seats in relation to the other parties.
REPRESENTATION IN TERMS OF PARLIAMENTARY SEATS AND PERCENTAGE
OF TOTAL VOTE
ELECTION YEAll
1934 1937 1942 1946
Percentage Percentage Percentage Percentage
of vote Seats of vole Seats of vote Seats of vote Seats
Communists
6.0
8.5
3
18.94
10
19.72
10
Conservatives
42.3
21
41.3
17
39.39
20
39.73
20
Progressives
21.9
15
24.9
19
27.18
15
22.64
13
Social Democrats
21.7
10
19.0
8
14.49
7
17.91
9
Agrarian *
6.4
3
6.1
2
Others
1.7
.2
? (Dissident right-wing group of Progressive Party formed in 1933.)
Communist influence in Iceland exceeds that inherent in the party's par-
liamentary representation and stems from several factors, the principal among them
being the Communists' strategic position in the trade union federation, (see Page 1-7),
the important cabinet portfolios they have held, their participation in local administra-
tion at strategic points, and the delicate balance of power among the other parties.
During their participation in the cabinet, 1944-46, the Communists were able
to seat one of their members as Director of Aviation, and also appointed many teachers
who were Communists or Communist sympathizers. As these were permanent ap-
pointments, the Communists were able to retain influence after they withdrew from
the cabinet. The balance of power among the political parties results in a situation
whereby a coalition which excludes the Progressives or Conservatives would have little
prospect of success unless it included the Communists.
Icelandic youth contributes considerable support to the Communists, largely
because of disillusionment with the corruption of present party politics and secondly,
a desire for social reform which they feel the Communists can provide. Since Ice-
landers are having difficulty in disposing of their fish products and are deeply con-
SECRET 1-6
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
cerned about the future of their export market, offers by the Soviet Union to purchase
large quantities of fish at high prices have made excellent propaganda material for
the Communists even though the relatively favorable price agreed upon did not reflect
the original lucrative offer. The failure of the present Icelandic Government to obtain
more favorable trade agreements with the USSR has been attributed by the Com-
munists to their absence from the government, but they have not overplayed their
hand in praising the Soviet Union, being careful always to maintain the role of Icelandic
patriots and guardians of nationalism.
4. OTHER INFLUENTIAL GROUPS.
The Federation of Icelandic Trade and Labor Unions is a politically active and in-
fluential power in Iceland. Labor movement support of government policies is es-
sential for an effective economic program and can be obtained only with Communist
consent, since the Communists dominate the Federation.
The Federation is an association of 123 individual labor unions, whose total mem-
bership is 21,417 and thus includes well over 90% of all organized labor and 17% of
Iceland's population. Officially organized in 1916, the Federation was identified with
the Social Democrats until 1940 when Communist trade unionists began dominating
its policies. In 1944 the Communist leadership gained complete control of the Federa-
tion, and now controls two-thirds of the delegates to the Congress of the Federation
as well as completely monopolizing its executive council. While the Communists are
firmly entrenched in several of the stronger unions of the Federation, the real key to
their influence is the control of the unskilled workers' union (Dagsbrun) of Reykja-
vik. Presently the Communists have about two-thirds of the votes in this union, which,
with its membership of 3,000, controls the transportation facilities and dockworkers in
Reykjavik " and therefore is in a position to paralyze transport and supplies for the
whole of Iceland.
Communist strength in the labor movement can be attributed largely to the party's
aggressive leadership which has consistently won improved working conditions and in-
creased wages for the workers. The Social Democrats, in contrast, appear to the labor-
ing class to put political expediency before the interests of the workers.
In 1947, the Communists attempted to bring about a cabinet crisis by use of the
strike weapon. The effort failed because anticipated labor support did not material-
ize; consequently Communist prestige in the unions suffered a serious blow. Although
the unsuccessful strike did not unseat the Communists from their positions of author-
ity in the unions, the extent to which they can exploit the labor movement for political
objectives has temporarily been limited. They are still in a position to harass the
present administration by arousing labor movement opposition to wage reduction of
a deflationary program. Thus the Communist Party, through its domination of the
Icelandic labor movement, frequently holds the balance of power in party politics.
? The nation's capital and principal port of entry ?population, 51,000.
1-7
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
5. CURRENT ISSUES.
The two most significant issues in Iceland at the present time are inflation and the
US-Iceland Airport Agreement.
Inflated production costs in Iceland's fishing industry seriously restrict the sale of
fish and fish products to other countries. The consequent decline in foreign exchange
earnings is becoming increasingly serious because Icelandic economy is dependent to
an unusual degree upon foreign trade to provide the country's requirements of food,
raw materials, and manufactures. An effective anti-inflation program is essential to
an orderly restoration of economic equilibrium, but adoption of such a program is being
delayed because each political party desires to Shift the burden of the sacrifices to
groups other than those from which it receives support.
The Communists, through their domination of the Trade and Labor Federation,
hold the key to the success of any solution involving substantial reduction of wages
paid to labor. The parties represented in the present government are therefore reluc-
tant to submit a deflationary proposal for fear that Communist-inspired opposition
from the trade unions may precipitate a cabinet crisis. The anti-inflation program
adopted in December 1947 effected a slight reduction of the cost of production in the
fishing industry, which provides roughly 93% of Iceland's foreign exchange earning
power. The fishing industry, however, is still not producing exports at prices competi-
tive with those prevailing in world markets.
The United States "base" issue was largely removed from partisan politics when
the US-Iceland Airport Agreement was concluded on 7 October 1946, but the presence
of United States personnel at Keflavik Airport still exerts considerable influence on the
political scene. All changes and improvements which the Icelandic Airport Corpo-
ration ? agent of American Overseas Airlines for the operation of Keflavilc ? desires
to make at the airfield must have the prior approval of Icelandic officials. The present
cabinet members are generally favorable toward the United States and accept the
presence of United States personnel at the airport as a means of enabling Iceland to
benefit from the operation of an airport serving trans-Atlantic air routes. As the
general public is not sympathetic to the presence of foreigners, however, the Govern-
ment tries to keep the airport issue out of the news. The Communists seek to pub-
licize all airport activities in the most unfavorable light, with a resultant barrage of
accusations, denials, and counteraccusations. The Communists propagandize all
improvements and additions at the airfield as evidence that the United States does not
intend to relinquish its privileges, and they accuse the government officials of sacrificing
Iceland's sovereignty. These accusations gain the Communists considerable support
because the extreme nationalism of the Icelanders makes them resentful of foreign
personnel at an Icelandic airfield. This state of mind is intensified by enforced recog-
nition of the fact that they are unable to operate a first-class airport themselves. The
Communists are therefore able to impede implementation of the Airport Agreement
by preventing many Icelandic politicians from publicly exhibiting a cordial attitude to-
ward the United States.
