The London School of Economics and Political Science Dissertation Cover Sheet

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MSc European Studies: Ideas, Ideologies and Identities

MSc European Studies (Research)

MSc Political Economy of Europe X MSc EU Politics

Dissertation Title:

Fish, Identity Or Reputation: Iceland’s Participation in

EU Restrictive Measures Against Russia

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1. Introduction ..................................................................................................................... 41.1 Research Question ............................................................................................................................................ 51.2 Hypotheses ........................................................................................................................................................ 51.3 The Argument ................................................................................................................................................... 71.4 Research Limitations ........................................................................................................................................ 7

2. Literature Review ............................................................................................................. 92.1 Introduction ...................................................................................................................................................... 92.2 Neoliberalism and State Reputation ........................................................................................................... 10

2.2.1 Anarchy, Rationality and Cooperation ............................................................................................... 102.2.2 State Reputation ..................................................................................................................................... 112.2.3 Repeat Play and Issue Linkage ............................................................................................................ 12

2.3 Constructivism ............................................................................................................................................... 132.3.1 Constructivism: Identities and Interests ............................................................................................ 142.3.2 Logic of Appropriateness or Consequentialism? .............................................................................. 14

2.4: Europeanisation and the Sectoral Approach ............................................................................................ 15

3. Case Study: Iceland — EU—Russia Restrictive Measures ........................................... 18

3.1 Case Selection ................................................................................................................................................. 183.2: EU Sanctions: Iceland Cooperates ............................................................................................................ 18

3.2.1: Russian Countermeasures ................................................................................................................... 213.3: Decision-Making in Iceland ........................................................................................................................ 223.4: Tough Choices .............................................................................................................................................. 253.5 Contrast — Cases of the Norway and the Faroe Islands ........................................................................ 26

4. Identity, Fish or Reputation? ......................................................................................... 284.1 H1: State Reputation and Cooperation ...................................................................................................... 284.2 H2: Identity and Interests ............................................................................................................................. 314.3 H3: Europeanisation ..................................................................................................................................... 324.4 Discussion ....................................................................................................................................................... 33

5. Conclusions .................................................................................................................... 34

6. Bibliography ................................................................................................................... 36

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1. Introduction

In 2014, the small island state of Iceland aligned itself with a decision to impose restrictive

measures against the Russian Federation and other actors relevant to the the illegal annexation of

Crimea and Russia’s action in Eastern Ukraine. This took place under the framework of the

European Union (European Council 2014).

This decision proved to be a major foreign policy conundrum for the government and

subsequently tested Iceland’s commitment to its allies. Iceland was at that point in time a candidate

country set to join the EU, but has since then withdrawn its application (IMFA 2015). Even after

Russia imposed countermeasures and banned the import of a variety of products from the western

states, Iceland remained aligned to the sanctions1, despite this affecting one of the lifelines of the

Icelandic economy, namely fishing exports.

What makes Iceland’s attitude and the subsequent action particularly noteworthy were the

proportionately high material costs for the Icelandic economy and the domestic pressures from

the most powerful domestic lobbying groups, even from inside the Cabinet, to abandon the

sanctions and reap the benefits of increased trade with Russia. Furthermore, the decision to align

themselves with allies was mainly seen a symbolic gesture of good will. The Icelandic fishing

industry depended heavily on trade with Russia which used to be one of the top importers of

Icelandic fish. Some gloomy forecasts estimated that up to 5% of the Icelandic exports could be

at risk (Reykjavík Economics 2016, 47).

There are various theoretical tenets in international relations theory, which would lend

different explanations to state cooperation. Historically the most prominent paradigm, realism, has

not traditionally predicted high levels of cooperation among states (Grieco 1988) (Waltz 1979) due

to the structural effects of international anarchy. The leading challenger to explain cooperation

under anarchy has been neoliberal theories based on similar assumptions of anarchy – with a more

1 The words restrictive measures and sanctions will be used interchangably to describe the actions

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positive outlook on potential cooperation (Keohane 1984). Constructivist thought has

furthermore challenged rationalist assumptions, which has encouraged IR scholars to look beyond

the material incentives to shift focus upon ideational factors as well.

These two research paradigms, neoliberalism and constructivism, will be put to the test.

My contribution will hopefully add value to the debate what drives the decision making of states,

by analysing the unique case of Iceland — which can work as a microcosm for decisions made

regarding cooperation.

1.1 Research Question

If one assumes Iceland to be a self-interested, egoistic actor in global politics, focused on its own

material interests— many theories of international relations would assume that Iceland might have

rationally opted for defection. Why would the state disregard the option of gaining materially and

protect their main industry?

What has proven to be one of the great puzzles of international relations is why states

choose to cooperate. Therefore, the main research question is:

‘Why does Iceland cooperate with its western allies in imposing restrictive measures on

Russia under the auspices of the European Union, despite the high and concentrated

costs for its domestic economy and the efforts of powerful lobby groups?’

1.2 Hypotheses

I will answer this question with help of theoretical approaches and concepts of international

relations and hypothesize with the help of these heuristic devices. I will divide my theoretical

analysis into two main hypotheses and one minor. First, I will review neoliberal explanations.

Second, constructivist theory will be analyzed. Third, I will review relevant literature on Icelandic

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foreign policy, more specifically on Europeanisation. The framework will be put forth in the

second chapter but briefly explained here to elaborate on the hypotheses.

H1: Iceland chose cooperation in the sanctions out of self interest due to the fear of

retaliation and damage to state reputation, if they would have chosen defection.

Based on neoliberal thought, the first hypothesis takes heed of the concepts state reputation and

self interest. Concepts such as repeat play (Axelrod 1984), issue linkage and more broadly state

reputation (Tomz 2007) are important in explaining why states willingly decide to cooperate, even

if it goes against their imminent interests.

H2: Iceland cooperated in restrictive measures with western allies due to a strong

ideational interests to protect common interests, due to a sense of identity as a western,

European and NATO state.

If one relaxes some of the rationalist assumptions, one might take a more constructivist outlook,

and view interests, not merely as material, but also as closely interlinked with identity and assume

they can change over time (Wendt 1999). Subsequently, the analysis will be more focused on how

Icelandic interests are socially constructed and what the relation between identity and interests

(Finnemore and Sikkink 2001) are in this case.

H3: Iceland chose to cooperate with western allies in sanctioning Russia (and relevant

actors) due to the high levels of Europeanisation of Icelandic foreign policy.

Building on the idea that the foreign policy of Iceland has become Europeanized (Jónsdóttir

2013) (Bergmann 2005), one might logically assume that this has influenced the decision makers

in Iceland to support EU sanctions.

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1.3 The Argument

This essay will argue that both the state reputation and identity hypothesis can be supported and

that they interact in interesting ways. Based on interviews and analysis of relevant literature, such

as reports and news, Iceland’s decision to cooperate stems mainly from the idea that Iceland would

otherwise be seen as an unreliable partner by its main allies (Sveinsson 2016). The fear of the

shadow of the future (Axelrod and Keohane 1985) and the importance of Iceland’s state reputation

(Tomz 2007) loomed over the decision, making the neoliberal argument very persuasive.

