Iceland formally recognized the Palestinian state at a ceremony in Reykjavik on Thursday.

Iceland formally recognized the Palestinian state at a ceremony in Reykjavik on Thursday, becoming one of the few Western European countries and NATO members to do so.

"This is the day I formally submit to you the declaration of Palestine independence in accordance with the will of the Icelandic parliament," Icelandic Foreign Minister Oessur Skarphedinsson said, addressing his Palestinian counterpart Riad Malki at a news conference.

Malki hailed the decision. "It's significant because (Iceland) belongs to Europe and it's very important that this might create a very positive atmosphere for others to follow suit," he told media sources.

The two also announced the establishment of diplomatic relations between the Nordic island nation and the Palestinians.

"There will be an ambassador from Iceland that will present his credentials to the Palestinians, a non-resident, and ... we are contemplating the possibility of appointing an honorary consul, an Icelander, here for the time being," Malki said.

Thursday's ceremony at the Reykjavik Culture House follows two years of preparations and a vote in the Icelandic parliament, or Allthingi, on November 29 in favor of recognizing the Palestinian state on the borders that existed before the 1967 Middle East war.

It also comes two days after the Palestinian flag was raised for the first time above a United Nations agency, flying over the UNESCO headquarters in Paris as Palestinian president Mahmud Abbas attended a ceremony marking his people's historic admission to the education, science and culture body.