SECRET 1-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
6. STABILITY OF THE PRESENT ADMINISTRATION.
The present administration cannot be considered a stable one because its continued
existence depends upon several factors beyond the administration's control.
The principal factor is a need for a deflationary program to avoid an economic
crisis, and the Communists, who are in the opposition, could probably induce a cabinet
crisis by creating labor union opposition to any deflationary program not acceptable
to them. The Communists, in addition to opposing any deflationary proposals of the
administration, are losing no opportunity to place the responsibility for the extremely
bad economic conditions upon the present government and the wealthier classes.
The parties comprising the present cabinet had considerable difficulty in formulating
a program acceptable to all three but finally agreed to exclude the Communists and to
concentrate on a program of inflation control and economic stability. This was pos-
sible only after a voluntary eclipse by the left-wing factions of the Progressive and Social
Democratic parties. The coalition thus formed was assured of 33 out of 52 possible
votes on most issues. (20 Conservative, 7 Progressive, 6 Social Democratic.)
The leaders of the left-wing factions are still capable of withdrawing their support,
forming a left-wing coalition with the Communists, and thereby probably attracting
from the remaining Progressives and Social Democrats the eight additional votes neces-
sary to unseat the present cabinet.
A major factor in the success of the present coalition is the willingness of the
Progressive Party to remain in the coalition. This the Progressives will do only until
they see an opportunity to improve their political position by withdrawing. If eco-
nomic conditions continue to deteriorate, it is therefore possible that Herman Tonasson,
strong left-wing Progressive leader, will withdraw his party's support of the government
and attempt a left coalition with the Communists and the left-wing Soeial Democrats.
Such a coalition attempt can also be initiated by the Communists who can offer labor
union support for a deflationary program in exchange for participation in the govern-
ment.
Unless the administration can adopt an effective deflationary program acceptable
to labor, the only alternative means of avoiding serious economic difficulties appears
to be financial aid from an outside source. The latter alternative, however, would
only give the administration added time in which to muster support for a deflationary
program and in Which to derive benefits from the ERP.
The likelihood that the present coalition will remain in power until the next gen-
eral election in 1950 has been definitely increased by the recent improvement in Ice-
land's economic condition resulting from the unexpectedly profitable winter herring
catch, inflation controls applied by the government, and the planned US assistance to
Europe.
1-9 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
SECTION II
ECONOMIC SITUATION
1. DEVELOPMENT OF T'HE PRESENT ECONOMIC SYSTEM.
Iceland's economy is based primarily upon its fishing industry which directly
supports about 25% of the population and produces about 90% by value of Iceland's
total exports. Sheep raising ranks second in importance, and wool, mutton, and
sheepskins comprise the only other significant exports. Iceland is dependent to an
unusual degree upon foreign trade to provide her requirements of food, raw materials,
and manufactures.
During the war Iceland's foreign exchange earnings were increased partly be-
cause of the higher prices paid for Icelandic fish but chiefly by military expenditures
by the British and US troops stationed there. The resultant abundance of easy money
caused a sharp rise in wages and purchasing power, and when the troops were with-
drawn, Iceland was left with a greatly inflated economy in support of which its foreign-
exchange earning power had not increased proportionately. The wartime accumula-
tion of foreign exchange reserves began to be expended in 1945 when the government
launched a program to expand and modernize Iceland's industry by purchasing capital
equipment abroad. Increased imports of consumer goods to satisfy the greatly in-
creased purchasing power of the general public also depleted foreign exchange balances.
Iceland's foreign exchange reserves are now so limited that extensive controls over
external purchases and internal distribution are maintained. They will remain neces-
sary until Iceland's wage and price levels are brought into line with other countries,
either through devaluation of the currency or internal deflation.
2. DESCRIPTION OF PRESENT ECONOMIC SITUATION.
a. Agriculture.
In the early Icelandic economy farming was the chief occupation, but the per-
centage of the population engaged in farming has decreased considerably in recent
years. Of the 14,650 square miles of inhabited land 92% are rough grazing grounds
and only approximately 1% are cultivated. The main agricultural regions are in
southwest Iceland near the coast, but grazing lands with some agriculture occur gen-
Sally along the entire coast and extend inland along the principal river valleys. On
account of uncertain weather conditions, soil of poor quality, and a climate unsuited
for cereal crops, most of the farm area is in pasture, and cultivation is devoted largely
to raising hay for winter feeding of livestock. Most farms have a cultivated home-
field, hay meadows, home pastures, and mountain pastures. Potatoes and turnips are
raised but not in sufficient quantities to satisfy the home market. Hothouse cultivation
of vegetables, chiefly in the areas of hot springs, has increased and is being en-
couraged ? but there is still an acute lack of fresh vegetables. Livestock production in
II-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
Iceland is concentrated on sheep, with some dairy cattle. The Scandinavian countries
and Great Britain are the principal markets for sheep products. Dairy production does
not satisfy domestic needs, although it provides relatively small amounts of cheese for
export.
Agricultural exports for 1947 totalled 18,000,000 kr. ($1,772,000). Agricultural
imports for 1947 amounted to about 48,000,000 kr. ($7,392,000) or 9% of total imports.
b. Natural Resources.
Iceland's only significant natural resources are its fishing banks, which are
among the richest in the world, and its relatively undeveloped water power potential.
There is no coal, oil or metal. Even cement must be imported. The sulphur deposits
and a deposit of Iceland spar have been exhausted. Low-grade peat is dug by the
farmers for their own domestic use and does not enter into trade channels.
The numerous hot springs in Iceland are of potential value as sources for heat-
ing buildings and of steam for low pressure steam turbines. Extensive utilization of
this potential appears unlikely because of Iceland's limited industrial development and
the improbability that foreign interests will be authorized to participate.
c. Industry.
Iceland's annual per capita output of fish is estimated to exceed 6,000 pounds,
or about four times that of Newfoundland and nine times that of Norway. More
than 25% of Iceland's total population derives its chief means of support directly
from the fisheries. An additional significant percentage is dependent on the income
from the fish canning and freezing, herring meal and oil plants.
