|Flag||Coat of Arms|
|President||Ólafur Ragnar Grímsson|
|Prime minister||Jóhanna Sigurðardóttir|
|Area||39,600 sq mi|
|GDP 2007||$19.9 billion|
|GDP per capita||$64,033|
Iceland is an island nation situated in the North Atlantic, between Britain and Greenland. The capital is Reykjavik. Uninhabited until the tenth century, it was colonized by Vikings - the Icelandic language is still remarkably similar to Old Norse, far more so than its cognate languages Norwegian, Swedish and Danish.
Iceland enjoyed one of the highest standards of living during its financial bubble, but the worldwide Financial Crisis of 2008 ruined the economy and bankrupted all its banks, leaving a gigantic national debt that will take many years to repay.
It has the oldest (though not continuously functioning) Parliament. It was traditionally ruled as part of Denmark until 1944, when it declared itself an independent republic. Iceland was occupied by British and American forces in 1940, following the German invasion of Denmark, to prevent its occupation by Germany.
Iceland is a volcanic island in the North Atlantic Ocean east of Greenland and immediately south of the Arctic Circle. It lies about 4,200 kilometers (2,600 mi.) from New York and 830 kilometers (520 mi.) from Scotland. About 79% of Iceland's land area, which is of recent volcanic origin, consists of glaciers, lakes, a mountainous lava desert (highest elevation 2,000 meters--6,590 ft.--above sea level), and other wasteland. About 28% of the land is used for grazing, and 1% is cultivated. The inhabited areas are on the coast, particularly in the southwest where about 60% of the population lives. Because of the Gulf Stream's moderating influence, the climate is characterized by damp, cool summers and relatively mild but windy winters. In Reykjavík, the average temperature is 11°C (52°F) in July and -1°C (30°F) in January.
Iceland's territory was augmented by the emergence of the island of Surtsey from beneath the waves in the years 1963-67, following submarine volcanic eruptions. The island is subject to erosion, and now occupies .54 square miles (1.4 km2), about half its area in 1967.
- Area: 103,000 sq. km. (39,600 sq. mi.); about the size of Virginia or slightly larger than Ireland.
- Cities: Capital--Reykjavík (pop. 117,898). Other towns--Kópavogur (28,665), Hafnarfjörður (24,895), Akureyri (17,278).
- Terrain: Rugged.
- Climate: Maritime temperate.
- Highest elevation: Hvannadalshnjúkur at Vatnajökull Glacier, at 2,110 meters (6,923 ft.).
Most Icelanders are descendants of Norwegian settlers and Celts from the British Isles, and the population is remarkably homogeneous. According to Icelandic Government statistics, 93% of the nation's inhabitants live in urban areas (localities with populations greater than 200) and about 60% live in the Reykjavík metropolitan area. Of the Nordic languages, the Icelandic language is closest to the Old Norse language and has remained relatively unchanged since the 12th century. About 91% of the population belongs to the state church, the Evangelical Lutheran Church, or other Lutheran Churches. However, Iceland has complete religious liberty, and about 20 other religious congregations are present.
Most Icelandic surnames are based on patronymy, or the adoption of the father's first given name. For example, Magnus and Anna, children of a man named Pétur, would hold the surname Pétursson and Pétursdóttir, respectively. Magnus' children, in turn, would inherit the surname Magnusson, while Anna's children would claim their father's first given name as their surname. Women normally maintain their original surnames after marriage. This system of surnames is required by law, except for the descendants of those who had acquired family names before 1913. Most Icelanders, while reserved by nature, rarely call each other by their surnames, and even phone directories are based on first names. Because of its small size and relative homogeneity, Iceland holds all the characteristics of a very close-knit society.
- Population (January 1, 2008): 313,376.
- Annual growth rate (2007): 1.8%.
- Ethnic group: Relatively homogenous mixture of descendants of Norwegians and Celts.
- Religion: Evangelical Lutheran, 86%.
- Language: Icelandic.
- Education: Compulsory up to age 16. Attendance--99%. Literacy--99.9%.
- Health: Infant mortality rate (2001-2006 average)--2.4/1,000. Life expectancy (2006)--men 79.4 years, women 83 years.
