Iceland acquired home-rule through the enactment of the Act of Union between Iceland and Denmark on December 1, 1918, whereupon Iceland and Denmark became two separate states with the same monarch. One of the articles of the Act of Union stipulated that Denmark should be entrusted with the conduct of the foreign affairs of Iceland. However, Iceland directed the course of its foreign policy, but the Danish foreign service administered this policy due to the fact that at the time Iceland had no foreign service.
When Denmark was occupied by Nazi Germany on 9 April 1940, all communications between Iceland and Denmark were severed. No longer was it possible for Iceland to communicate with the King and no instructions could be given to the Danish Foreign Minister regarding Icelandic foreign affairs. The following day, Althingi the Icelandic Parliament, passed two resolutions: Royal power was provisionally transferred to the cabinet in Reykjavík and Iceland assumed the conduct of its foreign affairs. Accordingly, the Foreign Service of Iceland dates from 10 April 1940.
The beginning of diplomatic relations between Iceland and the US can be traced back to July 7, 1941, when U.S. forces came to Iceland in order to supplement and eventually replace British forces during WWII. Britain had occupied Iceland 15 months year earlier in order to achieve a strategic position in the North-Atlantic, fundamental to Allied forces.
The arrival of US forces in Iceland coincided with Roosevelt´s Proclamation of Unlimited National Emergency (in which he mentioned Iceland specifically) on May 27, 1941, and on the basis of a bilateral defense agreement between the two countries, concluded by a Exchange of Messages July 1, 1941. This agreement was ratified by the the Parliament of Iceland on July 10, 1941, and President Roosevelt informed the US Congress of the exchange in a letter dated July 7, 1941, asking the Congress´s permission that diplomatic representatives be exchanged between the two countries.
It is noteworthy, that the arrival of US forces in Iceland was at the behest of the Government of Iceland, under condititions that the US accepted and observed. Concurrently, this agreement marked the end of Iceland´s declaration of neutrality in world affairs in the Act of Union between Iceland and Denmark from 1918. This was further to be substantiated by Iceland´s later agreement with the U.S. on the Keflavik base in 1946, with Iceland being a founding member of NATO in 1949, and with the conclusion of the Bilateral Defense Agreeement between Iceland and the US in 1951 (see chapter below).
On April 27, 1942, it was announced in Washington D.C. that the US had fully taken over command in Iceland. The number of US forces in Iceland peaked in 1943 when approximately 47,000 troops were stationed in Iceland. After that, the number of troops gradually declined, being around 10,000 in the fall of 1944.
The first Icelandic Ambassador to the US, Ambassador Thor Thors, presented his credentials to President Franklin D. Roosevelt on November 19, 1941, thereby marking the opening of the Embassy of Iceland in Washington D.C. The Embassy of Iceland was at that time located on 3839 Massachusets Avenue, in the Ambassador´s home. On June 17, 1944, the United States of America became the first country to officially recognize Iceland as a republic. That event in particular, based on the significant diplomatic and security relations during WWII, laid the foundation for the longstanding and ongoing friendship and alliance between Iceland and the US.
Iceland concluded a bilateral Defence Agreement (PDF-Icelandic v. & English v.) with the United States in 1951. Apart from the territorial defence of Iceland, the primary missions of US forces based at Keflavík (the Iceland Defence Force) included air defence, maritime surveillance and early warning in the North Atlantic area. In 1993 Iceland and the United States reassessed the mutual defence requirements at Keflavík, based on the 1951 bilateral defence agreement. The results, contained in an understanding signed on January 4 1994, called for reductions in force levels to reflect the relaxation of tension in the North Atlantic region. In September 2006 the Keflavik base was closed down following an Agreement (PDF). A Joint Understanding (PDF) was also negotiated in which both sides affirm their continuing commitment to the 1951 Defense Agreement. The Joint Understanding also lists bilateral activities designed to create a basis for future cooperation between Iceland and the United States in the areas of defence and security.
A few Milestones in History
12/18/1918 Iceland independent under the Danish King
05/10/1940 British forces occupy Iceland
05/27/1941 Roosevelt proclaims Unlimited National Emergency
07/01/1941 Defence agreement between Iceland and the US
07/07/1941 US forces arrive in Iceland
11/19/1941 Icelandic Ambassador to the US presents credentials
06/17/1944 US recognizes the Republic of Iceland
04/04/1949 Iceland signs the North-Atlantic Treaty
05/05/1951 The Bilateral Defense Agreement concluded
05/31/1973 Nixon meets Pompidou in Reykjavik
09/30/1986 Reagan Gorbachev summit in Reykjavik