Industrial enterprises produce almost solely for the domestic market, and their
production, inadequate to supply domestic needs, is dependent upon the importation
of all necessary raw and semi-finished materials. Manufactured goods include mar-
garine, soaps, paints and varnishes, shoes and leather goods, cloth and clothing, fish-
ing equipment, and books and other publications.
Normally Iceland accounts for about 20% of the total fish output of the ten
commercial fishery countries of northwestern Europe and about 2% of the total world
output. Before the war Iceland was the fifth most important fish-producing country
of Europe, ranking behind the United Kingdom, Norway, Germany, and France.
With the sharp decline of fishery activities by these countries during the war, Iceland
enjoyed exceptional prosperity. With the postwar recovery of the British and Nor-
wegian fisheries, however, Iceland is faced with a decline in the British dependence
on foreign fish and with heavy competition from Norway, whose fish exports in 1946
exceeded Iceland's total catch. With competition thus increasing, the fishing industry
tried to regain its prewar markets in Germany and the Mediterranean but the inability
of those countries to provide the goods that Iceland needs or to make payments with
hard currency has impeded resumption of normal trade.
The catch consists chiefly of cod, which is processed into frozen fillets and wet-
salted fish, although considerable quantities of coal-fish and haddock are also caught.
Normally there is a very important summer catch of herring along the north coast
SECRET 11-2
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
and a lesser one in spring off the southwest coast. These supply the herring oil,
currently so much in demand because of the world shortage of fats and oils.
Primarily because of the wartime wage increases, still in effect in the fishing in-
dustry, production costs are considerably above the prices for fish products in the world
markets. In order to avoid idleness among the fleet fishing for white fish and to pre-
vent a sharp reduction in wages, the government in December 1946 passed a mini-
mum fish price law guaranteeing a 30% increase in prices. Subsidy payments became
necessary and were a substantial drain on the Treasury.
The fishing industry has benefited substantially from the government's New
Construction Program initiated in 1945. New vessels were built or purchased abroad,
new gear was imported, and older trawlers and motor boats were re-equipped in order
to place the industry in a better position for competition with other countries. This
modernization cannot, however, overcome the high production costs brought about
by wartime wage increases. Consequently, the country appears to be confronted with
the necessity for wage reduction or currency devaluation.
d. Finance and Foreign Exchange Position.
The National Bank of Iceland, a state-owned institution with the exclusive
right to issue bank notes, and two other commercial banks, operate over a dozen
branches throughout the country. There are, in addition, over fifty savings banks.
The foreign exchange value of the krona has been stabilized at $0.154 since September
1939.
At the end of 1944 Iceland's foreign exchange credits totalled 562,900,000 kr.
($86,686,000), of which only 57,300,000 kr. ($8,824,000) was accounted for by the favor-
able export trade balance. The remaining $77,862,000 represented military expendi-
tures payments made by the British and American garrisons. At the end of 1944,
Iceland's dollar assets alone totalled $44 million, an amount 36 times greater than
the total value of her 1938 surplus of exports over imports. Taxable income rose
from $17.5 million in 1938 to $111 million at the end of 1945, a six-fold increase, or,
if the tripling of the price level is taken into consideration, a doubling of real income.
In January 1945, the government adopted a New Construction Program de-
signed to utilize the large foreign exchange holdings by importing capital goods to mod-
ernize and expand Iceland's industry, particularly fishing. Heavy importation of auto-
mobiles, radios, and other war-scarce goods has also contributed to the rapid utilization
of the foreign exchange accumulation. By the end of October 1947, unobligated for-
eign exchange reserves had dwindled to less than a million dollars equivalent value.
The export of Iceland's exceptionally large 1947-48 winter herring catch had increased
foreign exchange holdings to the equivalent of $1.5 million by 1 March 1948. The
National Bank recently obtained a loan of one million pounds sterling from Great
Britain in 1947 and is negotiating for an Export-Import Bank loan of approximately
$2 million.
e. International Trade.
Prior to 1940 more than 60% of Iceland's foreign trade was with Scandinavia,
central Europe, and the Mediterranean countries. When trade with those countries
11-3 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
was almost eliminated after Tune 1940, Icelandic trade shifted to the UK, Canada,
and the US. In 1940, all exports, except for cod-liver oil to the US, dried fish to Spain
and Portugal, and a small quantity of salted herring to Sweden, went to the UK.
This diversion of trade from normal channels continued through 1946 when the
USSR, with which trade had previously been almost nonexistent, showed a sudden
interest and purchased 20% of Iceland's exports to become her second largest cus-
tomer. The UK retained first place by purchasing 36% of Iceland's exports. Trade
with other European countries was again resumed on a limited scale, Italy in par-
ticular, rising to third place as a market for Icelandic exports during 1947.
Iceland's difficulties in disposing of its expensive fish products have been accen-
tuated by a poor summer herring catch for three successive years. The demand for
herring oil has been so great that Iceland has been able to command favorable prices
for frozen fillets by tying their sale to herring oil purdhases. For example, the USSR
and Britain were each promised 40% of the 1947 herring oil production, contingent
on their purchase of frozen fillets in a 3:2 proportion to the herring oil delivered.
With the herring catch about one-half the amount anticipated, Iceland was left with
over half of her fish catch in fillets and iced fish to dispose of elsewhere. In the
summer of 1947 the US arranged for purchase of fish under its Mediterranean relief
program. A favorable development toward the end of 1947 was the agreement in
principle by the United States and the United Kingdom to purchase with sterling
substantial quantities of Icelandic fish for shipment to the bizonal area of Germany.
Prices are, however, to be established at the open market level prevailing in England
for comparable qualities. The exceptionally large catch of herring during the winter
of 1947-48 provided a greatly increased export surplus of herring and herring oil.
This herring was caught off the west coast, however, abnormally far from the proc-
essing plants located on the north coast so added transportation further increased the
already excessive production costs.
f. Cooperative Societies and State Monopolies.
The Federation of Icelandic Cooperative Societies is the largest single business
concern in Iceland. It controls between 80 and 90% of the total export of agricul-
tural products, about 90% of the total meat export (including the entire export of
frozen mutton), and 80% of the wool export. It has not penetrated the fish export
business. It handles about 20% of the total imports, including most of the agricultural
machinery.
State monopolies are another distinctive feature of Iceland's economy. State
monopolies currently import some of the indispensable commodities, including to-
bacco, liquor, radios and radio parts, fertilizers, vegetables, and drugs.
