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Josh Owens

Josh Owens

Writer, Safehaven.com

Josh majored in International Relations at the University of Edinburgh and is currently the Content Director at Oilprice.com. Josh has over 6 years of writing…

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Why Is Iceland The Focus of Washington’s New Trade Strategy?

Iceland

Less than a month after his failed attempt to buy Greenland, Trump is now shifting attention to another Nordic nation—Iceland—but rather than offering to acquire the country, the U.S. administration is considering a sweet deal in free trade.

So while the name of the game is tearing apart free trade, a free trade deal with Iceland has another important benefit: It’s part of a broader plan to boost America’s presence in the Arctic region as a bulwark against Russia, and even China, as reported by Axios.

As it stands, the U.S. and Iceland have no bilateral investment treaties or Free Trade Agreements (FTAs), though they do have a bilateral taxation treaty and a Trade and Investment Framework Agreement (TIFA).

Iceland currently ranks as the 94th country in total trade value with the US with a monthly total of $666. In July, US exports to the country totaled $383.71 million and Imports totaled $282.44 million, a surplus of $101.26 million.

In June, the US Department of Defense said it planned to invest some $60 million in military construction in Iceland in 2020. 

Just in the last few months, US Secretary of State Mike Pompeo and Vice President Mike Pence have visited a country that normally would not have registered as a more than a blip on the diplomatic radar.  

And it seems that Icelandic Prime Minister Katrin Jakobsdottir has found some sort of common ground with Administration officials: fear of Russia and China. 

Pence discussed defense cooperation, expressed concerns about increased Chinese and Russian activity in the region, warned Iceland to ditch Huawei tech, and most importantly, congratulated Iceland on rejecting China’s Belt and Road Initiative.

But the Icelandic PM also used the opportunity to push the climate change agenda and gender equality, which she describes as the core of her government program.

Icelandic authorities also were quick to remind Washington’s officials that they had not yet formally declined participation in China’s Belt and Road Initiative.

Responding to the Pence’s statement, Chinese ambassador to Iceland Jin Zhijian said, “No decision has been made … I call this fake news.” Related: Are Bonds In A Bubble?

In other words, Iceland understands the art of negotiation and leverage, too.

Both Greenland and Iceland are geographically important regions with potential treasure troves of natural gas and rare earth minerals, in which the U.S., Russia and China are all extraordinarily interested.

In addition to natural resource wealth, China is also eyeing Greenland as a port hub for shipping through the Arctic to the eastern seaboard of the U.S.

In the meantime, it is of course not lost on Washington that Iceland has had a free trade agreement with China since 2014.

Nor has Russia’s efforts to reaffirm its presence in the Arctic been overlooked.

As for Greenland, Trump initially took the sale rejection as a personal insult after having been mocked by the Danish authorities and public. He retaliated by canceling a planned trip to Denmark.

However, strategic and economic interest prevailed, and personal feelings have been shoved under the rug. Now, the U.S. is planning to open a consulate in Greenland for the first time in decades. Its doors should open next year.

By Josh Owens for Safehaven.com

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