On the other hand, it is hard to properly disentangle this sentiment from the effect of

Iceland’s identity (Wendt 1999) as a western, Nordic, European state, which in turn affected its

interests and subsequently its decision. These two logics of both consequentialism and

appropriateness (March and Olsen 2011) worked in unison to support Iceland’s decision to

support very costly restrictive measures (Reykjavík Economics 2016) which were opposed both

by historically influential sector (Thorhallsson 2004), the fishing industry representing

concentrated interests (Olson 1965) and even influential politicians.

1.4 Research Limitations

As aforementioned, this analysis is not an attempt to review the sanctions as a whole or to answer

questions about the legitimacy of international sanctions or why they come about. Rather it is an

inquiry into state cooperation and a contribution towards international relations literature on the

topic. What is already a burgeoning literature now mainly revolving around rationalist and

constructivist camps (Finnemore and Sikkink 2001, 392), can still be supplemented.

Here, I have opted for a qualitative analysis (King et al. 1994), based mainly on a single

case study, albeit contrasted with two similar cases to avoid the problem of generalisation and to

gain a comparative outlook (Flick 2009, 134). The research method was mainly based on intensive

interviewing with relevant actors.

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This essay does not support a single causal mechanism. One of the reasons one conducts

social experiments is to discover such mechanisms, so this might be considered as a limitation.

However, this also points to the intricacies of social research and the lack of black and white in

political behaviour. As many noted international relations scholars have argued, there must an

attempt to build bridges in the literature, despite of epistemological differences (Zürn and Checkel

2007) (Jupille et al. 2003).

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2. Literature Review

2.1 Introduction

This paper has to do with question regarding the decision of a sovereign state — confronted with

a complex decision whether to choose cooperation or defection in international restrictive

measures alongside allies. Therefore, it is highly pertinent to make use of relevant international

relations theories to better understand the puzzle at hand.

I will divide my review of the relevant literature into two main sections linked to my

hypotheses and one regarding more specific literature and the minor hypothesis. These theoretical

underpinnings presented will strengthen the hypothesis this essay has set forth in the introduction

and explain how they are formulated.

First, I will put forth neoliberal explanation of state cooperation and under which

circumstances cooperation can occur. Neoliberal scholars emphasise the importance of state self

interest, egoistic behaviour, and importance of state reputation. They do, however, anticipate some

cooperation (Tomz 2007) (Keohane 1984). The second line of thought this essay will utilize is

constructivist, which challenges the rationalist assumption of anarchy (Hopf 1998, 172-173). It

places a greater deal of emphasis on ideational factors, such as identity, culture, ideas and norms

(Finnemore and Sikkink 2001, 392-393).

What is important to keep in mind however, is that neither rationalism nor constructivism

are substantive theories per se, but rather ways to approach social research (Jupille et al. 2003, 11-

14) (Wendt 1999). But these heuristic devises can guide me in my analysis, providing me with a

specific way of approaching the case study at hand — and assist in forming hypothesis and looking

at the case study in a systemic way. Finally, in this chapter I will scrutinize literature relevant for

our case study that is the case of Iceland and its relations with the outside world.

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2.2 Neoliberalism and State Reputation

‘Leaders who care enough about the future will calculate costs of forgoing cooperation tomorrow outweigh

the immediate gains from behaving selfishly today.’ (Tomz 2007, 5).

This chapter brings to the fore rationalist ideas which will be applied to better understand

cooperation between states within an anarchic system. The label rationalist lends itself to a very

broad definition. I will discuss some main assumptions related to the mainstream literature of

rationalist theories, which mainly fall within neoliberal2 scholarship. I have no intention of covering

every tenant of neoliberal thought — that is out of the scope of this paper. I aim to focus and

highlight main assumptions to extract effectively what is most helpful for my analysis.

Neoliberalism places an emphasis on absolute gains as opposed to relative gains and is

more optimistic of state cooperation (Powell 1991). Furthermore, the essence of the idea of state

reputation, touted as: ‘[…]the linchpin of the dominant neoliberal institutionalist theory of

decentralised cooperation.’ (Downs and Jones 2002, 95).

Subsequently, I will cover three main key terms or themes that will be put to the forefront

in my analysis: First, some main concepts of IR will be briefly introduced. Second, the idea of state

reputation in international relations will be corroborated, and third more specifically the concepts

of repeat play and issue linkage will be analysed.

2.2.1 Anarchy, Rationality and Cooperation

The state of anarchy in world politics is one of the main philosophical assumptions of rationalist

theories in general to describe the structure of international relations. It is very apparent in

neorealist theory which stresses the anarchy of structure, whereas actors will act based on the

constraints that defines the strategic settings in which they interact — and anarchy as such would

2 This framework has been labelled in a variety of ways, such as: Rational choice theories, functional regime theory, rational choice institutionalism or even simply institutionalism. From now on I will use the label neoliberalism, for simplification.

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apply certain behaviour (Powell 1994, 315). Neoliberalism partly shares this notion of international

anarchy, but the theory nuances some of its assumptions to better address cooperation (Keohane

1984, 7-10).

Scholars such as Keohane (1984) are not as pessimistic regarding cooperation as

mainstream realist theory (Keohane 1984, 65-67). Neoliberals utilize ideas on cooperation between

egoistic actors, which are based on game theory (Axelrod 1984, 4-5). This broad framework

possesses different tenants which share similar assumptions on state behaviour and the nature of

their cooperation— or lack thereof.

Cooperation has been one of the main puzzles for IR scholars. Many neorealists, place

emphasis on the role of hegemony in world politics and how hegemons influence other states

(Mearsheimer 2001). Neoliberal thought on the other hand takes a different approach. In his

seminal work, Keohane (1984), tries to explain cooperation in the absence of hegemony, whilst

accepting the rational-egoist assumptions. Axelrod and Keohane (1985) argue that cooperation

can indeed be achieved in anarchy. However, it should be differentiated from harmony and it can

appear where one finds conflicting and complementary interests. According to their definition

cooperation occurs: ‘[…]when actors adjust their behaviour to the actual or anticipated preferences

of others.’ (Axelrod and Keohane 1985, 226).

2.2.2 State Reputation

One of the pillars of the neoliberal reasoning is the idea of state reputation. Tomz (2007) articulates

the puzzle of cooperation and state credibility well when he analyses cooperation in international

debt (Tomz 2007, 4). As Phelan (2009) elaborates eloquently: ‘Reputation provides a reason for

states to comply with costly commitments in the anarchy of international relations, allowing

cooperation without friendship between egoists.’ (Phelan 2009, 3). States in the international

system are more willing to take on costs on local actors to preserve their state reputation — if in

turn they are promised further cooperation in other areas (Phelan 2009, 3). Based on this line of

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thinking one might argue that maintaining a good reputation is essential to a state—if its reputation

is tarnished, it will have a huge effect on future cooperation. But how so?