3. ECONOMIC STABILITY.
Prior to the war, economic stability in Iceland was maintained because the
standard of living was firmly based on the earning power of Iceland's exports, a bal-
ance being maintained through government control of imports. Wartime conditions
destroyed this equilibrium.
SECRET 11-4
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
C',
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
A return to economic stability is contingent upon a return to a considerably lower
living standard supportable by Icelandic foreign trade. The basic problem arises from
the inflated production costs of the Icelandic fish industry, in the face of renewed
foreign competition and falling world prices for fish.
Opposition to wage reduction, led by the Communists who control the labor move-
ment, is an important deterrent to effective deflationary legislation. Recent meas-
ures taken to increase government revenues and to absorb excessive purchasing power
include a capital levy and a sales tax, as well as the abandonment of consumer subsidies.
11-5 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
0
SECRET
SECTION III
FOREIGN AFFAIRS
1. GENESIS OF ICELAND'S FOREIGN POLICY.
Iceland's foreign policy has been developing only since 1941 because prior to that
time its foreign affairs were conducted by Denmark. The effective period is even
shorter considering the fact that Iceland was practically isolated during the war
except for contact with the United States and Great Britain and that its trade was
governed, not by choice, but by circumstances beyond her control.
Iceland's foreign policy is compounded of these basic factors: a struggle for
national survival, a desire to minimize foreign attention resulting from the island's
newly acquired strategic importance, a complete lack of armed forces or any military
potential, and the economic necessity of acquiring suitable markets for fish exports.
Preference for any one of the major powers or any political orientation is confused
by the necessity of reconciling these usually divergent factors. Icelanders who desire
to avoid "Americanization" and who oppose Communism may seek closer connec-
tions with Scandinavia; merchants, for economic reasons, desire collaboration with
the United States or England, while the fishing interests look to Britain and the
USSR.
2. SIGNIFICANT RELATIONS WITH OTHER NATIONS.
a. United States.
Icelandic relations with the US are significantly influenced by Iceland's policy
of "neutrality" between East and West, by fear of "Americanization", and a deter-
mination not to become a military base of the US.
Under an agreement of July 1941, US forces entered Iceland to protect the coun-
try and Allied shipping routes in the North Atlantic. The US took over this responsi-
bility from the British, who had landed in 1940, and agreed to occupy until "the
end of the war." After hostilities with Germany ceased, the US, in October 1945,
negotiated with Iceland for a long-term lease of two air bases and one naval base
which had been constructed by the occupying forces. The proposal was made public
in April 1946, when the Icelandic Prime Minister announced that Iceland could not
consider such an arrangement. The announcement increased an already awakened
antagonism for the Americans, and the Icelanders considered such a request for
bases an infringement of their sovereignty. The United States then invoked the
clause "end of the war" and, maintaining that the war was not officially ended,
continued to operate Meeks Field. About 1,000 of the original 50,000 men stationed
in Iceland remained. A new proposal was submitted to the Icelanders, and on 7
October 1946 the US-Iceland Airport Agreement was signed whereby Meeks Field
(at Keflavik) was transferred to the government of Iceland, and Iceland granted the
III-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
US landing rights there. The US was granted permission to operate the technical
facilities of the airfield and to provide the technical personnel necessary to maintain
the field as an international airport for a minimum of 61/2 years in order to fulfill "US
obligations to maintain control agencies in Germany." American Overseas Airlines,
through its subsidiary, the Icelandic Airport Corporation, is designated as the agent
of the US in the operation of the field. The last of the United States armed forces
were withdrawn in April 1947.
US operation of the facilities at the Icelandic-owned field continues to present
many technical difficulties which cloud the friendliness of US-Icelandic relations.
Icelanders, in their trepidation of harboring a military base, or even an "American
air base," question every improvement involving the use of American personnel and
material. Propaganda in the Communist press keeps this fear constantly before the
public, with most officials and politicians reluctant to display any cooperation which
could be labelled pro-American.
One exception to the general rule is Foreign Minister Benediktsson (Conserva-
tive) who is outspoken in his anti-Communism and pro-Americanism. He has been ex-
tremely cooperative in attempting to alleviate the difficulties involved in the imple-
mentation of the airport agreement and is anxious to promote closer US-Icelandic rela-
tions. Present US efforts to aid Iceland's economy (projected ERP aid and the promo-
tion of the UK-Icelandic arrangement for the sale of Iceland's fish for consumption in
the Western occupied zones of Germany) may help to improve relations.
b. Scandinavian Countries.
Iceland is considered one of the Scandinavian countries by virtue of racial
origin, cultural heritage, and close association with both Norway and Denmark. Not
being absolutely sovereign prior to the war, Iceland was not a member of the Oslo
States. The country is now participating, however, in Nordic ministers' meetings
which endeavor to formulate a unified and cooperative policy for the Scandinavian
countries in international organizations, and is consulting with the other Scandina-
vian countries concerning closer economic collaboration and the possibility of a
Scandinavian customs union. Iceland is eager to develop closer relations with Nor-
way, Sweden, and Denmark, but in addition to Iceland's nationalism and jealousy
of sovereignty the competitive nature of their economies imposes added obstacles.
Iceland is resentful of any moves by the other Scandinavian countries which appear
dominating or dictatorial.
Iceland considers itself closer to Norway than to Denmark or Sweden. In re-
cent Nordic ministers' meetings the Icelandic spokesmen aligned themselves with the
Norwegians to urge the Swedish and Danish governments to adopt a strong anti-
Communist program. Iceland's Foreign Minister is extremely critical of Swedish
Foreign Minister Unden's neutrality policy.
c. The United Kingdom.
Iceland's ties with the UK are principally economic, and since 1939 the UK
has purchased the major part of Iceland's exports. Iceland's inability to secure re-
SECRET 111-2
Declassified and Approved For Release 2013/01/30 : CIA-R DP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
quired imports from the sterling area because of shortages of available goods, a re-
covery of the British fishing industry, and a rapid decline in Iceland's sterling reserves
have hampered recent trade relations. In negotiations over the purchase of fish for
the US-UK occupied zones of Germany, Icelandic officials have been fearful of hard
bargains that would be asked by the British. Earlier trade 'negotiations between the
UK and Iceland have resulted in mutually aeceptable terms, but in the future, as
Iceland's herring oil becomes less important because of improvement of the world
fat situation, the Icelanders probably will find it increasingly difficult to compete in
the UK markets unless Icelandic fish prices are reduced to a competitive level.
d. USSR.
