Much responsibility, little involvement: Municipalities in Iceland’s defence

Debate on defence and security in Iceland has long focused on the role of the state: Iceland’s membership of NATO, the Defence Agreement with the United States and, more recently, the work of the Icelandic Coast Guard (Landhelgisgæsla Íslands). That is natural, since foreign and defence policy are primarily the responsibility of the state. But it is not the whole story.

Decisions on increased military presence, defence installations, fuel stocks, military exercises or warship visits always affect specific, geographically defined areas and the communities that live there. Relevant issues include planning, port facilities, roads, water supply and sewerage, fire services, civil protection and public information. Many of these tasks are the responsibility of municipalities.

There is therefore reason to examine more closely what role municipalities should play in security and defence, what information they need and how the costs of increased activity should be divided between the state and municipalities. The new defence and security policy does not mention municipalities at all, yet the government’s fiscal plan counts their spending towards Iceland’s contribution to NATO’s 1.5% target. The state has thus taken municipal costs into account, although no agreement is in place on who should bear them. The principle should be simple: responsibility, authority, information and funding must go together.

A new policy without municipalities

On 3 February 2026 Alþingi adopted Iceland’s first comprehensive defence and security policy. It sets out greater participation in defence cooperation, progressively increasing appropriations for defence-related projects and infrastructure, larger exercises and greater emphasis on civil preparedness and resilience.

Municipalities are not specifically mentioned in the policy, however, and references to the authorities mean primarily the state. Municipalities nonetheless have an important role in implementing many of the tasks the policy envisages. The link between defence, which is the state’s responsibility, and the statutory tasks of municipalities has not been worked out clearly enough, in terms of either responsibility or cost.

Counted but not agreed

At the NATO summit in The Hague in June 2025, Allies pledged to spend the equivalent of 5% of GDP annually on defence and security by 2035. At least 3.5% is to go to defence under NATO’s definition of defence expenditure. Up to 1.5% may go to other spending that supports defence and security, including protection of critical infrastructure and communications networks, civil preparedness, resilience, innovation and strengthening the defence industry.

Under NATO’s definition, defence expenditure covers payments by the state to meet the needs of its own armed forces or those of Allies. Municipal spending therefore falls outside the 3.5% category, as does civil protection spending in general. NATO’s published material, however, contains no comparably precise definition of the 1.5% component, including whether municipal costs can count. The Icelandic government has nevertheless answered the question itself. Iceland has no armed forces and has been exempt from the 3.5% component. Iceland’s commitment is the 1.5% component. The 2027–2031 fiscal plan, adopted by Alþingi, states that the 1.5% benchmark covers “the public sector as a whole; the state, municipalities and public enterprises owned by them”. Municipal spending on fire services, transport, utilities and other civil preparedness will therefore count towards Iceland’s contribution. The plan does not say who is to bear the cost.

This is an important matter for municipalities. Since their spending on fire services, transport, utilities or other civil preparedness may be counted towards Iceland’s contribution to the 1.5% target, the state should also share in funding it. Counting alone creates no obligation to reimburse, but it strengthens the municipalities’ case that the costs should not be shifted onto them.

The same should apply when municipal infrastructure is used for defence and security tasks decided by the state. There must then be an agreement on the task, cost sharing, funding and settlement. A clear distinction must be drawn between a municipality’s general services and the additional costs a state decision causes. Care must also be taken that the same cost is not counted more than once.

Defence-related development can certainly benefit municipalities. It can create jobs, increase demand for services and speed up improvements to ports, airports and transport infrastructure. But these benefits do not tell the whole story. Revenue does not necessarily accrue to those that bear the costs. Companies or the Treasury may gain from increased activity while the municipality bears the cost of services, maintenance and preparedness. Both benefits and costs therefore need to be assessed before deciding how spending is divided.

For municipalities to protect these interests, they must record defence-related additional costs separately. Otherwise those costs can easily disappear into general road works, maintenance, fire service wages or the purchase of backup power. An annual cost statement and shared definitions would strengthen both financial discipline and the municipalities’ position in dealing with the state.

Legal responsibility without full involvement

The division of responsibilities is set out clearly in the Civil Protection Act. The state is responsible for civil protection nationally and municipalities locally, in cooperation with the state. The Act also covers the consequences of military operations. Civil protection committees and the relevant district police commissioner work with the National Commissioner of the Icelandic Police on hazard assessments and response plans, which must be reviewed and tested. Municipalities, their agencies and the police commissioner must also assess the resilience of the district. Some of the resulting costs fall on municipalities.

