Foreign Relations of the United States, 1977–1980, Volume XXVII, Western Europe

268. Memorandum From Secretary of State Vance and Secretary of Defense Brown to President Carter¹

Washington, April 26, 1978

SUBJECT

• Revised Proposal for Dual-Purpose Terminal at Icelandic NATO Base

The Issue

To seek your consideration for a revised proposal to provide assistance to the Icelandic Government for the construction of a dual-purpose, military/civilian air terminal at the vital US-manned NATO base at Keflavik² (Dr. Brzezinski’s memorandum conveying your negative decision is attached at Tab 1³).

Essential Factors

In the light of your recent decision we wish to submit a revised proposal for your consideration. We are greatly concerned that if the US is not in some way responsive to the repeated Icelandic pleas on the air terminal, we risk adverse consequences out of all proportion to the costs involved (our original proposal is attached at Tab 2⁴).

As you know, the Keflavik base in Iceland occupies a unique strategic location from which the US and NATO can ensure early warning and conduct surveillance of Soviet air and naval activities emanating from Soviet northern bases. The importance of the Icelandic facilities has increased as the Soviets continue to expand their strategic forces. Should we ever be forced to leave Keflavik, no alternatives exist to maintain comparable intelligence coverage and estimated costs for relocation to recapture even some of the lost coverage are extraordinarily expensive. The intangible price in political and strategic terms would be incalculable.

In 1974, during a change of government in Iceland, we were threatened with closure of the facilities unless we renegotiated the terms of our presence. One of the provisions of the resultant 1974 Memorandum of Understanding (MOU)⁵ reaffirmed our longstanding commitment to pursue a complete separation of military and civilian facilities in the base/airport area. However, international travelers or Icelandic citizens must still pass through a terminal also used by US forces as well as a checkpoint at the base perimeter. Sharing facilities is regarded by Icelanders as an infringement on their national sovereignty. The present Government of Iceland would not hesitate to invoke the renegotiation Article again should the base become a significant factor during the election campaign and we have no doubt that any regime in Iceland would seriously consider this legal option. The result would probably be either to terminate the US presence in Iceland, or to raise the cost of remaining well above current and proposed “quids.”

In addition to stressing complete separation of facilities at the time the new proposal was submitted, the Foreign Minister also reiterated that the Icelandic Government could not afford to proceed with the project without external assistance and cited Iceland’s small population (220,000), narrow tax base and hard-pressed national treasury. We believe that the terminal project is well beyond the modest capabilities of Iceland, whose 1977 national budget totaled approximately $500 million.

Not only does the new proposal enjoy the unqualified support of the Joint Chiefs of Staff and the Supreme Allied Commander, Atlantic, but the Joint Chiefs of Staff recognize a contingency wartime military requirement for the proposed project which could be used by our armed forces as an operations/command center or medical facility to support US reinforcements.

Finally, the Northern Flank of Europe is of growing importance because of the expanding Soviet presence on the Kola Peninsula. The Scandinavians are concerned about this, and any action which would jeopardize our ability to meet that threat would add to those concerns.

Recommendations

We propose to drop the $15 million Security Supporting Assistance (SSA) portion of our original recommendation in favor of an absolute maximum contribution of $20 million to be funded from the Defense Department’s Military Construction (MILCON) program. Although significant in per capita terms in Iceland, $20 million is relatively little when compared to the cost which would be incurred if we are restricted in our Iceland-based operations. The political environment in Iceland remains unstable and we believe that we should not risk losing the Keflavik facilities in this period of expanding Soviet naval power.

A positive decision “in principle” would allow us to negotiate the most favorable terms for a US contribution with the Icelanders (this would not involve actual expenditure until approximately 1981). Moreover a single source of funding without the SSA portion would facilitate subsequent justification to the Congress. In any event, although Congressional approval cannot be presumed, we believe a very strong case can be made on national security grounds to the appropriate Congressional Committees.

We hope that you will be able to receive us for a brief meeting on this revised proposal.⁶

1. Source: Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Box 17, Iceland. Confidential. At the top of the page, Carter wrote: “ok, J.”
2. In an April 27 memorandum to Carter, Mondale expressed support for the plan. (Ibid.)
3. Tab 1, a memorandum from Brzezinski to Vance and Brown, April 13, was not found attached. See footnote 3, Document 267.
4. Tab 2, a memorandum from Vance and Brown to Carter, March 23, was not found attached. It is printed as Document 266.
5. See footnote 4, Document 259.
6. On April 28, Carter met with Mondale, Vance, Brown, Warren Christopher, Brzezinski, and Hamilton Jordan, presumably before approving the proposal. (Carter Library, President’s Daily Diary) No memorandum of conversation for that meeting has been found. In an April 28 memorandum to Vance and Brown, Brzezinski informed them that Carter had approved their proposal. He wrote: “The President agrees to your proposal to drop the $15 million Security Supporting Assistance portion of your original recommendation in favor of an absolute maximum contribution of $20 million to be funded from the Defense Department’s Military Construction program.” (Carter Library, National Security Affairs, Brzezinski Material, Brzezinski Office File, Box 17, Iceland)