Icelandic relations with the USSR were practically nonexistent until Jan-
uary 1944 when an agreement was signed for the first exchange of diplomatic repre-
sentatives. Iceland's present day strategic importance attracted increasing Soviet
attention, and in 1946, just one month before the Icelandic parliamentary elections,
the USSR offered an Icelandic trade delegation a proposal more favorable than even
the most optimistic Icelander could have hoped for. The prices offered were higher
than any obtainable elsewhere; the commodities to be exchanged gave Iceland a pos-
sible favorable trade balance of almost $10 million which, as an added inducement,
was payable promptly in US dollars.
In October 1946, just a few days after conclusion of the US-Iceland Airport
Agreement, the Icelandic Minister for Fisheries (Communist) announced that he
had been negotiating with the Soviet Commercial Attach?or the sale of Iceland's
entire anticipated 1947 production of fish and fish products at prices even higher
than those paid during 1946. Shortly after the Communist withdrawal from the
cabinet in protest against the Airport Agreement, the Soviet Commercial Attach?
and his purported trade offer returned to the USSR. An Icelandic trade delegation
subsequently spent four months of frustrating negotiations with the Soviets for a
1947 trade agreement which was finally concluded, this time immediately following
the announcement of a UK-Iceland trade agreement.
The political implications of these postwar trade agreements become even more
apparent when a comparison is made with prewar USSR-Iceland trade. The total
trade for the sixteen-year period 1930-45 amounted to only 3% of the trade for 1946
alone. Further indication of Soviet interest in Iceland is the increase in Legation
personnel at Reykjavik.
There has been no reported demand by the Soviets for privileges in Iceland com-
parable to those afforded the United States, but Iceland's fear of such a demand is
apparent in the conduct of its foreign affairs.
e. International Organizations.
Iceland's participation in international organizations is predicated largely
upon national rather than international considerations. Participation in the Paris
Conference for discussion of European recovery was considered an excellent oppor-
tunity to remind the nations gathered in Paris that Iceland had fish for sale. Ice-
111-3 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
land viewed this conference as a good thing for Western Europe but actually of little
or no consequence to Iceland itself.
In July 1946 Iceland applied for admission to the United Nations and was ad-
mitted to membership in November 1946. The head of the Icelandic delegation to the
General Assembly is Thor Thors, Minister to the United States. Iceland has not been
represented on any of the UN commissions to date. Iceland's membership in inter-
national organizations extends also to the ILO, FAO, IRO, ITO, ICAO, and the
International Bank and Monetary Fund.
SECRET 1114
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
SECTION IV
MILITARY SITUATION
Iceland has no military, naval or air forces and has declared itself permanently
neutral. The constitution provides that service for the defense of the country can
be made mandatory on every man capable of bearing arms, but supporting legislation
has not been enacted.
Internal order is maintained by a police organization responsible to the Minister
of Justice. Its present strength is about 100 uniformed policemen, most of whom
are used to preserve order and direct traffic in Reykjavik.
Iceland has no forces to resist aggression, and the sparsity of population makes
it highly improbable that any organized underground resistance would be formed in
the case of occupation by a hostile power.
INT-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
o
o
o
SECRET
SECTION V
STRATEGIC CONSIDERATIONS AFFECTING US SECURITY
The importance of Iceland, from the point of view of US security, lies in its
strategic location and in its possession of two well developed airfields suitable for
use by long-range aircraft. Under hostile control, Iceland would serve as a base
for the interdiction of North Atlantic shipping routes and for one-way air attack
on installations in all of the US except possibly the extreme southwest area. Con-
versely, if cooperative and secure, Iceland would be of great value as a US base for
the protection of North Atlantic shipping, air transit to northwestern Europe, and
long-range air operations over Europe.
Iceland's indigenous military potential is insignificant. Its only economic signifi-
cance lies in the relatively minor importance of the Icelandic fisheries as a source of
food for Western Europe,
V-I SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
SECTION VI
PROBABLE FUTURE DEVELOPMENTS AFFECTING US SECURITY
The impact of Iceland's newly acquired strategic importance upon the country's
insularity and traditionally intense nationalism is expected to promote the pro-
Western tendencies already evident in the present coalition government. The gov-
ernment's stability, although uncertain at its inception, has improved and the con-
tinuing benefits to Iceland's economy from the economic recovery of Western Europe
and from the ERP may well enable the present coalition to remain in power until the
next general election in 1950. The Communists, whose bargaining position was strong
when the present government was formed early in 1947, subsequently have suffered
severe setbacks as well as perceptible loss of popularity. Their influence in the labor
unions may be further weakened by a continuing improvement in Iceland's economic
position. This trend combined with the cooperative viewpoint of a few influential
members of the Icelandic government definitely limits Communist capabilities for
obstructing the implementation of the Airport Agreement and consequently of deny-
ing to the United States the advantages of Iceland's strategic location.
VI-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
APPENDIX A
TOPOGRAPHY AND CLIMATE
Iceland lies in the North Atlantic approximately 200 miles southeast of Green-
land and 600 miles west of Norway, with its northernmost point at the Arctic Circle.
It has an area of 40,437 square miles; the greatest length of the island is about 300
miles east and west and the greatest width is about 200 miles from north to south.
Geologically, Iceland is an unfinished country because it is frequently being added
to by outpourings of lava and volcanic ashes.
The name Iceland is a misnomer because only about one-eighth of the surface
is covered by ice. The surface is largely a bleak, rugged upland averaging 2,000 to
3,000 feet above sea level with numerous peaks and volcanoes rising to 4-5,500 feet.
Around this upland are narrow borders of rugged coastal land, valleys leading into
the interior and a few small low areas in the south and west. The coast varies from
the deeply indented fjord coast of the east, north and west to the low, sandy, surf-
beaten south shore.
Iceland's glaciers, melting snow, and high rainfall produce extensive runoff, and
the rivers are consequently numerous. The rivers are for the most part unnavigable
because of their steep fall, but they are potentially useful for waterpower development.
Hot springs and geysers are spread over a larger area, and their activity is more
intense in Iceland than anywhere else in the world. The waters vary in temperature
up to two or three degrees above boiling point and constitute a virtually inexhaustible
store of energy.
Only a small part of Iceland is covered with a continuous carpet of vegetation.
Forests, which existed in Iceland at the time of the first settlements, were thought-
lessly used up and the consequent denuding exposed the loose soil to the wind, leav-
ing only gravel and lava on which no new vegetation could grow. Scrub growths
of birch, dwarf willows, and mountain ash now exist only in the more favorable areas.
