When Iceland became a founding member of NATO in 1949, it did so on the explicit understanding that Iceland, which has never had a military, would not be expected to establish an indigenous force. Iceland’s main contribution to the common defense effort has been the rent-free provision of the “agreed areas"–sites for military facilities. By far the largest and most important of these is the NATO Naval Air Station at Keflavik. Although this base is manned primarily by U.S. forces, units from other NATO countries also are deployed temporarily to Keflavik, and they stage training exercises. In May 2001 the 50th anniversary of the bilateral agreement was celebrated.

In addition to providing the “agreed areas,” the Government of Iceland contributes financially to NATO’s international overhead costs and recently has taken a more active role in NATO deliberations and planning. Iceland hosted the NATO Foreign Ministers’ Meeting in Reykjavik in June 1987 and again in May 2002.