- Work force (2007, 181,500): Commerce--32.4%; manufacturing--10.2%; fishing/fish processing--4.2%; construction--8.9%; transport and communications--6.3%; agriculture--3.4%; government, education, and health--27.3%; other services--7.1%. Unemployment (2007): 2.3%.
The Sagas, almost all written between 1180 and 1300 A.D., remain Iceland's best-known literary accomplishment, and they have no surviving counterpart anywhere in the Nordic world. Based on Norwegian and Icelandic histories and genealogies, the Sagas present views of Nordic life and times up to 1100 A.D. The Saga writers sought to record their heroes' great achievements and to glorify the virtues of courage, pride, and honor, focusing in the later Sagas on early Icelandic settlers. The best-known Icelandic writer of the 20th century is the 1955 Nobel Prize winner Halldór Kiljan Laxness. The literacy rate is 99.9%, and literature and poetry are a legendary passion with the population. Per capita publication of books and magazines is the highest in the world.
Unlike its literature, Iceland's fine arts did not flourish until the 19th century because the population was small and scattered. Iceland's most famous painters are Ásgrímur Jónsson, Jón Stefánsson, and Jóhannes Kjarval, all of whom worked during the first half of the 20th century. The best-known modern sculptor, Ásmundur Sveinsson (1893-1982), drew his inspiration from Icelandic folklore and the Sagas for many of his works. Today, Kristján Jóhannsson is Iceland's most famous opera singer, while pop singer Björk and progressive rock band Sigur Rós are well known internationally.
The president, elected to a 4-year term, has limited powers. When Iceland became a republic in 1944, the post of president was created to fill the void left by the Danish king. Although the president is popularly elected and has limited veto powers (he can force a public referendum on a proposed law by refusing to sign it--a power that has only twice been exercised), the expectation is that the president should play the same limited role as a monarch in a traditional parliamentary system.
The prime minister and cabinet exercise most executive functions. The parliament is composed of 63 members, elected every 4 years unless it is dissolved sooner. Suffrage for presidential and parliamentary elections is universal for those 18 and older, and members of the parliament are elected on the basis of parties' proportional representation in six constituencies. The judiciary consists of the Supreme Court, district courts, and various special courts. The constitution protects the judiciary from infringement by the other two branches.
Principal Government Officials
- President--Ólafur Ragnar Grímsson
- Prime Minister--Jóhanna Sigurðardóttir
- Foreign Minister--Ingibjörg Sólrún Gísladóttir
- Minister of Finance--Árni M. Mathiesen
- Minister of Justice and Ecclesiastical Affairs--Björn Bjarnason
- Minister of Agriculture and Fisheries--Einar Kristinn Guðfinnson
- Minister of Communications--Kristján L. Möller
- Minister of Industry and Nordic Cooperation--Össur Skarphéðinsson
- Minister for the Environment--Þórunn Sveinbjarnardóttir
- Minister of Commerce--Björgvin G. Sigurðsson
- Minister of Health--Guðlaugur Þór Þórðarson
- Minister of Social Affairs--Jóhanna Sigurðardóttir
- Minister of Education, Science and Culture--Þorgerður Katrín Gunnarsdóttir
- Speaker of Althingi--Sturla Böðvarsson
- Ambassador to the U.S.--Albert Jónsson
- Ambassador to the UN--Hjálmar W. Hannesson
- Ambassador to NATO--Thorsteinn Ingólfsson
- Ambassador to the EU--Stefán Haukur Jóhannesson
Iceland's current government coalition was formed after the May 2007 parliamentary elections by the conservative Independence Party (IP) and the center-left Social Democratic Alliance. The two parties hold a large majority in parliament, with 43 out of 63 seats.
The current government replaced a coalition of the Independence Party and the Progressive Party (PP) that had been in power since 1995. Longtime IP leader Davíð Oddsson was Prime Minister 1991-2004, making him the longest-serving prime minister in Europe (from 1991 to 1995, the IP was in coalition with the Social Democratic Party). IP Deputy Chair Geir Haarde succeeded Oddsson as party chair when the latter retired from politics in 2005. At the same time, Haarde took over as Foreign Minister, and on June 15, 2006 he became Prime Minister when the PP leader and Prime Minister Halldór Ásgrímsson also left the political scene. In May 2007 the Independence Party and the Social Democratic Alliance formed a new government after an abysmal showing by the Progressive Party. Geir Haarde continued as Prime Minister, and Ingibjörg Sólrún Gísladóttir, chairman of the Social Democratic Alliance took over as Foreign Minister.