This can create tension. The state decides the scale and location of defence-related activity, but some of the consequences can fall on the municipality concerned. The municipality may need to revise its land-use plans, strengthen its fire service, reinforce utilities and other infrastructure, change traffic arrangements and provide for evacuation in its response plans.

The effects are not only military in the narrow sense. Increased defence activity can bring more transport of fuel and hazardous cargo, more air traffic, noise and pollution risk. It can also increase pressure on transport, telecommunications and other critical infrastructure and require greater resilience against cyberattacks.

Suðurnes: overlap between defence and municipal tasks

Reykjanesbær is probably the clearest example of overlap between defence and municipal tasks. Civilian settlement and activity of military importance are intertwined in the town. The municipality contains part of Keflavík Airport, designated security and defence areas, Ásbrú (on the former US defence area) and Helguvík harbour with extensive fuel infrastructure. The Coast Guard operates security areas and provides host-nation support. Reykjanesbær is responsible for planning outside the designated airport and security areas, for compulsory schools and for other services to residents. The municipality, however, has limited decision-making power over defence-related activity that can directly affect how the town develops.

The media recently reported on plans for a 90-bed nursing home at Ásbrú, near the security area, which illustrates the situation clearly. When plans to convert two apartment blocks into a nursing home went to neighbourhood consultation, the Coast Guard’s Security and Defence Division (varnarmálasvið) drew attention to the site’s proximity to Keflavík Airport. The noise calculations generally used had not accounted for military flights. The Coast Guard therefore saw reason to examine whether stricter acoustic requirements were needed for the buildings.

Reykjanesbær is not the only municipality in Suðurnes facing defence-related challenges. Suðurnesjabær is another. The Suðurnes Regional Plan 2024–2040 reflects this. It is the work of the four Suðurnes municipalities, the Keflavík Airport Planning Committee (Skipulagsnefnd Keflavíkurflugvallar) and the Coast Guard, which holds planning authority for security area B on behalf of the Minister for Foreign Affairs. Defence-related development is therefore a regional matter rather than one for a single municipality.

Reykjavík: warships beside residential areas

Foreign warships are seen in Reykjavík harbour more often than before, alongside Coast Guard vessels. They are a visible sign of a changed security environment, but their presence also raises questions for the surrounding area. This applies especially when they berth in the Old Harbour. With development at Austurhöfn, permanent residents have also moved closer to the harbour area.

The capital’s situation differs in some respects from that of other municipalities. Alþingi, the Supreme Court, the Government Offices, Landspítali University Hospital, Reykjavík Airport and important harbour areas all lie within a few kilometres. Warship visits add to this mix.

In July 2026 the Spanish amphibious transport and command ship Castilla and the frigate Blas de Lezo lay in Sundahöfn, while Juan Carlos I, the largest warship in the Spanish Navy, lay in Faxaflói Bay. According to news reports, crews and other military personnel on board numbered between two and three thousand. The example shows that treating “warships” as a single category is not enough. A small patrol vessel differs markedly from a large warship such as Juan Carlos I, which can carry marines, vehicles, fighter jets and helicopters. A ship’s size, equipment, weapons and mission largely determine the risk assessment and the preparedness required.

Location matters just as much. When a warship lies at Miðbakki or elsewhere in the Old Harbour, a number of issues arise. Miðbakki is surrounded by housing, hotels, restaurants, offices and busy public spaces. In armed conflict, warships would generally be military targets. Their proximity to housing and busy urban areas must therefore be factored into planning and preparedness.

International humanitarian law must also be considered in this context, although it applies primarily in armed conflict and is not part of peacetime planning law. Iceland is a party to Additional Protocol I of 1977 to the Geneva Conventions of 1949. Under its Article 58, the parties to a conflict shall, to the maximum extent feasible, avoid locating military objectives within or near densely populated areas. They must also take the other necessary precautions to protect the civilian population and civilian objects.

The rule does not prohibit military activity near settlements. It must nevertheless inform peacetime decisions on where defence-related activity is located. Such decisions should rest on an assessment of the risk to residents and civilian objects and of whether it can be reduced through a different location or specific security measures.

This is not an argument against warship visits or continued development at the harbour. The two roles must, however, be planned together. If Reykjavík harbour and other Icelandic ports take on a greater role in defence cooperation, the state, the City of Reykjavík, Associated Icelandic Ports (Faxaflóahafnir) and emergency responders will need to decide in advance which quays suit which types of ship. They will need to agree on the boundaries of designated areas, access routes, access control, closures and possible evacuation. It must also be clear who is responsible for preparedness and who pays.

