OCB files, lot 62 D 430, “Iceland, 1953–1954”

No. 706
Memorandum by the Operations Coordinating Board Working Group on Iceland to the Board Assistants of the Operations Coordinating Board

top secret

Progress Report on NSC 54261


(Policy approved by the President, July 23, 1954)

(Period covered: July 23–November 15, 1954)

a. summary of major actions

1. The period under review has been too brief to have provided time enough for full-scale implementation of all courses of action contained in NSC 5426 or to allow exhaustive evaluation of actions taken. However, each Course of Action set forth in NSC 5426 has been closely observed and where possible acted upon.

Department of Defense

2. That the U.S.–Icelandic Defense Agreement of 1951 has been interpreted in “the broad spirit of the supplementary understandings of 1954” is evident in the fact that working relationships between the Icelandic Government and the Iceland Defense Force at every level has been more satisfactory during the past half year than in the preceding period.

3. A system of trophospheric scatter technique for primary communications for AC&W in Iceland was approved during the reporting period. A major consideration in the selection of this system was the provisional and nationalistic sensibilities of the Iceland people towards U.S. personnel and facilities in Iceland. The new system reduces real estate requirements for communications stations from 25 to 5 and eliminates 168 additional personnel spaces. Monetary savings also accrue to the U.S. and it is believed the new system will meet AC&W needs.

4. The number of U.S. civilian laborers employed by U.S. contractors in Iceland was only 752 as of October 1954. Icelandic personnel employed by U.S. contractors has increased from 1432 in June to 1849 in October.

5. The Commander, Icelandic Defense Force, has been authorized to utilize U.S. equipment and supervisory personnel to assist the [Page 1543] local communities of Hafnarfjordur and Keflavik in the repair of off-base roads. The present U.S. prime contractor has indicated its willingness to furnish labor and material at cost as a good will gesture towards the off-base road project. It has been suggested that the Commander, Area Engineer and contractor take advantage of these actions by appropriate publicity indicating U.S. and Icelandic cooperation.

6. In compliance with the supplementary understandings, fencing and an access road have been approved for security of the military area.

7. In an effort to promote harmonious relationships with the Icelanders, U.S. military personnel armed with rifles and machine guns accompanied Icelandic fishermen in small boats and in one morning destroyed a pack of approximately 100 killer whales.

Foreign Operations Administration

8. During the period under review $300,000 was made available by FOA to finance the dollar costs of a construction training program for Icelanders. This program was provided for in the recent modification of the U.S. base agreement; its purpose is to provide an adequate supply of Icelandic labor for Icelandic Defense Forces construction projects. The program consists of the training of Icelandic construction workers on projects in Iceland, as well as in schools in the U.S. Local currency costs of the program are being borne by the Icelandic Government.

9. The first teams of Icelanders, totalling 18 men, arrived in the U.S. during September and October 1954. These individuals will be trained either in heavy equipment maintenance, airfield construction, spare parts supply, and foreman training. Approximately thirty more Icelanders will arrive during December to be trained in other specialized construction functions. By and large the groups coming to the U.S. will serve as trainers and supervisors of Icelandic workers on-the-job in Iceland.

10. The program is also going forward in Iceland, where projects designed to train workmen are now in process. FOA has sent a Technical Assistance Officer to Reykjavik to coordinate the program, and an Army Engineers’ officer has been assigned to the program as a Construction Training Officer at the Keflavik base.

11. FOA missions in Madrid and Rome have been requested to encourage the purchase of Icelandic fish by Spain and Italy.

12. Mr. Matthias Thorfinnson, a Minnesota 4–H Club leader, spent six months in Iceland under FOA auspices. He travelled widely and succeeded in giving the 4–H movement in Iceland much needed impetus.

[Page 1544]

United States Information Agency

13. New film titles, publications, and timely press materials were provided in support of cultural and informational projects. Close working relations were maintained by the United States Information Service in Iceland with representatives of the U.S. Icelandic Defense Force, the American Legation, and the Foreign Operations Administration in the planning and exploitation of cooperative propaganda campaigns to reduce anti-American, anti-NATO sentiment in Iceland. (See Annex A for detailed statement of USIA activities.2)

Department of State

14. In August 1954, Embassy London was instructed to approach the British Foreign Office and discuss the necessity of opening markets in Western Europe to Icelandic fish and to express U.S. apprehension at the growing complacency and disinterest in NATO among Icelanders, with a view to eliciting from the British a reaction which might lead them to seek a solution of the current trade dispute between Iceland and the United Kingdom. Iceland’s growing dependence on trade with the USSR was pointed out. The British stated their willingness to submit the matter to ICT but reiterated the inability of the British Government to force British trawler interests to cease boycotting the landing of Icelandic fish. Lately we have been informed that as soon as the Faroes Parliament approves a UK–Danish agreement in a similar fishery waters problem, the British will approach Iceland in an effort to work out a solution along similar lines.