Tomz (2007) names these two specific perspectives on how credibility and cooperation

repeat play and issue linkage (Tomz 2007, 4). This framework is very helpful to advance our

investigation of why states, if they are rational, self-maximising, egoistic entities, decide to

cooperate with other states and are even willing to accept costs to do so.

2.2.3 Repeat Play and Issue Linkage

Based on game theory, rational choice scholars such as Axelrod (1984) illustrated how self

interested actors can achieve a state of cooperation, without a central authority or sanctioning

mechanisms (Axelrod 1984, 4-5).

By assuming that actors are self interested and that preferences are not always

complementary he goes on to explain one of the main obstacles to international cooperation, the

Prisoner’s Dilemma (Axelrod 1984, 8). Two players must make a decision on how to act without

possessing information on what the other actor will do. No matter the action of the actor, defecting

will yield to a higher payoff than cooperation (Axelrod 1984). This is put forth to explain situations

of how actors could be better off if they would have cooperated, but what is individually best for

each actor leads to defection (Axelrod 1984, 9).

Tomz (2007) calls this repeat play. Based on the ideas explained above, he considers this

to be one of the major perspective on how cooperation can be maintained and: ‘One of the most

fertile lines of research in international relations.’ (Tomz 2007, 4). Simply put, cooperation is bred

from the threat of retaliation in relationships between states, whereas non-cooperation can breed

a breakdown of a relationship. However, a more nuanced understanding would rather expect the

aforementioned tit for tat relationship (ibid. 2011, 5).

A similar way of thinking about relationship between states is the shadow of the future, a

dimension explained by Axelrod and Keohane (1985). The key idea is that concerns about the

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future help to foster cooperation. Sometimes future payoffs are held to a higher value than short

term payoffs. They discuss factors that can facilitate the shadow of the future as an effective

promoter of cooperation (Axelrod and Keohane 1985, 232). If actors expect relationships to

continue over a long period of time, there is more at stake if they choose defection and

subsequently face retaliation (ibid., 232-233).

Issue-linkage similarly, has a long history in IR theory. Tomz (2007) identifies it as the

second important feature of successful cooperation. Countries can at its simplest enforce

agreements by linking one or more issues to the other. This means that leaders have to give it

serious thought before they defect from cooperation with their allies in repeated interaction (Tomz

2007, 7). Keohane and Nye (1973) describe it as a linking of economic and security issues

(Keohane and Nye 1973, 160).

2.3 Constructivism

Constructivist and rationalist approaches are the main two ‘points of contestation’, which continue

to direct and influence debates within international relations literature (Finnemore and Sikkink

2001, 392). Constructivism is seen as one of the main serious challengers to rationalist domination

on cooperation (Hopf 1998, 171). It is most commonly seen a social theory on how to view change

and study social realities (Finnemore and Sikkink 2001, 393) (Haynes et al. 2011, 214).

For this analysis, what is most relevant are these constructivist criticisms and added value

these fresh ideas bring to conceptions which rationalist theories often take for granted, such as:

interest formation, identities, and rationality (Adler 2013). Rationalists tend to subscribe to

exogenously given interests and identities, which is affected by structure (Wendt 1992; Wendt

1994).

First, one must bear in mind how the notion of anarchy in the relations between nation

states is challenged by constructivist scholars, most notably by Wendt (1992; 1999). If we view

anarchy as a social construction it changes the way, we analyse interaction between states. ‘Anarchy

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is what states make of it’, as Wendt proclaimed (Wendt 1992, 395). Second, it is important to note

the effects treating state identity and interests as hypotheses, not as exogenously given (Hopf

1998). Now we will delve further into some of the main concepts and theoretical underpinnings

of constructivism. First, what effects that has on some of the most relevant terms in constructivist

literature: identity and interests and second the concept of logic of appropriateness will be

explained briefly.

2.3.1 Constructivism: Identities and Interests

One of the fundamental ideas that constructivist mode of thinking lends us is that state how states

act, can be influenced by their identities, not merely a strict material, cost-benefit analysis or as a

balancing act (Finnemore and Sikkink 2001, 398-399). Identities in international politics are

integral to understand one’s role in the world. Hopf (1998) argues that they perform three

necessary functions: they tell you who you are, who others are, and subsequently have an impact

on a states’ preferences and interests, with respect to choices of what to do and how to act in

relations to other actors (Hopf 1997, 174-175). Furthermore, when one understands state

identities, one can better understand state behaviour and change (Adler 2013, 127)

Wendt (1992; 1999), has defined identities as being subjective and a part of an actor’s self-

understanding. Wendt (1999) offers us two types of identities most relevant for the relations

between nations. On one hand, type identities are categories of states with similar characteristics.

Such as western states, or Nordic states, etc. On the other hand, role identities, develop with the

interaction among states. They can be friends, rival, or even enemies (Wendt 1999, 224-233)

(Finnemore and Sikkink 2001, 399).

2.3.2 Logic of Appropriateness or Consequentialism?

After having established the neoliberal and constructivist approaches of analysing world politics,

one can see that the logic behind these two strands of thought are quite distinct. Adler (2013)

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argues that constructivists perceive the relationship between action and rationality differently from

rationalists. He differentiates between instrumental rationality on one hand and practical or

communicative rationality on the other. The latter, being more sensitive to historical, social and

normative realities. When constructivist theorists highlight the the logic of appropriateness, it

stands in contradiction of rationalist logic. This means that actors do not always choose the most

rational or effective alternatives, but rather the ones that fit with their identities (Adler 2013, 124-

125).

March and Olsen (2011) have persuasively identified a logic of appropriateness to describe

the behaviour of actors. This ‘logic’ perceives human action to be: ‘…driven by rules rules of

appropriate or exemplary behaviour, organized into institutions.’ (March and Olsen 2011, 478).

They see a logic of consequentiality as being driven by: ‘possible rules and interpretations as

alternatives as a rational choice problem.’ (March and Olsen 2004, 5). The logic of appropriateness

they argue: ‘[…] contrasts the current interpretation of politics that assumes self-interested,

egoistic, rationally calculating actors, instrumentalism and consequentialism. In the latter

perspective [the logic of consequentialism] simply reflect interests and power, or they are

irrelevant.’ (ibid. 2004, 5).

2.4: Europeanisation and the Sectoral Approach

Before going into further detail on the case study it is important to note the academic literature on

Icelandic foreign policy and its Europeanisation. Despite the fact that Iceland is not a member of

the EU, it has been recorded by numerous of scholars (Jonsdottir 2013) (Bergmann 2009).

Iceland can be established as a reluctant European in terms of European integration,

working on the edge (Thorhallsson 2004). For the largest part of the 20th century it was reliant on

the United States as their closest ally (Thorhallsson 2013) (Ingimundarsson 2007). After the US

closed its military base in Iceland, in 2006 the government had to realign themselves

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(Ingimundarson 2007). Jónsdóttir elaborates the effects of Europeanisation on Iceland as an

unintended side-effect of the EEA Agreement (Jónsdóttir 2013).

