Like its American ally, Iceland has been recovering from a devastating economic situation in the last several years.
And the U.S. Ambassador to Iceland says the country's recent comeback could offer some lessons for the United States.
Back in 2008, Iceland's major banks were on the verge of collapse, sending the country into an economic downturn that mirrored the United States's recession.
But unlike in the U.S. where the banks got a bail-out, Icelandic banks suffered the losses. The government then entered into an agreement with the International Monetary Fund to begin a stabilization program.
U.S. ambassador Luis Arreaga says Iceland approached its recovery in a unique way "worth considering in other countries."
"The net result was the suffering that people went through was not as high as it might have been otherwise," Arreaga says. "They made a very concerted effort to protect people and to strengthen the social safety net. While one cannot diminish the impact of the crisis on people and they're still going through it, it's not as bas as it could have been."
Arreaga, an alum of UW-Milwaukee, says the banks have mostly recovered their assets, and the country has achieved almost a three percent growth rate. While the country still has its challenges, its fiscal deficit has been cut and inflation is down.
Additionally, investment is returning to the country. That's thanks in large part to the United States, which is the country's single greatest foreign investor. Arreaga says the country is attractive to American investors thanks to its highly entrepreneurial culture.
"It shares a lot of the values and attributes that American entrepreneurs share," he says. "They are very creative, and very focused, so when you look at the basics there's no reason to doubt Iceland would get out of its situation."
To further its economic connection, several "visionary" CEOs began the American-Icelandic Chamber of Commerce. But Arreaga also credits Iceland's cultural, tourism and educational exchanges with the United States - ties that were strengthened under his tenure as ambassador. These were especially significant after the U.S. closed its military base there.
These ties will be crucial, Arreaga says, as Iceland looks to the future. Iceland is known for its increasingly prominent international role as an innovator in sustainable energy development, and Arreaga says the Arctic will become a "growing area of importance for a number of reasons." As ice melts, trade routes and access to mineral resources will open.
"(There's) an opportunity for Iceland and the U.S. to manage this process responsibly," he says.
Arreaga will soon end his tenure as Ambassador to take a new position as Deputy Assistant Secretary in the Bureau of International Narcotics and Law Enforcement Affairs at the State Department.
Arreaga, who holds three degrees from UWM, was in Milwaukee last week to receive the university's Lifetime Achievement Award.