U.S., ICELAND RELATIONS THREATENED OVER NATO CARGO

U.S., ICELAND RELATIONS THREATENED OVER NATO CARGO    The U.S. and Iceland governments are coming closer to a diplomatic scuffle over who controls ocean cargo transport to support the American military base in Keflavik.
      The Icelandic Steamship Co., or Eimskip, recently filed a petition with the Supreme Court which questions the validity of two ocean carrier contracts awarded to Trans Atlantic Lines by the U.S. Army’s Military Traffic Management Command in 1998.
   The carrier said the contracts were awarded to “an unqualified,    undercapitalized company owned and controlled by U.S. interests” in violation of a U.S.-Island treaty and memorandum of understanding.
   The treaty and MOU require that the military shipments be divided between a U.S.-flag carrier and an Icelandic shipping company, with the lowest bidder handling up to 65 percent of the cargo and the next-lowest bidder from the other country handling the rest.
   In 1998, MTMC’s Joint Traffic Management Office awarded the two contracts to Trans Atlantic Lines LLC and Trans Atlantic Lines Iceland — which Eimskip said have the same “identical management and ownership.”
   “The jointly owned and controlled companies — a single enterprise — were created specifically to obtain 100 percent of the military cargo,” said Gardar Thorsteinsson, general manager and vice president of Eimskip USA in Norfolk, Va. The same person prepared the bids for both companies, which had no assets or ships at time of bidding, he said.
   The contracts cover 3,260 TEUs and 1,463 measurement tons of breakbulk cargo, and are worth a combined $9.7 million. The contracts expire Oct. 31, but are renewable through 2003.
   In a suit Eimskip filed against the Army, the U.S. District Court in    Washington ruled in favor of Eimskip, stating that Army’s contract with Trans Atlantic Lines was in violation of treaty and MOU. However, the U.S. Court of Appeals for the District of Columbia Circuit reversed the decision, determining that 'this is essentially a disappointed bidder case.”
   Bill Merrigan, MTMC’s deputy legal officer, said the agency’s bid was    handled fairly in accordance with U.S. law.
   Iceland protested the awarded contracts in September 1998 in a diplomatic note to the U.S. State Department. On Dec. 30, 1998, a State Department diplomatic note “invited” Iceland to pass domestic legislation to define eligibility for Icelandic shipping companies to participate in the carriage of the cargo under the treaty.
   The Supreme Court is expected to decide on whether or not to take the case in June or at the beginning of the next court session in October. Some observers of the case say it’s unlikely the Supreme Court    will take up the case.
   Meanwhile, Trans Atlantic Lines has enlisted support from U.S. Sen. Robert G. Torricelli, D-N.J, who supported the Appeals Court ruling in strongly worded letters to Attorney General Janet Reno and Secretary of State Madeleine Albright.