Europeanisation can be understood as a change within domestic structures due to

pressures from the European level. It can also be described more broadly as the influence of formal

and informal rules in governance, ‘[…] the way of doing things’ (Schimmelfenning 2010).

Jónsdóttir’s findings are quite remarkable, based on case studies and interviews with experts in the

first holistic assessment of Iceland’s Europeanisation she finds that Iceland can be more likely

download EU policies than EU member states (Jónsdóttir 2013, 147). Even though Iceland did

not necessarily mean to find the European Union, one might say that the EU found Iceland.

Iceland’s identity as a sovereign nation is another crucial aspect in both its reluctance to

join the EU and often the way it conducts its foreign policy (Bergmann 2009). The political elite

has been described as ‘realistic’: ‘[..] searching for concrete economic advantages from all overseas

activities and preferences.’ (Thorhallsson 2013, 13). The realist nature of Iceland’s political elite

fits very will with Iceland’s security arrangements with NATO and the US. Which is rooted in a

bilateral defence agreement between the two countries and NATO cooperation (IMFA and DoD

2016).

One final thing of importance is what one can described as the sectoral approach, which

Ingelbritsen (1998) used to better understand the European integration of Nordic states. Her

argument, a neoliberal one is based on the idea that leading sectors because of their importance to

the Nordic economies and the way the economies are set up in the corporatist fashion, can shape

national interests and have political interests (Ingebritsen 1998). In her chapter on Iceland she

states that: ‘fish is the national interest’ (ibid. 1998, 126).

This is linked to the rationalist idea often associated with Olson’s (1965) analysis of public

goods as much of our analysis thus far – that special interests often override diffused more

common interests (Olson 1965). This general idea is very relevant to this discussion especially the

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role of the fishing industry lobby groups in Iceland, which have been described as having a very

clear connection to the legislature in Iceland (Thorhallsson 2004, 86).

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3. Case Study: Iceland — EU—Russia Restrictive Measures

3.1 Case Selection

To answer the research question on why Iceland decided to cooperate with western allies and take

part in the sanctions, it is important to thoroughly analyse the decision-making which led to the

decision. In this chapter, this process will be reviewed. The broader picture of the legitimacy or

efficiency of EU sanctions in general are left for other discussions. Furthermore, the decision-

making procedures of the EU are also outside the scope of this paper. This analysis addresses the

question of cooperation more specifically; why a small non-member state decided to cooperate.

Therefore, I will first take a closer look at the restrictive measures and map Iceland’s involvement

in them. Second, I zoom in to look at the decision-making process within Iceland. Third, I will

explain the dilemma at hand for Icelandic officials, and why one can argue that this decision was

noteworthy.

3.2: EU Sanctions: Iceland Cooperates

‘We can’t just follow the EU — adopting restrictive measures blindly. ‘ (Gunnlaugsson 2016).

Prime Minister Sigmundur Davíð Gunnlaugsson 2016

On the 17th of March in 2014, the European Council declared that new states had aligned

themselves with restrictive measures regarding the actions that undermined: ‘territorial integrity,

sovereignty and independence of Ukraine’ (European Council 2014). Meaning that they would

adopt the same restrictive measures as the EU had designed and executed.

At first sight, it might seem a declaration like any other published by the EU, to show

symbolic unity and strength in numbers. But, at a closer glance, one can see that the decision, for

at least one of those countries, Iceland — was hugely consequential. It has even been described as

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the hardest political decision of then Minister of Foreign Affairs Gunnar Bragi Sveinsson — nota

bene, the same minister which scrapped Iceland’s EU application (Sveinsson 2016). Alongside

Iceland close allies of the EU and possible candidates were also found on the list (European

Council 2014).

The EU restrictive measures were put into practice to condemn the actions of the Russian

Federation in Crimea and Sevastopol – and the conflict in eastern Ukraine more generally (EEAS

2015, 3). The main reasons for imposing these sanctions was to send a staunch warning to Russia

that illegal annexation in the 21st century was out of the question.

The sanctions imposed by the EU have been neatly categorised by Bond et al. (2015). The

so-called tier 1 and tier 2 sanctions were put into practice on the 17th of March in 2014 and targeted

individuals, companies and actors which were complicit in the illegal takeover of Crimea and

Sevastopol. These were coordinated by the EU and the US (Bond et al. 2015, 4) (Council of the

European Union 2016).

Most consequential were the economic sanctions or tier 3 sanctions, which were imposed

following the shooting down of a passenger plane MH 370 in Ukraine. These economic sanctions

were targeted at the Russian government and included an arms embargo an export ban and

restrictions on lending amongst other things (Bond et al. 2015, 4). These sanctions were aligned

to the implementation of the Minsk agreements by Russia, which could eventually result in a step

towards more peaceful relations between the west, Ukraine, and Russia (Council of the European

Union 2016).

The atmosphere in Europe leading up to the ‘targeted sanctions’ imposed by the EU and

other western allies has been quite volatile. Russia was seen: ‘[..] to have broken every basic

principle in the Helsinki Final Act of 1975 concerning the respect for the territorial integrity and

sovereignty of states, and repudiation of the threat of force.’ (Emerson 2014, 2). Therefore, it was

seen of utmost importance mainly for European and North American leaders to condemn Russia’s

actions in Ukraine – and furthermore take action and unity of Western states. This triangle that

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has been created between Russia-EU-Ukraine, and one might add the United States, has been

described unique case of global players imposing sanctions and counter-sanctions on one another

(Emerson 2013, 2). The sanctions have been criticised as following the logic of ‘something must

be done; this is something; therefore it must be done.’ (Bond et al. 2015, 1).

One might ask what this turbulence in Europe and global affairs in general, has to do with

the small Republic of Iceland located in the middle of the Atlantic Ocean? And why, Iceland,

would adopt these sanctions under the EU framework after formally requesting its EU candidacy

be scrapped in 2015 (European Commission 2015).

The interconnectedness of the world includes even small island states on the border of the

habitable. Iceland’s security allegiance with NATO and cooperation with Nordic and European

countries is of vital concern to the nation (Sveinsson 2016). Iceland furthermore remains a member

of EFTA and thus part of the EEA Agreement between EFTA member states and the European

Union. This does not mean that Iceland automatically subscribes to every Council decision.

Cooperation in the Single Market through the EEA Agreement excludes foreign policy decisions

– among many other things.

The former Chairman of the Foreign Affairs Committee Birgir Ármansson (2016),

explained that the formal process was that the European Union invites EFTA countries to take

part in sanctions through the EEA Agreement (Ármannsson 2016). In 2012, Iceland had aligned

itself with 91% of relevant foreign policy decisions, when invited by the EU — the 9% where

Iceland did not cooperate were due mainly to technical difficulties. With regard to restrictive

measures the normal procedure is that Iceland adopts the relevant sanctions introduced by the

Council Decisions (European Commission 2012). Ármansson could not remember any occasions

where Iceland chose not to cooperate (Ármannsson 2016).

