The U.S. Pull-Out
September 30, 2006, marked the end of an era at Keflavík's NATO military base. In an understated ceremony, the U.S. flag was lowered, and the Icelandic flag was raised in its place. Iceland now has no armed forces on its territory.
In 1940 the British occupied Iceland to prevent a German takeover. The Americans moved in the following year and have guaranteed Iceland's defense ever since. U.S. forces left after the war, but re-established a large base at Keflavík on behalf of NATO soon after the U.S.-Iceland Defense Agreement of 1951. Iceland was crucial in monitoring Soviet submarines and controlling North Atlantic air space: More Soviet aircraft were intercepted from Keflavík than from any other U.S. base. The base consistently aroused vocal domestic opposition, but commanded governmental support: In 1974, a parliamentary motion to terminate the 1951 agreement was defeated by a petition signed by over half the country.
Before its closing, the Keflavík base hosted 1,200 U.S. servicemen, 100 Defense Department civilian employees, several fighter jets, and a rescue helicopter squad, at a cost of around $260 million a year to the U.S. government. In March 2006, news of the American pull-out was delivered ham-handedly to the Icelandic government by a State Department underling.
The U.S. is still obliged by treaty to defend Iceland, which could one day regain strategic importance from its proximity to prodigious oil tanker traffic. In the meantime, Iceland has considered starting its own military, but plans for the abandoned base site are still uncertain.
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