The centrist agrarian Progressive Party has been a party to government for over 30 years in the past four decades. Its support dropped from 23% in the 1995 parliamentary election to 12% in 2007. The party has dealt with internal instability in the past few years, and power struggles have lead to frequent change in the party's leadership. Chairman Jón Sigurðsson stepped down after the 2007 elections and was replaced by Deputy Chairman Guðni Ágústsson.
Three left-wing parties--the Social Democratic Party, the People's Alliance, and the Women's List--formed an electoral coalition prior to the 1999 parliamentary election in the hope of mounting a credible challenge to the long-dominant Independence Party. But the dream of creating a united left coalition failed when disaffected leftists formed a new splinter party called the Left Green Movement, led by former deputy People's Alliance leader Steingrímur Sigfússon. With this defection, the left coalition won a disappointing 27% of the vote (17 seats) in the 1999 election, four percentage points below what the three parties had won running separately in 1995. Their 31% (20 seats) showing in 2003 recaptured this ground but did not suffice to topple the government. The Left Greens won a respectable 9% of the vote (5 seats) in 2003, but in the 2007 election they improved significantly, with 14% of the total vote (9 seats). Another new faction, the Liberal Party, won just over 7% (4 seats) in 2003 based on its strong opposition to the current fishing management system, and clung to roughly 6% in 2007.
Despite the poor electoral showing in 1999, the three left-wing parties decided to merge formally in 2000, creating a new party, the Social Democratic Alliance, led by Ingibjörg Sólrún Gísladóttir. The party has found it difficult to reconcile the widely varying foreign policy views of its members, which range from strong support for NATO membership to pacifism and a desire for neutrality.
Iceland's current President is Ólafur Ragnar Grímsson, a former political science professor who led the far-left People's Alliance in 1987-95 and served as Finance Minister in 1988-91. Although Grímsson won office with only a 41% plurality in 1996, he was not challenged for re-election in 2000. He was re-elected again on June 26, 2004. In 2008 Grímsson was re-elected by default, as no other candidate declared their intention to run against him. Since no opposition candidate was declared, the presidential election scheduled for June 28 was cancelled. This follows a well-established tradition of giving deference to sitting presidents. Once in office, a president can generally count on serving as many terms as he or she likes, assuming good behavior. Reflecting the belief that the president is "above politics," presidential candidates run for election as individuals--since 1952, political parties have played no role in nominating or endorsing candidates. President Grímsson has occasionally drawn criticism that he breaches the bounds of presidential etiquette by being too outspoken on sensitive political issues.
Iceland maintains diplomatic and commercial relations with practically all nations, but its ties with other Nordic states, with the United States, and with the other NATO member states are particularly close. Icelanders remain especially proud of the role Iceland played in hosting the historic 1986 summit in Reykjavík between President Reagan and Soviet leader Gorbachev, which set the stage for the end of the Cold War.
Iceland has greatly increased its international profile since the early 1990s. Since the mid-1990s, Iceland has opened a number of missions overseas for a total of 22, including an embassy in Beijing, giving Iceland a diplomatic presence in all five permanent member countries of the UN Security Council. Not coincidentally, it has announced its candidacy to serve on the UN Security Council in 2009-2010. In the past few years, Iceland has also established missions to the Council of Europe in Strasbourg and to the Organization for Security and Cooperation in Vienna. In 1998, it bolstered its delegation to NATO, assigning a permanent representative to the military committee for the first time ever.
Notwithstanding its status as an unarmed nation, Iceland has been eager to do its part to contribute to the maintenance of international peace and security. One of the niches it is helping to fill is in civilian peacekeeping and crisis management. It took a significant step forward in this area in 2001 by launching its Icelandic Crisis Response Unit (ICRU). In setting up the ICRU, the Ministry for Foreign Affairs established a roster of over 100 experts in various occupations (police officers, nurses, doctors, lawyers, engineers, journalists, etc.) who will be specially trained and prepared to deploy to trouble spots abroad on short notice.