Iceland formally adopted the CFSP decision 2014/386/CFSP, based on the principle of

the EFTA—EU cooperation through the EEA Agreement, 2/1993. But the decision to take part

in the restrictive measures was not born of obligation, but rather willingness to cooperate. There

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is no clause in any agreement between Iceland and any other actor which states that Iceland should

or should not take part in sanctions of any kind. As a sovereign state it is to take independent

decisions.

What is even more interesting to note is that Iceland’s participation in the sanctions is

mainly symbolic. The former foreign minister who took the decision conceded that: ‘[..] from

Iceland’s point of view the sanctions were symbolic. There is no real trade with any of the products

or financial services that were listed. The only project affected was one small submarine – which

could be used for warfare — but was built for oil drilling.’ (Sveinsson 2016).

3.2.1: Russian Countermeasures

On the 6th of August in 2014, Russian President, Vladimir Putin signed decree banning the import

of a variety of products, including: agricultural products, raw materials, fish and other foodstuff

from the countries which had signed the sanctions against Russian actors (ERPS 2015, 3). These

sanctions are still in place and affect all EU countries, but the effects vary considerably; mainly

affecting producers in the agricultural sector within the EU member states (ERPS 2015, 4-6). A

year later, Iceland along with Albania, Montenegro and Liechtenstein were added to the list of the

states affected by the countermeasures (ERPS 2015, 3) (IMFA 2016, 7).

The countermeasures imposed by Russia proportionately hit Iceland more negatively than

most other countries (Reykjavik Economics 2016, 5). This is due to the reliance of the Icelandic

economy on seafood exports, it being among the largest seafood exporters in the world — and

how relatively important the Russian market is to the seafood industry — especially for mackerel

(Reykjavik Economics 2016, 5). The fisheries lobby group Fisheries Iceland and its main

spokesperson Jens Garðar Helgason, criticised the decision to join the sanctions due to a lack of

strategic thinking, a lack of information flow and a lack of consideration for interests of the fishing

industry (Helgason 2016).

22

3.3: Decision-Making in Iceland

‘This matter must not centre around money, it is about the interests of the whole of the Icelandic nation.’

(Sveinsson 2016)

Gunnar Bragi Sveinsson — Minister for Foreign Affairs

Iceland de jure adopts restrictive measures on the basis of legislation nr. 93/2008, on the execution

of international sanctions. As aforementioned, the EU can invite Iceland to take part in CFSP

restrictive measures on the basis of the EEA Agreement. (IMFA 2016). Before Iceland supports

restrictive measures, the Parliamentary Committee of Foreign Affairs must be consulted. The

Foreign Minister of Iceland subsequently takes major decisions regarding restrictive measures

supported by his Ministry (IMFA 2016).

Former Icelandic Minister for Foreign Affairs Gunnar Bragi Sveinsson, describes the de

facto decision-making process in 2014, to take part in the restrictive measures, as a two-week

process marked by considerable deliberation with various actors (Sveinsson 2016). The initial

impetus for Iceland to join the restrictive measures came mainly from the United States, but also

the EU, after both of the actors had designed their own sanctions. The unity of NATO states, and

especially the willingness of the United States, seems to have influenced the decision of the foreign

minister and his ministry – who specifically quoted the discussions in NATO Summits, which

partly dealt with the Ukraine crisis and were attended by Icelandic delegates (IMFA 2016, 5)

(Icelandic NATO Delegation 2015).

After having designed a proposal in the Ministry for Foreign Affairs3, the idea is presented

to the Icelandic Cabinet. The discussions in the executive branch of the government revolved

around the possible effects of the decision to join the sanctions in March of 2014. Eventually, a

decision was reached to support the sanctions (Sveinsson 2016), despite of media rumours

regarding divisions within the Cabinet (RÚV 2015) (Visir.is 2015) (Icelandic Review 2015). The

Minister and the IMFA then consulted the Foreign Affairs Committee – which in turn discussed

3I will use IMFA for short hereafter

23

different sides to the decision — the decision of the Committee was simple: ‘To fully support

restrictive measures against Russia.’ (Ármansson 2016). The former foreign minister was as

unequivocal as he asserted that: ‘The only clear option for me was to join [the sanctions].’

(Sveinsson 2016).

For twelve months, after the original decision was reached by the Icelandic government in

March of 2014 and until August 2015, when Russians imposed an import ban on a variety of

Icelandic products (IMFA 2016, 18), all hell broke loose. Fisheries lobby groups representatives

have described it as an ‘extremely stressful summer of 2015.’ (Ólafsdóttir 2016) and Foreign

Minister Sveinsson described it as a: ‘serious blow.’ (Al Jazeera 2015). He had expected the

Russians to add Iceland to the list, but the ferocity and disproportionality surprised him (Sveinsson

2016). The lobby groups representing the fishing industry tried to make the case that this

countermeasure imposed by the Russians was too serious a blow – and tried to evaluate the

interests at stake for the fishing industry (Helgason et al. 2016).

What followed might be described as a turf-war between the fishing lobby groups on one

side and the foreign minister and his ministry on the other. Former foreign minister Sveinsson

describes pressures as high and accused the lobby groups of wanting Iceland to: ‘change horses in

midstream’, but feels he and his ministry did a good job of keeping the fishing lobby groups

informed (Sveinsson 2016).

Three reports were subsequently released analysing the impact of the countermeasures.

The first was from the Regional Development Institute in 2015, which described highly negative

impacts on around ten communities in Iceland and estimated that there could be a serious loss of

wages for employees (Icelandic Regional Development Institute 2015, 2-3).

The latter was prepared on the behest of an ad hoc task force from various government

agencies and Fisheries Iceland (SFS) to assess the economic impact of the Russian counter-

sanctions (Reykjavík Economic 2016). It was published in early 2016 and their outlook was quite

bleak — highlighting the loss of revenue of Icelandic companies and the loss of trade that could

24

result from the counter-sanctions. Billions of Icelandic krónas would be lost and approximately

1% of the total Icelandic GDP could be in danger (Reykjavík Economic 2016). One of the main

criticisms from the lobby group, Icelandic Fisheries, was the lack of preparation and the disregard

to the interests of Icelandic fishing exporters and it was very important to them to explain and

inform the Foreign Minister of the consequences of his decision (Helgason et al. 2016). PM

Sigmundsson, was sceptical towards Iceland’s participation in the sanctions, arguing that it would

be unfair that the country that was least involved was hit the hardest (Sigmundsson 2016).

The third, was published by the Icelandic Ministry for Foreign Affairs in January 2016,

gave a more holistic review of Iceland’s interests (IMFA 2016). Keeping in mind potential material

losses, it set out the persuasive argument that respect for international law and territorial

sovereignty was quintessential for Iceland, due to its reliance of escaping international anarchy. It

furthermore highlighted the importance of cooperation and solidarity with its allies and the general

notion that deviation from Iceland’s set course in international relations would bear negative

consequences (IMFA 2016, 2-6).

