Iceland may be on the verge of a financial collapse but it may soon have another headache to deal with : being on the frontline of the new military and resource conflict of the Arctic.

There is a going to be a rush to exploit the melting Arctic with shipping firms using new routes and oil and gas companies looking for new resources. The security implications of all this has just been discussed at a two day NATO conference in Reykjavik.

NATO Secretary General Jaap de Hoop Scheffer told the conference: “Although the long-term implications of climate change and the retreating ice cap in the Arctic are still unclear, what is very clear is that the High North is going to require even more of the Alliance’s attention in the coming years.”

De Hoop Scheffer added “I would be the last one to expect military conflict — but there will be a military presence. It should be a military presence that is not overdone, and there is a need for political cooperation and economic cooperation.”

But rather than cooperation there are the signs of growing confrontation. The United States, Russia and Canada are all trying to claim jurisdiction over Arctic territory alongside the Nordic nations. Analysts say China is also likely to join a rush to capture energy reserves.

For example, Canada already has an ongoing legal dispute with Denmark; Canada and the U.S. are at odds over an oil-rich, 11,000-square-kilometre section of the Beaufort Sea and over Canada’s view that the Northwest Passage is an internal Canadian waterway.

But as the rush to exploit the Arctic gathers pace once, we are wholly unprepared for any accidents from shipping or drilling. The U.S. National Oceanic and Atmospheric Administration has just released a report raising alarms about the ability of northern nations to cope with a potential oil spill in the Arctic Ocean.

“More needs to be done to enhance emergency response capacity as Arctic sea ice declines and ship traffic in the region increases,” the report, jointly produced by NOAA and the University of New Hampshire, concluded.

“The reduction of polar sea ice and the increasing worldwide demand for energy will likely result in a dramatic increase in the number of vessels that travel Arctic waters,” said Nancy Kinner, university co-director of the Coastal Response Research Center. “As vessel traffic increases, disaster scenarios are going to become more of a reality.”

The exploitation of the Arctic is one hell of a disaster scenario waiting to happen.