Iceland's larger message

SELECTING Iceland as the scene for this weekend's meeting between President Reagan and Soviet leader Mikhail Gorbachev is one of those happy compromises that make more and more good sense as one thinks about them. Iceland, after all, sits roughly midpoint between the two superpowers in its cold North Atlantic setting. Even more important, Iceland -- with its Scandinavian linkages -- represents a part of the world that since World War II has attempted to forge a so-called ``middle way'' between the material indulgences of the free-enterprise West and the egalitarian rhetoric of the socialist East bloc. The Scandinavian nations have sought to strike a compromise: retaining a commitment to political and economic egalitarianism, while forging booming national economies that produce high standards of living for their people.

Mr. Reagan and Mr. Gorbachev might find it instructive to pause for a moment or so in their deliberations to look out on the streets at the people of Iceland and to consider what those people have accomplished.

Simply put, the Icelanders -- all 200,000-plus of them -- have tamed an often inhospitable landscape. Possessing a tough terrain once used by NASA as a training ground for American astronauts bound for the moon, Iceland enjoys one of the highest standards of living in the world. Its government estimates that the gross national product will increase 5.2 percent this year, in part because of falling world oil prices, increased fish catches, and across-the-board non-inflationary pay raises for workers. Inflation is now under control, likely to come in under 10 percent.

Still, Iceland, although it has no slums, has its ``poor'' -- perhaps 20,000 or so families whose own circumstances have not kept up with the nation's prosperity. A debate is under way in Icelandic political and social circles about how to best help these families.

Meantime, Icelanders remain true to their rugged independence. Within Iceland, as throughout Scandinavia, there is a strong desire for an easing of the East-West rivalry on arms. That is perhaps the most important message that will be conveyed to Reagan and Gorbachev as they look out on the streets of Reykjavik. And it is a message that deserves to be heard.

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