In spite of objections and rivalries in Iceland and other European countries, the economic

sanctions have been prolonged numerous times by the European Council. First in March of 2015,

when they were linked to the implementation of the Minsk agreements until the 31 of December

2015. After that they were extended again until 31 of July in 2016 for half a year. Finally, they were

renewed by the Council for a further six months on the 31 of July in 2016 until 31 of January 2017

(Council of the EU 2016).

Iceland has always followed the same course even after a Cabinet reshuffle in 2016 —

which was due to the Panama Papers scandal which forced the Prime Minister of Iceland to resign.

The new foreign minister Alfreðsdóttir has even emphasised Iceland’s commitment by stating:

‘We stand by our western allies.’ (Kjarninn 2015). Russia has also stood their ground and have also

prolonged their import band on products from the sanctioning countries until 2017 (RÚV 2016).

This issue is far from resolved and there seems to be no end in sight when this is written.

25

3.4: Tough Choices

The rhetoric in Iceland regarding the decision to join the restrictive measures is interesting to the

observer of international politics. Especially the dilemma between: a) Material interests and the

effects for the Icelandic economy, mainly emphasised by the fishing lobby groups and some

notable politicians, even the likes of former PM Gunnlaugsson (2016). Their outlooks were aimed

at increasing export to Russia — and might even be characterised as having an isolationist,

opportunistic streak. If Iceland had acted based on those interests, it would not have taken part in

the international sanctions imposed on Russia, or would at least have withdrawn their part after

the countersanctions were imposed.

B) Ideational interests rooted in norms of appropriate behaviour and respect for

international law. These are often based on Iceland’s identity as a western state (viz. Alfreðsdóttir

2015), a European state or even a Nordic state. These seem to have been in the driving seat thus

far – as Iceland decided to take part in the restrictive measures. This typology is not as clear cut as

they seem. Most decision-makers were probably aware of both of these sides of the coin as former

foreign minister and current MP, Össur Skarphéðinsson rightly suggested (Skarphéðinsson 2016).

However, it is apparent that decision-makers, especially the foreign minister at the time, had a stark

clash of interests and had to juggle them correctly.

One might however suggest another possible logic of action which may have guided

behaviour which was based on what might happen if Iceland would not take part in the sanctions.

C) State reputation or the fear of the consequences for Iceland’s state reputation as an international

player. Iceland as a sovereign state depends on other actors in the international fora to maintain

international law and normalised nations. Iceland relies heavily on its partners and allies in defence

and trade cooperation. If Iceland had defected from their allies in this case, who might know what

could happen in regards to their future cooperation with other states?

26

The dilemma I have put forth here often applies to decision makers around the world.

One might exchange the interests of the fishing lobby with any strong lobbying group. What is

interesting about the Icelandic case study, is how clear and concentrated the material interests were

and therefore they prove a very insightful and interesting case which could tell us a great deal about

how decision makers make their decisions and the logic they follow. It is easy to make grand

gestures and offer diplomatic verbiage, but when material interests are at stake, most countries

would value material interests above ideational ones. This is also partly what makes this case so

unique – that despite of a potential loss of 1% of their GDP (Reykjavik Economics 2016), Iceland

takes this consequential symbolic (Sveinsson 2016) decision. Although the Icelandic case is quite

unique because of the smallness of the country and the reliance of the economy on the fishing

industry — it proves a very interesting laboratory for research on the interplay between domestic

and international politics.

A) Material

interests

B) Ideational

Interests

C) Fear for State

Reputation

What guides

action?

Short-term interests Norms, appropriate

behavior

Long-term interests,

fear of consequences

Consequences for

this case study

Defection (see Faroe

Islands)

Support for sanctions

(see Iceland and

Norway)

Support for sanctions

(see Iceland and

Norway)

Source: Author

3.5 Contrast — Cases of the Norway and the Faroe Islands

Two states, one sovereign, Norway, and one mainly self governing entity, Faroe Island, faced

similar decisions as Iceland in regards whether to take part in the sanctions imposed by the EU.

To compare Iceland’s decision, I will now contrast it with two of the most relevant cases.

First, the case of Norway and their involvement, is quite similar to that of Iceland. They

aligned themselves with the EU sanctions simultaneously to Iceland and are also a NATO member

and an EEA State, with close links to the EU. The main differences being firstly, that Norway was

27

on the original list of countermeasures whilst Iceland was not added until a year later (European

Commission 2015). Secondly, the Norwegian market was better adapted for the shock. The

Norwegian market is less reliant on exports of fish, because of their oil wealth, and they have

subsequently found new markets for the products affected by counter sanctions (IMFA 2016, 19).

Norwegian officials seem firm in their opposition to Russian actions in Ukraine and in their

support for the sanctions (Barents Observer 2015). If we look at the typology I have set up

between the different interests, it is clear that Norway chose to protect their state reputation (c)

and and ideational interests (b) overcame material interests (a) in their case.

The Faroe Islands, on the other hand are outside the Russian countersanctions and do not

formally take part in the restrictive measures directed towards Russia (IMFA 2016, 19). As a semi-

independent country they can partly control their own policy and have taken this consequential

decision. The result has been a sharp increase in trade between Russia and the Faroese and they

have even been touted the winners of the tit for tat sanctions (WSJ 2015). The Director for

Icelandic Fisheries pointed out: ‘It’s Christmas in the Faroe Islands.’ (Árnason 2016). Sveinsson,

the former foreign minister had a more pessimistic outlook and commented that: ‘The Faroese

will regret their decision later on.’ (Sveinsson 2016). The Faroe Islands have even opened up a

specific representative office in Moscow in 2015 (Reykjavik Economic 2016, 28).

In the case of the Faroese, it is obvious that they chose the material interests (a) over the

ideational interests (b and c). Whether this will be consequential for Faroe Island’s international

reputation remains to be seen. But as they are not a fully sovereign state and are even smaller than

Iceland on the international stage, they do not necessarily have the same fear of consequences.

28

4. Identity, Fish or Reputation?

Now I will thoroughly assess which hypothesis, if any, fits with the case and if they can provide us

with a better understanding of how the decision was made and sustained. The hypotheses provided

in the introductory chapter will be assessed and tested in turn and either supported or rejected.

4.1 H1: State Reputation and Cooperation

‘To disrupt the western alliance would be considered a major deviation from Icelandic foreign policy [..] and

would in a best case scenario result in our allies seriously questioning which journey the Icelandic officials have

chosen to embark upon and furthermore negatively impact the relationship with our closest allies, both within

the EEA and NATO.’ (IMFA 2016,4)

The above quotation perhaps best captures the spirit of the state reputation hypothesis, which

assumes that Iceland took part in the sanctions mainly because they feared a fall out in the relations

with their main allies and a major blow to their reputation as a reliable partner. In this chapter we

assume state rationality and egoistic behaviour and make use of neoliberal theories on cooperation

to try to understand the behaviour of Icelandic officials.