The government is sponsoring a reforestation program but progress is difficult because
of the extremely unfavorable soil conditions.
The climate is tempered by the North Atlantic drift and affected by the arrival
or nonarrival of drift ice along the north and east coasts. The climate is prevail-
ingly very damp, relative humidity averaging about 8070 throughout the year. Air tem-
peratures can be characterized as mild in winter and cool in summer. The mean
annual range of temperatures for seven stations recorded over a forty-seven-year
period is 53? F, the mean annual extremes for the coastal stations included above being
70? and 3? F. The climate of the interior is more extreme.
Iceland does not experience the long Arctic nights, the shortest winter day hav-
ing more than 2? hours of daylight.
A-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
APPENDIX B
SIGNIFICANT COMMUNICATIONS FACILITIES
Communications facilities in Iceland are relatively undeveloped because of the
sparsity of the population and the great physical contrasts which exist within the
island. Icelandic transport falls mainly into three categories: (1) land transport
along the coast and across the coastal plains; (2) sea transport around the island
and to foreign countries; and (3) air transport.
Road transport in Iceland is a comparatively recent development. Prior to 1900
there were very few bridges, and wheeled vehicles were almost unknown. All inland
transport was by pack horses over bridle paths. Construction of bridges and roads
was undertaken about 1900, and at the present time the road net is approximately
3,000 miles in length of which, however, only a few short stretches are suitable for
two-way traffic. Except for some of the roads in the coastal regions of the western
half of the island, few can be considered suitable for conventional motor vehicles, and
of those only a limited few are passable from October to early May. The Icelandic
pony is, therefore, the chief means of land transportation.
Sea transport around the island is limited by the lack of adequate harbors along
a large part of the coast. Coastal steamers are forced to anchor at a distance off-
shore while passengers and freight are transferred in rowboats. Limited port fa-
cilities are available at many of the coastal towns and cities, but the harbors are
either too small or too shallow to accommodate large merchant vessels or naval ships.
Good anchorages, however, exist outside several of the harbors.
Air transport in Iceland is not extensively developed because funds and manpower
are limited. The two domestic air lines, Iceland Airways, Ltd., and Skyways, Ltd., have
expanded domestic operations since the war, and scheduled flights are operated between
Reykjavik and Copenhagen via Prestwick, Scotland.
Meeks Field near Keflavik, the largest airfield in Iceland, which is operated by
US and Icelandic personnel, is now being used by international civil air lines. It
has four runways exceeding 6,000 feet in length, complete weather service, and radio
aids. Night landings are made frequently. Continued operation is contingent upon
considerable outside aid because Iceland has neither financial resources nor technically
trained personnel adequate to fulfill its commitments under ICAO requirements.
B-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
cr" APPENDIX C
POPULATION: STATISTICS, CHARACERISTICS, AND INSTITUTIONS
The population of Iceland as of 31 December 1946 is estimated at 133,000. Since
1880 the population has grown steadily with the greatest increase occurring since
1920 (35.9% from 1920-44). The growth is due almost entirely to the excess of births
over deaths. In 1944 the birth rate was 25.1 per 1,000 compared with a death rate
of 9.4.
The population is concentrated in the villages and towns on the periphery of
the island, chiefly in the west and southwest sectors. With three-fifths of the total
land area uninhabitable, the effective population density of the island is 3.16 per
square mile, the lowest in any European country. An upward trend in the rural to
urban population shift has accompanied the change from a predominantly farming
economy to one where fishing and fish processing are the major industries. Whereas in
1920 the rural areas were settled by some 54,000, or 58% of the inhabitants, the shift to-
wards towns and cities has reversed the rural predominance so that of the 1944 popula-
tion only 36% lived in rural areas.
Iceland is one of the most racially pure countries in Europe. In 1940, of the
1,158 foreigners on the island only 58 were non-Scandinavian. The basic Icelandic
stock is Scandinavian, chiefly Norwegian. Minor Celtic and Scottish strains were
introduced in the early immigrations, and there are some identifiable Armenian and
Mediterranean racial types. The average Icelander is tall, light-eyed and fair com-
plexioned. Stubbornness and argumentativeness are recognizable characteristics of
the Icelandic temperament, which is predominantly gentle, and kindhearted. Ex-
treme patriotism from which has sprung uncompromising nationalism is a charac-
teristic of the Icelanders as a people.
The Icelandic language is described as 10th century Scandinavian or Old Norse
which has been preserved almost unchanged from the early settlers. No dialectic
variations occur and few international terms for new ideas or scientific developments
are incorporated in the language.
Universal compulsory education in Iceland dates from 1907 and has been ex-
tended so that schooling is now compulsory for all children from 7 to 14 years old.
Although elementary education is free and the system has been expanded in the
past two decades, the difficulties of transportation are a limiting factor in extending
educational facilities to the rural and outlying fishing districts.
Compulsory education ends with the elementary schools. There are district sec-
ondary schools, subsidized by the state, which prepare students for admission to various
technical schools or the University of Iceland. The state-owned technical schools in-
clude a teachers college, a nautical school, marine and electrical engineering school,
agricultural schools, and nurses training schools. The University of Iceland has five
colleges ? Theology, Medicine, Law, Philosophy, and Research.
C-1. SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
Illiteracy is rare in Iceland and there is a great emphasis placed on intellectual
pursuits. Proportionate to the population the number of books published in Iceland
far exceeds that in the US, and there is an extensive daily and weekly press. The
daily press is limited to Reykjavik. All the newspapers in Iceland are associated with
the political parties. Latest figures indicate about 1 in every 4 persons on the island
owns a radio receiving set. Radio broadcasting is a monopoly of the government which
operates Radio Reykjavik, the sole station, through the Ministry of Education.
Iceland adopted the Christian faith as a state religion by parliamentary decree
in the year 1060. It is a Protestant country and 98% of the people are members of
the Lutheran Church. The Evangelical Lutheran Church is established by the con-
stitution as the national church with a single bishopric in Reykjavik. Of the 2,859
persons who were not members of the Lutheran Church in 1940 less than half were
members of other churches, principally Adventist and Roman Catholic. Full religious
liberty has existed in Iceland for over 50 years. Although the Lutheran Church is
the national church, no one is required to contribute to its support if not subscribing
to its faith.
SECRET C-2
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
/
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
APPENDIX D
SIGNIFICANT PERSONALITIES
BJORNSSON, SVEMN : President of Iceland.