Peacekeeping has been a permanent item in the Icelandic state budget since 1994, and Iceland has been an active member of the UN Peacekeeping Committee since 1997. With the formal establishment of the ICRU, the government decided to increase the number of deployed peacekeepers to 50, though the timeline for that goal has shifted. The key emerging niche capability of the ICRU is airport administration following the successful management of the airport in Pristina, Kosovo, in 2003 and of the airport in Kabul, Afghanistan, in 2004-2005.
Icelanders have a strong emotional bond with the Baltic states, and Iceland prides itself on being the first country to have recognized these countries' claim for independence in 1991.
Membership in International Organizations
Iceland is a member of the following organizations: Arctic Council, Barents Euro-Arctic Council; Council of Baltic Sea States; Council of Europe; European Economic Area; European Free Trade Organization; EFTA Court; EFTA Surveillance Authority; North Atlantic Treaty Organization; Organization for Security and Cooperation in Europe; Organization for Economic Cooperation and Development; International Criminal Police Organization; International Council for the Exploration of the Sea; International Hydrographic Organization; International Maritime Satellite Organization; International Union for the Publication of Custom Tariffs; Nordic Council; North-East Atlantic Fisheries Commission; North Atlantic Salmon Conservation Organization; the International Whaling Commission; and the North Atlantic Marine Mammal Commission.
It also is a member of the United Nations and most of its related organizations, specialized agencies, and commissions, including the International Monetary Fund, World Trade Organization, World Tourism Organization, Food and Agricultural Organization, International Atomic Energy Agency, International Civil Aviation Organization, International Fund for Agricultural Development; Industrial Development Organization; International Labor Organization, International Maritime Organization, International Telecommunications Union, UN Educational, Scientific, and Cultural Organization, Universal Postal Union, World Health Organization, and World Meteorological Organization; World Intellectual Property Organization; International Bank for Reconstruction and Development; International Development Association; International Finance Corporation Multilateral Investment Guarantee Agency and International Center for Settlement of Investment Disputes; UN Conference on Disarmament; Economic Commission for Europe; UN High Commissioner for Refugees; Office for the High Commissioner for Human Rights; Commission of Human Rights; UN Conference on Trade and Development.
The U.S. and Iceland signed a bilateral agreement in 1951 stipulating that the U.S. would make arrangements for Iceland's defense on behalf of NATO and providing for basing rights for U.S. forces in Iceland. In March 2006 the U.S. announced it would continue to provide for Iceland's defense but without permanently basing forces in the country; Naval Air Station Keflavik closed in September 2006 after 55 years. The Government of Iceland expressed disappointment, and even opposition politicians opposed to the U.S. military presence criticized the manner of the closing, but bilateral discussions ensued to explore new ways of ensuring the country's security, with an emphasis on a "visible defense." Negotiations concluded with a Technical Agreement on base closure issues (e.g., facilities return, environmental cleanup, residual value) signed on September 29, 2006, and a "Joint Understanding" on future bilateral security cooperation (focusing on defending Iceland and the North Atlantic region against emerging threats such as terrorism and trafficking) signed by the Secretary of State, Prime Minister Haarde, and Foreign Minister Valgerdur Sverrisdóttir in Washington on October 11, 2006. The United States also cooperated with local officials to mitigate the impact of job losses at the Air Station, notably by encouraging U.S. investment in industry and tourism development in the Keflavík area. The Government of Iceland announced in spring 2007 that a large portion of the former base site would be converted into the university-level "Atlantic Center of Excellence" with operations commencing in fall 2007.
Cooperative activities in the context of the new agreements began almost immediately, with the arrival of the amphibious ship USS Wasp in Reykjavík on October 12, 2006 (the first U.S. Navy port visit since 2002) to demonstrate the Navy's rapid reaction capability and to support counterterrorism training by units of Iceland's Coast Guard and police. In November 2006 a U.S. Navy P-3 patrol aircraft arrived at Keflavík for joint search and rescue, disaster surveillance, and maritime interdiction training. Northern Viking 2007, a U.S.-led air defense exercise, took place in August 2007, and planning for subsequent joint endeavors is underway.
The 2008 budget for the Government of Iceland is the first in the country's history to include funding for defense ($8.2 million); the money is earmarked for support of cooperative defense activities, military exercises in Iceland, and maintenance of defense-related facilities. This funding is in addition to roughly $12 million in new expenditures for the operation of the Iceland Air Defense System radar sites, which the United States handed over to Iceland on August 15, 2007.
