To know how Iceland’s referendum was going to turn out, instead of poring for months over polls that never moved, the European Union should have looked at the flight schedules: it would have discovered that on October 26, the first direct route between Beijing and Reykjavík is set to launch, and it would also have understood that the real problem wasn’t fishing rights, but the political and economic vacuum left on the island by the EU and NATO. And the fact that, at a certain point, China stepped in to fill it.
In the years between the breakdown of Iceland-EU negotiations in 2013 and the hasty referendum called by the island’s progressive government, spooked by Donald Trump’s Arctic outbursts, Europe’s relations with Iceland were routine. Good, yes; commercial, yes; touristic, yes. But business as usual. Iceland’s relations with China, by contrast, were intense and, above all, rich in investment and exchange. It started with a currency swap agreement in 2010, when Iceland was in the grip of the financial crisis. Then, in 2013 — right as talks with the EU were being cut off — Iceland became the first European country (in the geographic sense) to sign a free trade agreement with Beijing.
For Reykjavík, the logic of the deal was obvious: it saw the doors of a giant market opening up to its fish. For Beijing, it was less obvious. What interest could a giant like China possibly have in a marketplace of 300,000 people? Very little, at least commercially. A great deal, however, from an energy and geographic standpoint. On the energy side, the reason for so much interest comes down entirely to geothermal power: Iceland produces, on its own, simply by tapping its volcanic soil, enough energy to power around 90 percent of its homes and a large share of its industry. China, at least in certain regions, has similar characteristics and enormous geothermal potential — except Beijing lacks the necessary know-how. Iceland, on the other hand, has it in abundance.
So, over the years, important energy alliances have grown up between Beijing and Reykjavík: China puts in the money, Iceland the technology and expertise. “Iceland’s leading company, Orka Energy, partnered with Sinopec to develop the Shaanxi Green Energy Geothermal Development (SGE) joint venture, in which Sinopec holds a 51 percent stake,” the Dutch think tank Clingendael writes in a report. Sinopec’s subsidiary, Star Petroleum Company, signed a deal with another Icelandic firm, Geysir Green Energy, and in 2018 Iceland’s Arctic Green Energy Corporation and China’s Sinopec (SNPMF) secured a $250 million loan from the Asian Development Bank to help develop geothermal resources in China. On top of that, every year Iceland hosts a program for young Chinese engineers and researchers, offering advanced training courses in the sector.
And where does Europe fit into all this? Isn’t it interested in this form of clean energy? Perhaps — but, as is often the case, with markedly less initiative. The same holds true for geography: it has long been known that Arctic shipping routes are destined to become navigable, and above all strategic, and that Beijing — despite having no Arctic coastline of its own — is keen to secure an outpost along those routes, to build its own Polar Silk Road. And yet, in 2006, the United States decided that, since the Cold War was over, the presence of American bases in Iceland, a NATO member, was no longer necessary, and began withdrawing its weapons and troops. A decision that, over time, has proven rather short-sighted — partly because, in some sense, the Cold War has started up again (so much so that after Russia’s 2014 invasion of Crimea, American equipment and personnel returned to the Keflavík base), and partly because, as usual, the vacuum the West left at such a crucial crossroads was filled by Beijing. In 2018, the Polar Research Institute of China (PRIC) opened a scientific observatory in the island’s northeast, dedicated to studying the northern lights. The trouble is that the equipment used to study the northern lights is the same equipment used to track satellites. The practical upshot is that Beijing could end up with what amounts to a military base right in the middle of a NATO country. And the reason it might get to have one is that it simply occurred to no one else — not in NATO, not in the EU — to do it first.
