Prime Minister Kristrun Frostadottir emphasized that the partnership will focus on critical infrastructure, cyber threats, hybrid threats, and defense cooperation, aiming to enhance security and economic resilience.

Iceland is strategically aligning with the European Union to unlock long-term investments in energy, technology, and defense, with negotiations expected to conclude by the end of 2025.

The partnership is expected to catalyze investments in renewable energy, digital infrastructure, and Arctic logistics, positioning Iceland as a key regional hub.

While geopolitical risks such as potential EU membership referendum and Arctic tensions exist, these are balanced by opportunities for strategic investments in Iceland.

European Commission President Ursula von der Leyen announced that discussions on a security and defense partnership with Iceland would begin on July 17, 2025, reflecting increased EU engagement in Arctic security.

Both Sweden and Finland have recently joined NATO, marking a broader European effort to strengthen security alliances amid rising geopolitical tensions.

The EU's focus on Arctic security has been intensified by increasing Russian and Chinese activities, prompting updates to the EU's Arctic strategy.

Key initiatives include expanding geothermal and hydroelectric energy, improving cybersecurity networks, and enhancing Arctic shipping logistics.

Iceland's Keflavík Airport extension, funded by a €200 million EIB loan, aims to boost air traffic capacity and establish Iceland as a North Atlantic logistical hub.

The partnership is expected to lead to significant investments in renewable energy, digital resilience, and transport infrastructure, fostering economic growth and strategic development.

Iceland’s abundant geothermal and hydroelectric resources position it as a potential regional energy hub, attracting clean-tech investments.

Iceland plans to hold a referendum by 2027 on resuming EU accession talks, with growing public support citing potential financial benefits.