The Government of Iceland contributes financially to NATO's international overhead costs and recently has taken a more active role in NATO deliberations, planning, and peacekeeping. Iceland hosted the NATO Foreign Ministers' Meeting in Reykjavík in June 1987 and again in May 2002. Iceland hosted the NATO Military Committee in April 2007 and hosted the NATO Parliamentary Assembly in October 2007.
Traditionally marine products have accounted for the majority of Iceland's exports of goods, but for the first time ever, in 2008 aluminum exports will exceed marine product exports. Other important exports include ferro-silicon alloys, equipment and electronic machinery for fishing and fish processing, and pharmaceuticals. The vast majority of Iceland's exports go to the European Union (EU) and the European Free Trade Association (EFTA) countries, followed by the United States and Japan. The U.S. is by far the largest foreign investor in Iceland. Iceland's relatively liberal trading policy was strengthened by accession to the European Economic Area in 1994 and by the Uruguay Round agreement, which also brought significantly improved market access for Iceland's exports, particularly seafood products. The agricultural sector, however, remains heavily subsidized and protected. Iceland became a full member of the European Free Trade Association in 1970 and entered into a free trade agreement with the European Community in 1973. Under the European Economic Area agreement, which took effect January 1, 1994, there is basically free cross-border movement of capital, labor, goods, and services between Iceland, EU, and EEA countries.
- GDP (2007): $19.9 billion.
- GDP growth rate (2005): 5.8%; (2006): 4.2%; (2007) 3.8%.
- Per capita GDP (2007): $64,033.
- Inflation rate (2007): 5.1%; (June 2008, 12-month change): 12.7%.
- Central government budget (2007): $6.3 billion; (projected 2008): $6.7 billion.
- Annual budget surplus (2006): 1.4% of GDP.
- Net central government debt (2007): 4.9% of GDP.
- Natural resources: Marine products, hydroelectric and geothermal power.
- Agriculture: Products--potatoes, tomatoes, cucumbers, carrots, roses, livestock.
- Industry: Types--aluminum smelting, fishing and fish processing technology, ferro-silicon alloy production, hydro and geothermal power, tourism, information technology.
- Trade: Exports of goods (2007)--$4.8 billion: marine products 41.8% industrial products 38.9%, agriculture 1.1%, and miscellaneous 18.2%. Partners--EEA 78.4% (Netherlands 21.3%, Germany 13.4%, U.K. 13.2%, Ireland 7.6%, Spain 4.6%, Norway 3.8%, Denmark 3.3%); U.S. 5.3% ($250 million); Japan 4.2%. Imports (2007)--$6.7 billion: industrial supplies 26.7%; capital goods, parts, accessories 21.5%; consumer goods 15.7%; transport equipment 20.5%; food and beverages 6.8%; fuels and lubricants 8%. Partners--EEA 64.6% (Germany 12.1%, Sweden 10%, Denmark 7.4%, Netherlands 5.6%, U.K. 5.4%, Norway 4.6%, Italy 3.4%); U.S. 13.5% ($208 million); China 5.1%; Japan 4.7%.
Iceland's economy was historically prone to inflation due to periods of rapid growth and its dependence on a few key export sectors, such as fish, which could fluctuate significantly in quantity and price from one year to the next. For example, inflation exceeded 43% in 1974 and 59% in 1980, before falling to 15% in 1987, and then rising to 30% in 1988, which resulted in devaluations of the krona. In the 1990s and continuing until 2006, Iceland experienced several years of strong economic growth, thanks to economic reforms, deregulation, and low inflation, averaging around 4%. The economy suffered a setback in spring 2006 when credit rating agencies and other international financial firms released a number of reports raising questions about the activities and stability of Iceland's major banks and the state of the Icelandic economy. These reports were widely covered in the international financial press, causing a marked drop in the value of shares listed on the Icelandic stock exchange and of the Icelandic krona. The market recovered as reforms were made in the banking sector. The financial sector was hit hard by the global credit crisis beginning in 2007. Although Icelandic banks had limited sub-prime mortgage market exposure, they were affected by the general lack of available capital. In the first six months of 2008, the Icelandic krona was devalued by 30% and inflation rose to nearly 12%. Because of Iceland's high current account deficit, high inflation, and high private sector debt levels, the global financial community and the foreign media closely monitored the situation. In turn, the Icelandic Government has carefully followed foreign confidence in the Icelandic economy because access to foreign capital, which Icelandic business people have used aggressively in overseas investments, is extremely important. Wealthy Icelanders have heavily invested in the retail and real estate markets in Denmark and the U.K. and telecom, pharmaceutical, banking, and financial sectors in Eastern Europe. Their success, beginning in the late 1990s, created for the first time a "super-rich" elite in Icelandic society.