Date of birth: 27 February 1881.
Education: Law degree from University of Iceland.
Career: Supreme Court Lawyer ? 1907-20; Member of Althing 1914-16, and 1919-
20; Icelandic Minister to Denmark 1920-24, 1926-40; Regent of Iceland (elected)
1941-44.
Remarks: Elected for the Presidency by the Althing in 1944, Bjemsson, unopposed
as a nominee for popular election, was named President by acclamation in July 1945
and was unopposed in 1946 for a succeeding 4-year term.
Experienced in international relations, he is regarded as a prudent and judicious
arbitrator. While considered the only nonpartisan political leader in the country,
he was opposed in his first election by all the Communist Althing members and a
few Conservative and Progressive members. There is no question of his popularity
with the people in whom he seems to inspire great confidence.
He speaks English, French, and German, in addition to the Scandinavian languages.
His attitude toward the US is very friendly. Bjernsson visited the US in 1944 on the
invitation of President Roosevelt.
BENEDIKTSSON, BJARNI: Minister of Foreign Affairs and Minister of Justice.
Date of birth: 30 April 1908.
Education: University of Reykjavik, Law degree 1930; Graduate studies ? Berlin
University 1930-32; Speaks English and German.
Political affiliation: Conservative Party.
Career: Conservative Party Committee Member 1936 to date; Mayor of Reykjavik ?
1940-47; Member of Althing ? 1942 to date; Delegate to UN General Assembly, 1946.
Remarks: Benediktsson is regarded as one of the most influential men in the
Conservative Party. He is described as an extremely capable young man, an astute
politician, and clear thinker. In his first years as Mayor he initiated a policy of
collaboration with the Communists, but he is said to have become fully alive to the
Communist danger. Immediately after the announcement of his appointment as
a delegate to the United Nations, he was attacked by the Reykjavik Communist press
as being an agent of the United States and therefore not trustworthy as an Icelandic
representative.
Since his appointment as Foreign Minister, Mr. Benediktsson, in speeches before
the Althing and in a series of newspaper articles, has castigated the activities of the
Communist Party. His efforts in this direction have been so strong that a few of the
more cautious members of the Conservative Party are reported to have suggested that
he adopt a more circumspect tone lest his writings jeopardize any chances for Con-
D-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
servative-Communist collaboration in future cabinets. Although a protege of Olafur
Thors, Benediktsson appears to have joined the right-wing Conservative faction, vio-
lently opposed to Thors' policy of Communist collaboration.
He has made every effort to alleviate difficulties in the implementation of the Air-
port Agreement and to promote closer and better US-Icelandic relations. Recently
he made mention to the US Charg?f the desirability of extending the agreement past
its initial duration.
THORS, OLAFUR: Leader of the Conservative Party; member of delegation to UN
General Assembly.
Date of birth: 19 January 1892.
Political affiliation: Conservative Party?which he dominates.
Career: Member of Althing 1926 to date. Minister of Justice 1932-39. Minister
of Foreign Affairs 1939-42. Prime Minister 1942, 1944-47 (also Foreign Minister).
Remarks: Olaf ur Thors is the outstanding personality among the small group of
politicians whose personal relationships contribute as much to the complexion of Ice-
landic politics as do the clash of political ideas. Thors is the head of the Conservative
Party and the head of the Thors family, which controls a large part of the country's
shipping and processing industries. He also controls the Reykjavik daily morning
newspaper, which reputedly has the largest circulation in Iceland. Until recently
Olafur Thors' domination of the Conservatives was almost undisputed, but his program
of collaboration with the Communists has evoked strong criticism from right-wing
anti-Communist Conservatives. Bitter personal and political enmity between Olafur
Thors and Herman Jonasson, leader of the Progressive Party, has consistently been
an obstacle to Progressive-Conservative cooperation, which otherwise would be feasible
on the basis of party interests. It is believed that Olafur Thors entertains ambitions of
becoming President of Iceland.
As Prime Minister of the coalition cabinet formed in 1942 Thors succeeded, by
adept juggling and finesse, in holding together the warring elements of his own party
as well as the rival parties participating in the government. He is the most seasoned
politician in Iceland.
Throughout his tenure of office he showed himself to be definitely favorable to the
US, finally losing control of the government after forcing through the US-Iceland
Airport Agreement. Extremely nationalistic and chauvinistic, however, Thors is in-
clined to be very resentful of any indications of domination or attempts by a foreign
government to influence Icelandic affairs. Olafur works closely with his brother,
Thor Thors, Icelandic Minister to the US, whose pro-Americanism is frequently demon-
strated. While exceedingly opportunistic, Olafur is not likely to change his Western
orientation.
STEFANSSON, STEFAN JOHANN: Prime Minister and Minister of Social Affairs; Chair-
man of Social Democratic Party.
Date of Birth: 20 July 1894.
Education: Law degree, University of Reykjavik 1922.
SECRET D-2
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
Career: Member of Althing 1934 to date; President of Federation of Icelandic Trade
and Labor Unions 1938-40; Foreign Minister and Minister of Social Affairs, 1939-42.
Remarks: In January, when Thors failed to form a government, President Bjornsson
chose Stefansson, although the Progressives and Communists had larger Althing
representation, to form a cabinet. A right-wing Social Democrat, Stefansson was able
to reach an agreement with right-wing Progressives and Conservatives and form the
present anti-Communist cabinet in February 1947.
Internationally he is a strong supporter of the UN and favors closer relations with
the UK and Scandinavia. He voted for the Airport Agreement and is said to be favor-
ably inclined toward the US.
Domestically he is a strong parliamentarian of the right wing (dominant wing)
of the Social Democratic party. Stefansson is active in espousing the cause of or-
ganized labor and favors enlarging the sphere of government ownership. A violent
anti-Communist, and persona non grata to the Communists, he is acceptable to both
the Progressives and Conservatives on whom he exerts a mediating and stabilizing in-
fluence. He is one of the few Icelandic politicians without violent personal or political
enemies.
TONASSON, HERMAN: Progressive member of Althing; Member of Iceland Delegation
to UNGA 1947.
Date of birth: 25 December 1896.
Education: University of Reykjavik, Law degree 1924; Speaks English, German,
and Danish.
Political affiliation: Chairman of Progressive Party.
Career: Chief of Police, Reykjavik 1929-33; Prime Minister 1934-42; Member of
Althing 1934 to date; Member of Althing Foreign Affairs Committee, 1944 to date.
