Buttressing the West in the North: The Atlantic Alliance, Economic Warfare, and the Soviet Challenge in Iceland, 1956–1959

Abstract

left-wing government in Iceland precipitated a crisis in NATO in 1956 by demanding the abrogation of Iceland's bilateral treaty of defence with the United States. Given Iceland's importance as a strategic outpost between North America and Western Europe, the decision shocked the Eisenhower administration and its European allies. Although the Icelandic government the so-called Leftist Government made it clear that Iceland's membership in NATO would not be affected by demilitarization, its foreign-policy agenda nonetheless represented the first political challenge to the presence of US troops in Iceland since their arrival, in 1951, as part of the Western military build-up following the outbreak of the Korean War. The decision was rooted in both domestic and international developments: the left-wing realignment in Icelandic politics, which strengthened the groups protesting against the US military base, and the growing popular perception that the thaw in SovietAmerican relations the Spirit of Geneva made US troops in Iceland unnecessary. The perception also reflected the disunity within the Western alliance as the United States and its Western European allies clashed over trade, NATO's nuclear strategy, and European neocolonialism. But the Icelandic case was unique in two ways: first, during the mid-1950s the Soviet Union suddenly became Iceland's biggest trading partner, and second, the Icelandic government included the pro-Soviet Socialist Party, which was adamantly opposed to Iceland's Western alignment. No other member of NATO came close to being economically dependent on the Eastern bloc or allowed Communists to join the government. Traditionally, historians have focused on the impact of the Suez debacle and the controversy over the nuclearization of NATO to explain the malaise that gripped the Western alliance in the mid-1950s.1 The purpose