Iceland, Worried by Rise of World Terrorism, May Set Up a Counterespionage Unit

Iceland has no army, but it may soon get a secret service.

In an age of terrorism and increasing superpower tensions, Iceland’s center-right government wants to increase the country’s internal security. Analysts say this may lead to the establishment of a counterintelligence organization.

Opponents of the idea argue that such secrecy would be anathema to the tradition of openness on this North Atlantic island nation of 240,000 people.

“Are they talking about increasing surveillance on Icelanders or about strengthening the look-out for foreign saboteurs?” asked Olafur Ragnar Grimsson, a member of the leftist People’s Alliance Party.

Foreign Ministry officials say that hosting the summit in Reykjavik in October between President Reagan and Soviet leader Mikhail S. Gorbachev demonstrated the need for an organization here equipped to gather intelligence about terrorists.

Political Leaders Unprotected

At present, all political leaders here are unprotected against attacks at home, and a single security guard watches the former Danish colonial prison that serves as the office of Iceland’s president and prime minister.

A committee was set up last year to recommend ways of improving Iceland’s internal security.

“Events here and abroad since we started thinking seriously about this--the murder of (Swedish Prime Minister Olof) Palme, expulsions of Soviet diplomats in Norway, Britain and the U.S.--have all shown us that we were right to do so,” an official said.

Questions also have been raised about the comparatively large size of the Soviet Embassy, which has a staff of about 80 in Iceland, although the Soviet Union has only limited financial interests here.

A recent publication by the respected Norwegian Foreign Policy Institute argues that, in the event of war, the Soviet Union would use bombers and elite sabotage squads to neutralize NATO facilities in Iceland within hours.

Training in Norway, Denmakr

If the organization goes ahead, the authorities could start sending people to be trained in intelligence operations either in Denmark or Norway this year, informed sources said.

Recently, the island’s 500-man police force set up a special unit--the Viking squad--to be called in to help in the case of sieges, hijackings and other acts of terrorism, and to protect high-level visitors.

The Viking squad is similar to Britain’s SAS force and would complement the proposed intelligence service. Squad members are police officers who volunteer for this work.

They are reported to go through a grueling training routine, but the details are secret.

The emphasis on creating an intelligence force coincides with moves to increase the strategic island’s participation in the North Atlantic Treaty Organization, though there have been no suggestions that Iceland should create an army.

Only 30 miles from Reykjavik, 3,000 American servicemen operate a naval base considered vital for the defense of shipping lanes between Europe and the United States.

Plans to install two new radar stations in northern Iceland and build additional fuel storage facilities at the base are already being implemented, despite loud protests from Iceland’s left-wing opposition.