Remarks: Herman Jonasson has been the leader of the Progressive Party since
1942. He controls the left-wing group which is not giving its full support to supporting
the government but he has given his consent to participation by the moderate and
right-wing factions under the leadership of Eysteinn Jonsson. Although voting against
the Airport Agreement, it is believed that Jonasson is anti-Communist but politically
radical and opportunistic. He has recently made protestations of extreme anti-Com-
munist feeling to US Legation officials. However, his political ambition is very great
and ambition again to become Prime Minister might lead him to strike a bargain with
the Communist Party for formation of a Progressive-Communist coalition under his
leadership. His personal feud with Olafur Thors, although now showing definite signs
of abatement, has been the chief obstacle to a Conservative-Progressive coalition. Of
the 13 Progressives in the Althing 6 are supporters of Herman Jonasson. There are
some indications that his power in the party may be declining and that Eysteinn
Jonsson may oust him as leader.
Although favorably inclined toward the US, political opportunism is more likely
to influence his action than any idealistic convictions.
D-3 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
BJARNASSON, BRYNJOLFUR: Chairman of the Executive Committee of the Communist
Party.
Date of birth: 26 May 1898.
Education: Bachelor's degree, University of Copenhagen 1919; studied in Berlin
1923-24.
Career: Member of Althing 1942 to date; Minister of Education 1944-47.
Remarks: Although not the leader of the Communist Party in Iceland, Bjarnasson
is reliably reported to be the most powerful member in the party. A teacher by pro-
fession, he is the leader of the intellectual Communists who dominate the party. Po-
litically he is said to be ruthless, fanatical, and willing to sacrifice for party ideals.
He is a great admirer of the Communist system with which he became personally
familiar on two trips to the USSR prior to 1942. In all probability his faith in the
Communist system and his admiration of Russian methods dominate his views on
Icelandic foreign policy.
He is anti-US, voted against the Airport Agreement, and constantly attacks Foreign
Minister Benediktsson and ex-Prime Minister Thors as traitors to Iceland because of
their support of the Agreement.
SECRET D-4
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
SECRET
APPENDIX E
CHRONOLOGY OF SIGNIFICANT EVENTS
930 ?First Icelandic Republic established.
1000 ? Christianity adopted by Parliamentary Decree.
1262 ? The Republic ended when Iceland's Althing swore allegiance to the Norwegian
king.
1534 ?Danish king acquired control of Iceland from Norway.
1602 ?King Kristian IV of Denmark granted a monopoly of Icelandic trade to three
Danish towns.
1662 ? Icelanders swore allegiance to King Frederik of Denmark as absolute ruler of
Iceland.
1787 ? Free trade with Iceland reopened to all subjects of the kings of Norway and
Denmark.
1843 ? Iceland's Althing revived by Danish king.
1874 ? A constitution granted to Iceland.
1915 ? Constitution revised?suffrage granted to all men and women above 25 years.
1918? Act of Union came into force whereby Iceland became an independent state,
united with Denmark under a common king.
1940 ? (10 April) Parliamentary resolution placed the authority of the King in the.
hands of the Icelandic Government.
1940? (10 May) British forces landed in Iceland.
1941? (17 June) Sveinn Bjarnsson elected regent and vested with virtual royal
authority.
1941 ? (July) US-Iceland Defense Agreement approved by the Althing. US Forces
replaced the British.
1944 ? Dissolution of the Act of Union. Iceland became an independent sovereign
nation.
1944 ? Sveinn Bj6rnsson elected first President of the Icelandic Republic.
1946 ? (7 Oct) US-Iceland Airport Agreement approved.
1946 ? (November) Iceland admitted as a member of the UN.
1947? (April) Remaining US troops of the Iceland garrison withdrawn.
E-1 SECRET
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
10789
4 22
?
16 14
\
.,,,,41r. ?4-0/ ? 4
t4 .
I....
4 ... )..
?-?
i ?
?
4
4
' cir
. ? i-??? NE` *sine
I :I 'Sl'A. . .1.X-i s-
V NT
W
IUA
? -
t.it.?
a
r.<
,I,
s?,af4.
S.J..
? N
o
41
i e
? Vfta 11.
-, ? ?
'
ea
i ? 1
it
a.
_ 1
/
trj
..
we
.?
.'!!i-'
At,. v ,
?
?or ....
.
wr..._
I-.-,
ICELAND
Ice Field
SOURCE: Map of Iceland. 1:1.000,C00. Publ shed by the
Geodetic Institute Copenhagen and Reyklav I q .0.0
WES Grassland (or Meadow) and Bog
Auto Road (Passable in
summer)
Pack Trait
-- ----- Foot Path
Airfield
Scale 1-1:660.000
0 10 20 30 40 50
.4 I-' t 7 1- -2._ a
Miles
0 10 20 30 40 50
-Ik
Kilometers
24 ' '
Map Branch. CIA
:0789 October 1947
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
U S Government Printing Office -S
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
10814
160
180
\ rip oputrOARtES
The nternabonal boundaries shown on this
map do not necessarily correspond in all
cases to the boundaries recognized by the
U.S Government
V.
160
140
4{1%4
? Lip
PHILIPPIN lir/
IS.
/-?
E.-A N
e?C
20
140( Cn 00
)
1"
( ,....r1/4
..." ....-/ 0
--._?"1/4
1.
--.... ?
C.
\ 1"
swilim?ww. \
i 9
t i
c,
I-
i
..... -.. ......:-LP .-.....NH..?
..-- . a t. r ?
N.
120 ..--1....?..... 80
re.
L. 1
C .N.
t.t ....7
i. 17
\ fr
. x
? 1'
100 I.
NORTH POLE
80
60
lc 51-?!.:'0
? /
SP GU .*N*
40
20
.--nsr 0 CAST-H.
60
40
20
Map Branch. CIA
10814 October 1947
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001 -8
U.S Government Printing Office-5
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
STRIBUTION
le President
tief of Staff to the Commander-in-Chief
cretary of Defense
ecutive Secretary, National Security Council
airman, National Security Resources Board
cretary, Research and Development Board
partment of State
partment of the Army
partment of the Navy
partment of the Air Force
Dmic Energy Commission
int Chiefs of Staff
kte-Army-Navy-Air Force Coordinating Committee
Int Intelligence Group
fTh
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8
U. B. GOVERNMENT PRINTING OFFICE
MEM-N-1948
Declassified and Approved For Release 2013/01/30 : CIA-RDP78-01617A001500060001-8