In the case of Iceland, we see that Iceland cooperated with its allies, based on Axelrod’s

and Keohane’s (1985) definition on cooperation, they adjusted their behaviour to the preferences

of western allies (Axelrod and Keohane 1985, 226). They did this by aligning themselves to the

sanctions imposed by the EU on Russia. The question remains, what drove the decision makers

to do so? If we assume Iceland is a rational, egoistic actor, focused on serving its own interests

(Keohane 1984, 5-17), why should it take part in international sanctions regarding a conflict far

away from its borders, especially if it damages its local economy?

The idea of the importance of state reputation championed by neoliberal scholars (Tomz

2007) provides us with a very helpful answer to this puzzle. As explained earlier it provides states

29

with a reason to cooperate and comply, even when the domestic costs are high. Based partly on

Axelrod’s (1980) theory of the evolution cooperation and rational choice arguments. It expects

self interested actors in repeated games to mimic the other players move and subsequently and

slowly cooperation develops (Axelrod 1984, 13-14). Tomz (2007), is among the scholars which

have illustrated this and elaborates its relevance to international relations. He argues that

cooperation is maintained due to the fear of retaliation in relationships between states and as a

worst case scenario, the relationship would break down (2007 2011, 5).

This is a very compelling argument for the case study. The Icelandic officials who were in

charge of the decision making in the case of the sanctions expressed grave concerns regarding the

relationships with our closest benefactors, NATO and the European Union. The foreign minister

who took the decision stressed that:

‘We have a security alliance with NATO which is imperative for us. There is too much at stake and we have to

be able to rely on our friends and allies. When we take part in international cooperation in the future, fighting

for this and that cause, we have to be able to rely on these partners as well. If we would always simply switch

sides whenever possible, that would come back to haunt us.’ (Sveinsson 2016).

This general sentiment was very apparent in the the Foreign Ministry’s report on Icelandic

interests. It argued that it was in Iceland’s interest to take part in the sanctions so not to breach

the solidarity of the western countries and that defection would tarnish the reputation of Iceland

as a solid ally (IMFA 2016, 2). Sveinsson furthermore emphasised the importance of watching out

for the shadow of the future, stating that it would have been marvellous to just sell fish to Russia.

But the consequences he feared were that Iceland would have been marked as opportunistic and

untrustworthy. That if we would not have cooperated, it would have had a huge effect on future

cooperation (Sveinsson 2016). The Chairman of the Foreign Affairs Committee, has emphasised

it is key for Iceland to have a good working relationship with North America and Western Europe

and it would have been tactless not to support the measures (Ármansson 2016).

30

The best case scenario for Iceland if they would have chosen defection would have been

a one-time redemption, following this logic (tit-for-tat), but they could have had a breakdown in

relations with their closest allies (Tomz 2007). To further strengthen the argument, one might

supplement the idea of repeat play with that of issue linkage (Tomz 2007, 7). Meaning simply that

states link one or more issues when making deals.

Iceland’s relationship with NATO and EU member states form the bedrock of its foreign

policy (Thorhallsson 2013), e.g. its participation in the Coalition of the Willing, when many

traditional allies of the US and UK opted out (Gunnlaugsson 2015). It would have been

catastrophic for Iceland for a blunder on this front to affect another issue area, such as the security

cooperation with NATO and the United States, or trade interests with the EU — which are

imperative to Iceland. Icelandic decision makers knew that there was no other possibility than

close cooperation with these actors and which must have affected the decision. One might also

mention that only recently the United States reaffirmed their security cooperation with Iceland

(DoD and IMFA 2016). This might be a clue that Iceland’s relationship with the United States has

strengthened, which could possibly be linked to its firm stance on the restrictive measures and a

hint that some issue linkage took place.

The idea of maintaining Icelandic state reputation as a reliable ally is very much based on

the idea of logic of consequentialism (March and Olsen 2004) and the fear of retaliation. As

Keohane (1984) explains in his seminal work on cooperation: ‘For reasons of reputation, as well

as fear of retaliation and concern about the effects of precedents, egoistic governments may follow

the rules and principles of international regimes even when myopic self-interests counsels them

not to.’ (Keohane 1984, 106). This seems to play a major role in the minds of the decision makers.

Therefore, it is logical to support this hypothesis of state reputation in this case study.

But this does necessarily not tell the whole story. This decision was so significant for such

a small country, other factors must have played a role what about the role of identity and its effects

on Icelandic interests?

31

4.2 H2: Identity and Interests

‘This is a matter of principles — obviously we align ourselves with the countries which stand by our side.’

Minister for Foreign Affairs Gunnar Bragi Sveinsson

(Sveinsson 2016)

One of the most important contributions that constructivist thought brings to IR was the idea that

identities could change and affect state interests (Hopf 1997, 174-175). As Checkel (1998) has

argued, one of the main advantages of constructivism is that of: ‘[..] expanding the theoretical

contours of IR. By exploring issues of identity and interests bracketed by neoliberalism [..]’

(Checkel 1998, 325). This is based on the ontological position that the international structure can

be socially constructed – but not set in stone as anarchic, hostile and based on material interests

(Wendt 1992). In the case of Iceland, one can persuasively argue that Iceland’s sense of identity as

a: western, NATO, and Nordic state played a major role in the decision to support the restrictive

measures. All sources both, both interviews and reports that support the decision do so on the

basis of Iceland’s identity. All of the decision makers realised that Iceland’s participation in the

sanctions was partly based on symbolism – of choosing a block (Sveinsson 2016) (Ármansson

2016) (Skarphéðinsson 2016).

The foreign minister at the time considered the decision to be based on principle and he

asserted that it reflected the group Iceland wanted to align themselves with in general; EU, North

America, the Nordic countries adding that this is the group of nations Iceland belongs with

(Sveinsson 2016). This rhetoric reflects Wendt’s assumption of state identity being both type

identities: Iceland belonging to a group of liberal, democratic, western countries, and furthermore

role identities: Seeing the Russians as foes and the western states as friendly (Wendt 1999, 224-

233).

32

The Icelandic national interests, at least the interests of the decision making elite seems to

be coloured by Iceland’s position in the world and that this identity is more telling than some

realise or would admit. As Hopf (1997) argued, identity affected the way in which Icelandic

decision makers saw themselves and subsequently impacted their preferences and interests and

decisions (Hopf 1997, 174-175). Iceland’s interests were not a ‘black-box’ or merely material, but

partly reflected the identity of the decision makers.

The decision to support the restrictive measures imposed on Russia one might argue was

the ‘appropriate thing to do’ based on Iceland’s elite identity as a western, based on the rule of law,

democracy and liberalism. Furthermore, one might argue that the international norm of territorial

integrity, played a major role in Iceland’s unequivocal reaction. As the Ministry of Foreign Affairs

argued in their evaluation of Icelandic interests: ‘cooperation and harmony with western

democracies has been a guiding light for Icelandic foreign policy for decades. During the

independence era it has manifested itself several times that Iceland is best off within this group of

states and by taking part in the solidarity of these states.’ (IMFA 2016, 1).

