The Rainbow Navigation Dispute

The Rainbow Navigation Dispute In March 1984, Rainbow Navigation, a small US company made headlines in Iceland when it took over the transportation of cargo for the US military base at Keflavík. The company took advantage of the 1904 Cargo Preference Act, accord- ing to which the US military should always use US flag vessels to carry cargo if there are any available. This provoked much anger in Iceland since two Icelandic companies, Icelandic Steamships (Eimskip) and Ocean Ships (Hafskip), had car- ried such cargo between 1968 and 1984 because of a lack of interest from US com- panies. Icelandic officials tried almost immediately to contact their US counter- parts in an effort to regain the transportation for the Icelandic companies. Initially, the US was slow to respond, but when the Reagan Administration realised how seriously the Icelandic government took the issue, they did indeed try to return the transportation to the Icelandic companies. After some initial struggles, the countries agreed to a special bilateral treaty, ratified by the US Senate and the Icelandic parliament, where they shared the transportation between companies of both countries. In this article, it is argued that the Rainbow Navigation issue demonstrates the importance of the Keflavík military base in the eyes of the United States due to its strategic location in the North Atlantic during the resumption of Cold War hostilities in the 1980s. The role of the companies, particularly on the Icelandic side, is emphasised and their effect on foreign policy analysed. It is also main- tained that the Reykjavík Summit meeting between Reagan and Gorbachev, and the world media’s sudden interest in Iceland because of that meeting, led to a quick Senate ratification of the bilateral treaty between Iceland and the United States regarding the dispute. The controversy is placed within the broader context of the Cold War, in general, and the history of US-Icelandic relations, in particular.