With the accelerated Soviet buildup of its Baltic fleet, the development of Soviet bases on the Kola Peninsula, and the related expansion of Allied forces, Scandinavia has once again become a potential theater of war. Looking at the strategic implications of the Soviet threat in northern Europe and possible NATO responses, the author examines the competitive activities of intelligence services; the interactions among the media, public opinion, and politics; problems of arms control; efforts to stop the export of sensitive technology; and the phenomenon of peacetime military exercises. But what if either limited or all-out war comes? The author describes the strategies and forces of the two sides and examines the key role of Iceland, emphasizing the strategic element of control of the waters. Potentially this is an area with four major actors: NATO, the USSR, the neutrals–Finland and Sweden–and the potentially dangerous but probably unreliable Warsaw Pact allies. It is a region of major importance that NATO must defend as its northern shield.