This argument that it is the ‘right thing to do’, to support western states in sanctions, is a

prime example and a case in point for the identity based, logic of appropriateness argument. It was

upheld by the foreign policy elite comprised of the foreign minister, his ministry and the foreign

affairs committee of the parliament (Sveinsson 2016) (Ármannsson 2016) (IMFA 2016).

Therefore, the second hypothesis that Iceland’s decision to cooperate is based on interests

intertwined in its identity is supported. The decision makers stressed the importance of Iceland’s

place in a group of western states and believed that they acted on behest of interests based on that

front.

4.3 H3: Europeanisation

Based on data collected there seems to be very limited influence of Europeanisation on the

decision of Iceland to support the restrictive measure. Even though Iceland formally took part

33

under the auspices of the European Union, even though it was not a member state, that seems to

be more based on convenience more than anything else. Based on my understanding of the

situation, there was more pressure from the United States to take part in the sanctions. When the

interviewees were asked about the EU’s influence, they considered it to be limited, but specifically

mentioned the importance of the United States (Ármansson 2016) (Sveinsson 2016)

(Skarphéðinsson 2016).

The government that took the decision was EU-sceptical and withdrew Iceland’s

application but wanted to remain a close ally to the European states. Iceland was not obliged to

take part in the sanctions (Sveinsson 2016), but chose to do so, based on a different reasoning.

The hypothesis of Icelandic Europeanisation must therefore be rejected.

4.4 Discussion

The original hunch of the author was that Iceland’s participation in the restrictive measures

stemmed from the high levels of European influence it was exposed to, but on closer enquiry that

proved to be a misguided thought. A combination of arguments based on the fear of retaliation

by allies and Iceland’s identity and the norm cooperation guided Icelandic decision makers.

What is even more interesting to note is that both of the two major hypothesis were

supported, even though they are based on partly contending logics (March and Olsen 2011).

However, as March and Olsen (1998) point out, the relationship between these two logics is

immensely complex and: ‘the two logics are not mutually exclusive’ (March and Olsen 1998, 952).

They suggest a several possible ways in which these logics can interact. In this case they

worked as mutually reinforcing. Both the fear of consequences and logic of appropriate behaviour

resulted in Icelandic decision makers supporting and maintaining the international sanctions. This

resulted in Iceland not pursuing the short-term material gains — which were championed by

efficient, historically powerful lobby groups. The influence of the fisheries sector over Icelandic

foreign policy has long been notable (Thorhallsson 2004) (Ingelbritsen 1998). This makes the

34

stance Iceland took even more astonishing. When you have a sector such as fisheries which

contributes around 42% of exports — in an export driven economy (Promote Iceland 2013), it is

quite astounding to endanger a substantial part of that sector’s exporting potential due to an

international commitment.

It is pertinent to revisit the importance to Iceland to evaluate interests in such a way that

international law and territorial integrity is respected (IMFA 2016). One of the main arguments

made, both by the Foreign Ministry and the Foreign Minister, is that Iceland must stand up for

international law and make sure it is respected (Sveinsson 2015). For Iceland it is seen as an

existential question, due to our reliance on alliances and the respect for international law. If that is

not in Iceland’s interests, to preserve an assurance of sovereignty through the respect of

international law, it is hard to see what is.

The world is usually neither black nor white and politics are certainly neither. Even though

two of the heuristic devices have been reinforced, it does not mean they are both always right. But

in this case study, two logics of behaviour seem to have guided decision makers.

This is a very interesting and revealing inquiry into the way important international

decisions are made, from the perspective of a small state with powerful neighbours. One might

say that Iceland must identify as a western, Nordic, European democracy strongly committed to

the international community acting to secure the territorial integrity and vital interests of weaker

nations from powerful ones — because Iceland cannot continue to exist in a world where its

territory and vital interests are not secured by such nations.

5. Conclusions Despite the fact that the results from this paper have reinforced two hypotheses, most often seen

as contending, this result shows how complex and intricate politics can be. The Europeanisation

hypothesis was rejected; due to a lack of substantive evidence. In answering the research question

of why Iceland took part in the restrictive measures I have found the two logics of decision-making

35

interlinked in complex ways. First, the hypotheses were presented, second the literature was

reviewed and third I introduced the case study and subsequently linked the two.

Based on interviews with policy makers and stakeholders who took part in the decision,

this paper has argued that the concern for Iceland’s state reputation (Tomz 2007) (Keohane 1984)

had a very important impact on the way decision makers approached the issue at hand. This is

based on the neoliberal conception of how cooperation works, that actors are rational and consider

consequences. In the case of Iceland, actors were concerned about what effects defection in the

sanctions might have on the future of cooperation with Iceland’s allies and did not seriously

consider defection (Sveinsson 2016).

What has likely reinforced the vigour of Icelandic decision-makers when it came to making

the decision was has been described by constructivists as the importance of identity in shaping

interests and subsequently decisions (Finnemore and Sikkink 2001) (Wendt 1992), including

whether to cooperate and defect. This however, means that the researcher must look at things

from the perspective that interests are socially constructed. This adds value to the ideas of

neoliberalism and rationalism as many constructivist scholars have argued (Adler 2013). Iceland’s

identity as a Nordic, western, European, sovereign nation state affected its decision to cooperate

in our case study — based on thorough interviews with relevant actors in the process. In spite of

pressures from one of the main sectors of Iceland’s economy — the fishing industry which was

greatly affected by Iceland’s support of the sanctions, the politicians have stood by their decision.

Regarding cooperation, it is hard to disentangle the fear from retaliation from genuine

willingness to cooperate or the effect of state identity or a logic of appropriateness. Future research

might take heed of this result and continue on a path which has already been embarked upon

towards convergence of theoretical insights, which can work as mutually reaffirming.

36

6. Bibliography Interviews conducted by author:

Ármannsson, Birgir. 2016. Birgir Ármansson — Former Chairman of the Icelandic Foreign

Affairs Committee. Current Member of Icelandic Parliament. Interviewed by author. In

person. Icelandic Parliament.

Helgason, Jens Garðar, Steinar Ingi Matthíasson, and Hallveig Ólafsdóttir. 2016. Fisheries

Iceland Representatives. Interviewed by author. In person. Fisheries Iceland.

Skarphéðinsson, Össur. 2016. Össur Skarphéðinsson — Former Icelandic Minister For Foreign

Affairs and Current Member of the Icelandic Parliament Foreign Affairs Committee.

Interviewed by author. In person. Austurstræti, Iceland.

Sveinsson, Gunnar Bragi. 2016. Gunnar Bragi Sveinsson — Former Icelandic Minister for

Foreign Affairs and Current Minister of Fisheries and Agriculture. Interviewed by author. In

person. Ministry of Fisheries and Agriculture.

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