Diversion airports: the burden falls on the town

The link between municipalities and defence is not confined to Suðurnes and Reykjavík. The airports at Akureyri and Egilsstaðir are international airports and serve as important diversion airports when air traffic through south-west Iceland is disrupted. They can also support civil protection and the transport of people, equipment and supplies, and so can matter for defence preparedness. During Swedish Air Force air policing in February 2026, for example, approach exercises were planned at the diversion airports at Akureyri and Egilsstaðir. If the state intends a larger security and defence role for these airports, they will need further investment.

Akureyri Airport shows in particular how a diversion role can have direct effects beyond the airport itself. In February 2026, eight jets landed there within an hour when weather closed Keflavík. Some 600 passengers were stuck at the airport into the night, while the new terminal can hold at most 450 people, and local businesses supplied the stranded passengers with food. An event like this tests the airport as well as transport, accommodation, public information and, where relevant, health and emergency services. A new terminal and a larger apron have increased the airport’s capacity. Further development could both strengthen its diversion role and support direct international flights and business in North Iceland.

Democratic accountability and the necessary flow of information

These examples from individual municipalities suggest that state decisions can have significant effects on municipalities, which then have to deal with various practical consequences. Municipal involvement in security and defence is a democratic question. Defence-related activity can shape the development of a municipality or parts of it for a long time, restrict other land use and require investment that burdens municipal finances for years. When decisions affect people’s immediate surroundings, residents often turn first to the municipality. Yet it is difficult to hold elected municipal representatives politically accountable for decisions made by the state, potentially without meaningful consultation.

Sensitive information in defence matters must by its nature be handled with care. Municipalities nevertheless need to know enough to carry out their statutory tasks. As noted above, they must among other things assess resilience in their district and take part in preparing response plans. Where defence-related activity affects such assessments, a way must be found to share the necessary information without making sensitive information public.

Municipalities do not set the state’s defence policy. They are, however, inevitably involved in defence-related development that calls for changes in land use or planning, or for works subject to a permit. Their planning authority is statutory and therefore more than a formality. Consultation must therefore begin while location, impact on settlement, cost, mitigation and the division of tasks are still open for discussion.

Neighbouring states define zones of influence in advance

Sweden, Norway and Finland do not assume that military and civilian infrastructure must be geographically separated everywhere. The emphasis is on defining defence interests and zones of influence in advance, and on the state, municipalities and emergency responders working together on planning and preparedness.

In Sweden, the designated national interests for the military component of total defence (totalförsvar) include military airfields, firing and training ranges, naval exercise areas, technical systems and other military installations. Their zones of influence can extend beyond the installations or operating areas themselves, because of noise, requirements for unobstructed airspace and other risks. The Swedish Armed Forces therefore take an active part in municipal planning when planned development may affect these interests. The Armed Forces specifically note that noise from airfields and ranges can affect planning for housing, schools and health facilities.

In Norway, municipalities and counties are an important part of total defence. In a security policy crisis or war, municipalities must, among other things, ensure the safety of residents, maintain critical services, keep administration and emergency management running and coordinate civilian actors within the municipality. Finland’s comprehensive security model similarly rests on broad cooperation among many actors.

The shared lesson from these countries is therefore clear delineation of zones of influence, risk assessment and close consultation where defence-related activity and civilian settlement coexist, rather than separating military and civilian infrastructure everywhere.

From consultation after the fact to cooperation from the start

Iceland needs a clearer municipal dimension in security and defence. Needs vary between municipalities and no single solution fits everywhere. The principle should nonetheless be the same: responsibility, authority, information and funding must go together. Defence will remain a task of the state, but the country’s defences cannot be built without the municipalities. They are already part of Iceland’s defence capability and resilience, rather than outside stakeholders. The legal and institutional framework needs to reflect this. It must ensure that municipalities can carry out their role without the safety of residents or municipal finances becoming an afterthought.

The first step is obvious. The fiscal plan announces a long-term plan for public-sector contributions to defence and security, to be based on “a coordinated approach between government, municipalities and public enterprises”. The Ministry of Finance and Economic Affairs and the Icelandic Association of Local Authorities (Samband íslenskra sveitarfélaga) should agree on how to define and divide defence-related additional costs. They should do so before that plan is in place, and no later than the 2028–2032 fiscal plan.