Closure of US base in Iceland to mark end of an era

REYKJAVIK, Sep 30 (Reuters) When the United States lowers the flag at its base in Keflavik, Iceland, today, it will end a military presence that has lasted since World War Two and leave the island nation without home-based defences.

Still, Icelandic Prime Minister Geir Haarde does not see his country as vulnerable, although it lacks a military of its own.

''(U.S.) fighters can get up here pretty fast,'' he told Reuters at his modest office in Iceland's capital. He paused, then added: ''Of course obviously longer than before, but still I am sure sufficient in case there is a danger.'' A newly cemented defence deal between the two countries contains a U.S pledge to rush to Iceland's aid, even though there will be no American military on the island.

Haarde said the ''new era'' of the US-Iceland defence relationship was a product of new realities.

''We're not really worried about a territorial threat any more. We don't perceive a threat from any other country in the old sense,'' Haarde said.

''There are other dangers, there are other threats, here as everywhere else, and we need to cooperate both with our American friends and other NATO allies and Europe in general on those.'' The naval air base that in its heyday housed up to 6,000, including military personnel, their families and local staff, was once a Cold War listening post.

After his second summit with Mikhail Gorbachev ended in disappointment in 1986, US President Ronald Reagan celebrated the importance of the Keflavik base in a speech there.

''Iceland has always held a strategic position in the Atlantic, commanding, if you will, the sea between the Old World and the New,'' Reagan told Keflavik personnel.

But the United States has since been scaling back operations set up for the Cold War in order to focus its military on fighting its war on terrorism.

Today, the 30 people left on the base will attend a humble farewell that will see the US flag lowered for the last time and will then leave the country.

A more formal ceremony took place earlier this month.

In Washington, assistant secretary of defence Thomas Hall, the chief US negotiator in the deal to close Keflavik, said the United States will keep a communications facility in Iceland, but one run by contractors not US military personnel.

''We have turned over all of the US and NATO facilities to Iceland and it is their responsibility to accept and to maintain those,'' he said.

Hall said Iceland has agreed to maintain enough facilities at the base for future military exercises.

Iceland's prime minister said the base will be turned to civilian use and should deliver economic benefits, even factoring in the cost of demolition and clean-up of structures.

''The value of the property that we will be taking over far exceeds the expected cost of such things. So overall I think it's an economic plus rather than a minus,'' he said.

Haarde, who said he will soon go to Washington to sign the US-Iceland defence agreement formally, said the base no longer has the importance in the local economy it once did.

''There are some people who will lose their jobs but our economy is expanding. It's booming, and it's been relatively easy for people to relocate and find new jobs,'' he said.

Some in Iceland's capital shared the prime minister's untroubled view of the departure of the US military.

''I don't think it's a big loss. I don't think it is going to change much for us here,'' parking guard Robert Elvarsson said.

''There are no terrorists here in Iceland and I don't think they are going to come here and do anything.'' Reuters AD VP0535