Iceland has few proven mineral resources, but has abundant hydroelectric and geothermal energy resources. These clean energy sources provide for nearly 100% of electricity generation and home heating. Iceland's energy resources support power-intensive export industries, such as aluminum smelting. The Kárahnjúkar hydroelectric project is the largest single electrical station in the country, with capacity of 690 megawatts (mw). Other major hydroelectric stations include Búrfell (270 mw), Hrauneyjarfoss (210 mw), Sigalda (150 mw), and Blanda (150 mw). Iceland-based Nordural Aluminum is a wholly owned investment of Century Aluminum of Monterey, California. The plant employs more than 450 people and recently expanded its production capacity to 220,000 tons per year. A new smelter owned by Alcoa, another U.S.-owned aluminum company, began operations in June 2007 and will have a production capacity of 346,000 tons per year when fully operational. The Kárahnjúkar hydroelectric power plant, completed in early 2007, was built to provide power to the Alcoa smelter. Over $2 billion was invested to build the power plant and smelter, making the combined project the largest in Icelandic history.
Iceland has no railroads. Organized road building began about 1900 and has greatly expanded in the past decade. The current national road system connects most of the population centers along the coastal areas and consists of about 13,000 kilometers (8,125 mi.) of roads, of which about 4,800 kilometers (2,982 mi.) are paved. Regular air and sea service connects Reykjavík with the other main population centers.
Iceland was settled in the late 9th and early 10th centuries, principally by people of Norse origin. In 930 A.D., the ruling chiefs established a republican constitution and an assembly called the Althingi (Alþingi) the oldest parliament in the world. Iceland remained independent until 1262, when it entered into a treaty establishing a union with the Norwegian monarchy. Iceland passed to Denmark in the late 14th century when Norway and Denmark were united under the Danish crown.
In the early 19th century, national consciousness revived in Iceland. The Althingi had been abolished in 1800 but was reestablished in 1843 as a consultative assembly. In 1874, Denmark granted Iceland limited home rule, which was expanded in scope in 1904. The constitution, written in 1874, was revised in 1903, and a minister for Icelandic affairs, residing in Reykjavík, was made responsible to the Althingi. The Act of Union, a 1918 agreement with Denmark, recognized Iceland as a fully sovereign state united with Denmark under a common king. Iceland established its own flag, but Denmark continued to represent Icelandic foreign affairs and defense interests.
German occupation of Denmark in 1940 severed communications between Iceland and Denmark. Consequently, Iceland moved immediately to assume control over its own territorial waters and foreign affairs. In May 1940, British military forces occupied Iceland. In July 1941, responsibility for Iceland's defense passed to the United States. Following a plebiscite, Iceland formally became an independent republic on June 17, 1944. In October 1946, the Icelandic and U.S. Governments agreed to terminate U.S. responsibility for the defense of Iceland, but the United States retained certain rights at Keflavík. Iceland became a charter member of the North Atlantic Treaty Organization (NATO) in 1949. After the outbreak of hostilities in Korea in 1950, and pursuant to the request of NATO military authorities, the United States and Iceland agreed that the United States should again make arrangements for Iceland's defense. A bilateral defense agreement signed on May 5, 1951, remains in force, even though the U.S. military forces are no longer permanently stationed in Iceland. Iceland is the only NATO country with no standing military of its own.
During the 2009 economic crisis, the then-current prime minister Geir Haarde stepped down, and Jóhanna Sigurðardóttir took control of the Icelandic parliament (or Althing). At the time she was the only "out" homosexual head of government, though she was not elected. She was recently re-elected by the Icelandic people, highlighting the radical progressivism of this country and its culture.
|License:||This work is in the Public Domain in the United States because it is a work of the United States Federal Government under the terms of Title 17, Chapter 1, Section 105 of the U.S. Code|
|Source:||File available from the United States Federal Government .|