This document is a dissertation cover sheet submitted by a student at the London School of Economics. The student's dissertation is titled "Fish, Identity Or Reputation: Iceland’s Participation in EU Restrictive Measures Against Russia" and has a word count of 10,000 words. The student is enrolled in the MSc EU Politics program. The cover sheet provides information on the submission deadline, the student's candidate number, a statement of authenticity signed by the student, and a confirmation that the student understands the university's plagiarism policy.

1. The London School of Economics and Political Science
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MSc European Studies: Ideas, Ideologies and Identities
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MSc Political Economy of Europe
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Dissertation Title:
Fish, Identity Or Reputation: Iceland’s Participation in
EU Restrictive Measures Against Russia
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1. Introduction .....................................................................................................................4
1.1 Research Question............................................................................................................................................5
1.2 Hypotheses ........................................................................................................................................................5
1.3 The Argument...................................................................................................................................................7
1.4 Research Limitations........................................................................................................................................7
2. Literature Review.............................................................................................................9
2.1 Introduction ......................................................................................................................................................9
2.2 Neoliberalism and State Reputation ........................................................................................................... 10
2.2.1 Anarchy, Rationality and Cooperation............................................................................................... 10
2.2.2 State Reputation..................................................................................................................................... 11
2.2.3 Repeat Play and Issue Linkage ............................................................................................................ 12
2.3 Constructivism............................................................................................................................................... 13
2.3.1 Constructivism: Identities and Interests ............................................................................................ 14
2.3.2 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................................................................................................................................................. 18
3.2: EU Sanctions: Iceland Cooperates ............................................................................................................ 18
3.2.1: Russian Countermeasures ................................................................................................................... 21
3.3: Decision-Making in Iceland........................................................................................................................ 22
3.4: Tough Choices.............................................................................................................................................. 25
3.5 Contrast — Cases of the Norway and the Faroe Islands........................................................................ 26
4. Identity, Fish or Reputation?......................................................................................... 28
4.1 H1: State Reputation and Cooperation...................................................................................................... 28
4.2 H2: Identity and Interests............................................................................................................................. 31
4.3 H3: Europeanisation ..................................................................................................................................... 32
4.4 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

19. 19
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

20. 20
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

21. 21
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. 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
3
I will use IMFA for short hereafter

23. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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.
References:
Adler, Emanuel. 2013. "Constructivism In International Relations: Sources, Contributions And
Debates". In Handbook Of International Relations, 2nd ed., 112-144. SAGE Publishing.
Al Jazeera. 2015. "Iceland: Fish Fight Spawned Over Ukraine Sanctions".
http://www.aljazeera.com/indepth/features/2015/10/iceland-fish-fight-spawned-ukraine-
sanctions-151007115626775.html.
Alþingi (Icelandic Parliament). 2008. “Lög um framkvæmd alþjóðarlegra þvingunaraðgerða
(Legislation regarding the execution of international sanctions)“
http://www.althingi.is/lagas/nuna/2008093.html
Axelrod, Robert. 1984. The Evolution Of Cooperation. New York: Basic Books.
Axelrod, Robert and Robert O. Keohane. 1985. "Achieving Cooperation Under Anarchy:
Strategies And Institutions". World Pol. 38 (01): 226-254. doi:10.2307/2010357.
Barents Observer. 2015. "Norway Continues Sanctions On Russia".
http://thebarentsobserver.com/society/2015/12/norway-continues-sanctions-russia.

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