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ACTION EUR-12
INFO OCT-01 ISO-00 SSO-00 CIAE-00 PM-03 INR-07 L-02
ACDA-05 NSAE-00 PA-01 PRS-01 SP-02 USIA-06 TRSE-00
SAJ-01 DODE-00 SS-15 NSC-05 /061 W
--------------------- 001079
R 211645Z FEB 75
FM AMEMBASSY REYKJAVIK
TO SECSTATE WASHDC 5177
INFO CINCLANT
COMICEDEFOR
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E.. 11652: N/A
TAGS: PFOR, MARR, IC, NATO
SUBJECT: IDF RETENTION IMPLEMENTATION: PRIMIN COMMENTS ON BASE
CONSTRUCTION
(BEGIN UNCLASSIFIED)
1. IN COURSE OF INTERVIEW WITH PRIME MINISTER GEIR
HALLGRIMSSON ABOUT DECLINE IN ECONOMIC ACTIVITY IN
ICELAND, FREE COMMERCE MAGAZINE RAISED WITH HIM QUESTION
OF WHETHER CONSTRUCTION AT US-MANNED NATO BASE MIGHT
HELP TAKE UP SLACK IN CONSTRUCTION INDUSTRY. QUESTIONS
AND PM'S ANSWERS AS FOLLOWS:
QUESTION: WHEN CAN THE CONSTRUCTION PROJECTS WHICH
WERE SPECIFIED IN THE RECENT WASHINGTON AGREEMENT
BEGIN? WILL THE UNITED STATES BE PREPARED TO PAR-
TIALLY FUND THE REYKJANES HOT WATER DISTRUBUTION
SYSTEM AS WELL AS OTHER PROJECTS AT THE KEFLAVIK
AIRPORT SO THAT WORK WILL BE CREATED IF THERE IS
A CONTRACTION IN THE CONSTRUCTION INDUSTRY?
PRIME MINISTER: CONSTRUCTION AT THE AIRPORT CAN BEGIN
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AT ONCE. CONSTRUCTION OF 200 HOUSING UNITS
HAS BEEN AUTHORIZED AND THIS IS THE FIRST STAGE IN
IMPLEMENTING THE POLICY OF HOUSING ALL DEFENSE FORCE
PERSONNEL ON THE BASE. IT IS NOT YET CLEAR IN WHAT
WAY THE BASE MIGHT BE TIED TO THE REYKJANES HOT WATER
SYSTEM OR WHETHER IT WILL SUPPLY FUNDS FOR THIS
PURPOSE.
THE AGREEMENT WITH THE UNITED STATES ASSUMES THAT
THE US WILL FINANCE ALL CONSTRUCTION MADE NECESSARY
BY THE SEPARATION OF MILITARY AND CIVILIAN AIR
SERVICES. HOWEVER, IT IS NOT INTENDED THAT THE US
HAVE ANY PART IN FINANCING THE NEW CIVILIAN AIR
TERMINAL. THERE IS THE POSSIBILITY, OF COURSE,
THAT THE US GOVERNMENT MAY HELP TO RAISE LOANS
FOR THIS PURPOSE.
IT HAS BEEN THE AIM THAT THE MANPOWER NEEDED AT
THE AIRPORT SHOULD NOT INCREASE TO THE POINT WHERE
IT CREATED DIFFICULTIES FOR OTHER EMPLOYERS IN THE
REYKJANES AREA, FOR EXAMPLE, THE FISHING FLEET.
UNDOUBTEDLY, THE MANPOWER FOR THE PROJECT
COULD BE INCREASED IF IT WAS THOUGHT NECESSARY.
BUT I HOPE THIS WON'T HAPPEN. (END UNCLASSIFIED).
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2. COMMENT: THIS EXCHANGE ILLUSTRATES EVOLUTION
IN OPINION TOWARDS BASE OVER PAST FEW MONTHS. AS
FEARS OF POSSIBLE UNEMPLOYMENT IN ICELANDIC ECONOMY
INCREASE, CRITICISM OF PRESENT GOVERNMENT FOR REACHING
UNDERSTANDING WITH USG ON RETENTION OF BASE HAS BEEN
MUTED. LAST YEAR, JON SKAFTASON, ALTHING MEMBER
FROM REYKJANES CONSTITUENCY WAS UNDER SEVERE ATTACK
IN HIS OWN PROGRESSIVE PARTY FOR ADVOCATING BASE RE-
TENTION AND WAS BEING CALLED "TRAITOR TO ICELAND."
EMBOFF ASKED HIM LAST WEEK IF HE FELT BASE WAS ANY
LONGER AN ISSUE IN HIS CONSTITUENCY. HE REPLIED,
"THE ONLY WAY IN WHICH THE BASE IS NOW AN ISSUE IN
MY CONSTITUENCY IS HOW TO GET A JOB THERE."
WHILE NO BASE OPPONENTS HAVE BEEN CONVERTED AND BOTH
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FRIENDS AND FOES WILL BE CLOSELY WATCHING US PER-
FORMANCE IN IMPLEMENTING AGREEMENTS, BASE ISSUE AS
SUCH HAS NOW TAKEN SECOND PLACE TO ECONOMIC PROBLEMS
AS IMMEDIATE POLITICAL CONCERN. (END LOU).
MARTIN
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