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Settled by Norwegian and Celtic (Scottish and Irish) immigrants during the late 9th and 10th centuries A.D., Iceland boasts the world's oldest functioning legislative assembly, the Althing, established in 930. Independent for over 300 years, Iceland was subsequently ruled by Norway and Denmark. Fallout from the Askja volcano of 1875 devastated the Icelandic economy and caused widespread famine. Over the next quarter century, 20% of the island's population emigrated, mostly to Canada and the US. Limited home rule from Denmark was granted in 1874 and complete independence attained in 1944. The second half of the 20th century saw substantial economic growth driven primarily by the fishing industry. The economy diversified greatly after the country joined the European Economic Area in 1994, but Iceland was especially hard hit by the global financial crisis in the years following 2008. Literacy, longevity, and social cohesion are first rate by world standards.
party to: Air Pollution, Air Pollution-Persistent Organic Pollutants, Biodiversity, Climate Change, Climate Change-Kyoto Protocol, Desertification, Endangered Species, Hazardous Wastes, Kyoto Protocol, Law of the Sea, Marine Dumping, Ozone Layer Protection, Ship Pollution, Transboundary Air Pollution, Wetlands, Whaling
signed, but not ratified:
Environmental Modification, Marine Life Conservation
strategic location between Greenland and Europe; westernmost European country; Reykjavik is the northernmost national capital in the world; more land covered by glaciers than in all of continental Europe
Lutheran Church of Iceland 80.7%, Roman Catholic Church 2.5%, Reykjavik Free Church 2.4%, Hafnarfjorour Free Church 1.6%, other religions 3.6%, unaffiliated 3%, other or unspecified 6.2% (2006 est.)
elections:
president, a largely ceremonial post, elected by popular vote for a four-year term (no term limits); election last held on 28 June 2004 (next to be held in June 2012); following legislative elections, the leader of the majority party or the leader of the majority coalition usually the prime minister
note:the presidential election of 28 June 2008 was not held because Olafur Ragnar GRIMSSON had no challengers; he was sworn in on 1 August 2008
unicameral Parliament or Althing (63 seats; members elected by popular vote to serve four-year terms)
elections:
last held on 25 April 2009 (next to be held in 2013)
election results:
percent of vote by party - Social Democratic Alliance 29.8%, Independence Party 23.7%, Left-Green Movement 21.7%, Progressive Party 14.8%, Citizens' Movement 7.2%, other 2.8%; seats by party - Social Democratic Alliance 20, Independence Party 16, Left-Green Alliance 14, Progressive Party 9, Citizens' Movement 4
note:the Citizens' Movement disintegrated in September 2009; three of its former MPs are now represented under the banner of The Movement and the fourth former MP is an independent
Supreme Court or Haestirettur (justices are appointed for life by the Minister of Justice); eight district courts (justices are appointed for life by the Minister of Justice)
Independence Party or IP [Bjarni BENEDIKTSSON, Jr.]; Left-Green Movement or LGM [Steingrimur SIGFUSSON]; Progressive Party or PP [Sigmundur David GUNNLAUGSSON]; Social Democratic Alliance or SDA [Johanna SIGURDARDOTTIR]; The Movement [Birgitta JONSDOTTIR]
blue with a red cross outlined in white extending to the edges of the flag; the vertical part of the cross is shifted to the hoist side in the style of the Dannebrog (Danish flag); the colors represent three of the elements that make up the island: red is for the island's volcanic fires, white recalls the snow and ice fields of the island, and blue is for the surrounding ocean
Iceland's Scandinavian-type social-market economy combines a capitalist structure and free-market principles with an extensive welfare system. Prior to the 2008 crisis, Iceland had achieved high growth, low unemployment, and a remarkably even distribution of income. The economy depends heavily on the fishing industry, which provides 40% of export earnings, more than 12% of GDP, and employs 7% of the work force. It remains sensitive to declining fish stocks as well as to fluctuations in world prices for its main exports: fish and fish products, aluminum, and ferrosilicon. Iceland's economy has been diversifying into manufacturing and service industries in the last decade, new developments in software production, biotechnology, and tourism. Abundant geothermal and hydropower sources have attracted substantial foreign investment in the aluminum sector and boosted economic growth, although the financial crisis has put several investment projects on hold. Much of Iceland's economic growth in recent years came as the result of a boom in domestic demand following the rapid expansion of the country's financial sector. Domestic banks expanded aggressively in foreign markets, and consumers and businesses borrowed heavily in foreign currencies, following the privatization of the banking sector in the early 2000s. Worsening global financial conditions throughout 2008 resulted in a sharp depreciation of the krona vis-a-vis other major currencies. The foreign exposure of Icelandic banks, whose loans and other assets totaled more than 10 times the country's GDP, became unsustainable. Iceland's three largest banks collapsed in late 2008. The country secured over $10 billion in loans from the IMF and other countries to stabilize its currency and financial sector, and to back government guarantees for foreign deposits in Icelandic banks. GDP fell 6.6% in 2009, and unemployment peaked at 9.4% in February 2009. GDP growth is expected to be near zero in 2010. Since the collapse of Iceland's financial sector, government economic priorities have included stabilizing the krona, reducing Iceland's high budget deficit, containing inflation, restructuring the financial sector, and diversifying the economy. Three new banks were established to take over the domestic assets of the collapsed banks. Two of them have foreign majority ownership, while the State holds a majority of the shares of the third. British and Dutch authorities have pressed claims against Icelandic Landsbanki to compensate their citizens for losses suffered on deposits held in that bank. The collapse of the financial system initially led to a major shift in opinion in favor of joining the EU and adopting the euro, although support has dropped substantially because of concern about losing control of their fishing resources and in reaction to measures taken by EU partners following the financial crisis.
general assessment: telecommunications infrastructure is modern and fully digitized, with satellite-earth stations, fiber-optic cables, and an extensive broadband network
domestic:
liberalization of the telecommunications sector beginning in the late 1990s has led to increased competition especially in the mobile services segment of the market
international:
country code - 354; the CANTAT-3 and FARICE-1 submarine cable systems provide connectivity to Canada, the Faroe Islands, UK, Denmark, and Germany; a planned new section of the Hibernia-Atlantic submarine cable will provide additional connectivity to Canada, US, and Ireland; satellite earth stations - 2 Intelsat (Atlantic Ocean), 1 Inmarsat (Atlantic and Indian Ocean regions); note - Iceland shares the Inmarsat earth station with the other Nordic countries (Denmark, Finland, Norway, and Sweden)
registered in other countries:
37 (Antigua and Barbuda 12, Bahamas 1, Belize 2, Denmark 2, Faroe Islands 1, Gibraltar 1, Malta 5, Marshall Islands 3, Norway 3, Saint Vincent and the Grenadines 7) (2008)
Iceland has no standing military force; under a 1951 bilateral agreement - still valid - its defense was provided by the US-manned Icelandic Defense Force (IDF) headquartered at Keflavik; however, all US military forces in Iceland were withdrawn as of October 2006; although wartime defense of Iceland remains a NATO commitment, in April 2007, Iceland and Norway signed a bilateral agreement providing for Norwegian aerial surveillance and defense of Icelandic airspace (2008)
The online Factbook is updated bi-weekly. ISSN 1553-8133
For additional information on government leaders in selected foreign countries, go to World Leaders.
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