The article deals with Iceland's contemporary foreign policy, focusing on its increased military strategic value for both the US, NATO and the EU after 2014. The historical conditions of Iceland's current identity in world politics, on the one hand, define its propensity for isolation and adopting special approaches different from the allies and promoting peace initiatives in the Arctic, and, on the other hand, its continued reliance on transatlantic solidarity, given Iceland's importance for the security of the USA and Europe. At the same time, despite Iceland's increased strategic value for controlling the Arctic space, the U.S. has no plans to reestablish a permanent military presence on Iceland as of early 2024, but rather uses strategic military visits to the country to signal its readiness to deter Russia. The main expression of Iceland's continued special foreign policy identity can be seen in the work of the Arctic Circle forum, which is one of the main achievements of Icelandic diplomacy. But at the same time this very achievement makes close foreign policy coordination between Iceland and the EU on Arctic politics unlikely. Iceland’s current strategic value in the context of growing great power rivalry, despite its lack of armed forces, lies mainly in its geographical position, which makes it possible to strengthen monitoring and surveillance of the Arctic and North Atlantic spaces, thus realizing the concept of «deterrence by detection», which is technically accessible even to small NATO and EU countries.