15. The reaction in Iceland has been most favorable to the President’s rejection on July 7 of the U.S. Tariff Commission’s recommendation for the imposition of higher duties and absolute quotas on the importation of frozen groundfish fillets. The President’s action avoided what would otherwise have been a most difficult situation, with far-reaching adverse consequences to U.S. interests. We are continuing our efforts to open the U.S. market to the importation of shellfish by simplifying import sanitary regulations.

. . . . . . .

18. During the period under review four U.S. “specialists” visited Iceland under the Exchange of Persons program as grantees; three persons visited Iceland under the Voluntary Youth Activities program. All were prominent in their individual fields and were successful in their missions. Two Icelandic leaders and four Icelandic [Page 1545] students came to the U.S. during the period. No voluntary artists were scheduled during the summer months because of the personnel shortage at the Legation at Reykjavik. Two scheduled appearances of prominent U.S. artists in September and October had to be cancelled for the same reason.

19. A labor reporting officer was assigned to Reykjavik on an urgent basis in September in order to establish closer contact with Icelandic organized labor, and to develop programs in the field of labor exchange and education.

20. Efforts to push negotiation of a Fulbright Agreement with Iceland appeared to be doomed by inadequate allowances for FY–1956 by the Bureau of the Budget.

21. The Legation has been instructed to discuss with the Icelandic Foreign Minister negotiation of an agreement providing for the transfer of U.S. military equipment to Iceland on a reimbursable basis.

b. operational considerations bearing on policy

22. Operating experience during the brief period under review has not demonstrated a need for revision of the policy enunciated in NSC 5426 at this time.

c. emerging problems and future actions

23. The major problem emerging in Iceland is one of greater de-emphasis on Icelandic defense needs, arising out of the belief by Icelanders that tensions have relaxed. This belief has been reinforced by the successful negotiations for German rearmament, which has given rise among prominent Icelanders to a “continental shield” concept under which the “front line” of NATO defense has moved so far east that the stationing of U.S. troops in Iceland may not be required after German rearmament becomes a reality. Through our Minister to Iceland we are endeavoring to show Icelandic leaders that German rearmament is the capstone of an elaborate system of defense, rather than a substitute for existing arrangements, and that if tensions have relaxed it is because the West is strong and must therefore remain so. This problem, however, cannot be specifically combatted in Iceland when a similar tide of relaxation is rising in other Western European countries, from which Iceland takes its cue.

24. A second major problem is presented by the assumption of control of the Icelandic Federation of Labor by a Communist-Left-wing Social Democratic coalition on November 22. With the Communists operating from this strong base we may expect increased anti-U.S. propaganda among working people, and intensification of labor disputes and an increase in strikes at our base at Keflavik. [Page 1546] Because of Icelandic popular opinion that labor relations in defense construction work have been poor in the past, credence will be given by the Icelandic public to the IFL side of any labor dispute. The result will probably be a general intensification of anti-U.S. feeling in Iceland.

25. In the organization of the Joint Althing (Icelandic Parliament) in October, the Communists got two seats on joint committees, one being in the Foreign Affairs Committee.

26. Close coordination by the Department of State, the USAF, and the Corps of Engineers has resulted in the evolvement of a plan of action (shortly to be presented to Iceland) designed to maintain the present U.S. prime contractor in Iceland in an advisory capacity after withdrawal from field construction work in accordance with the Exchange of Notes of May 25, 1954. It is judged to be imperative to retain the contractor in this modified capacity to provide a “prime contractor potential”, i.e., a U.S. firm subject to U.S. control which will preclude establishment of an absolute Icelandic monopoly in defense construction by its very presence in Iceland and the fact that with little effort it could be augmented to act as a prime contractor when and if the Icelandic prime contractor fails to perform or to offer satisfactory prices. While it is believed that Icelandic contractors may accept this arrangement, it will be difficult to sell to the politicians.

27. The Icelandic Minister of Commerce has informed us that the Russian Minister to Iceland has offered Russian assistance in building the cement plant for which Iceland earlier sought loans in Europe and the U.S. Such action by Russia would actually be detrimental to Soviet trade interests, since the Icelandic plant would, when complete, supplant the annual import of 50,000 tons of Russian cement under present Iceland-Soviet trade agreements. However, the propaganda advantage which the Russians would realize and the espionage they could conduct through technicians sent to construct the plant would be adverse to NATO and U.S. interests. It is therefore considered imperative that the U.S. request the IBRD to reconsider Icelandic application for a loan for the cement plant.

d. extent of agency interests

28. In support of the National Security Council’s requisite [request?] to provide such basic civilian requirements of the Icelandic population in the event of war as will not be met from local sources, the Office of Defense Mobilization submitted an estimate as to industrial and food needs. This estimate was transmitted to the Defense Department for consideration by the appropriate Defense Agencies.

  1. Supra.
  2. Not printed; it provided a list of all USIA programs in Iceland for the preceding 6 months.