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. Denmark granted limited home rule in 1874 and complete independence 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.

Northern Europe, island between the Greenland Sea and the North Atlantic Ocean, northwest of the United Kingdom

slightly smaller than Kentucky

temperate; moderated by North Atlantic Current; mild, windy winters; damp, cool summers

mostly plateau interspersed with mountain peaks, icefields; coast deeply indented by bays and fiords

fish, hydropower, geothermal power, diatomite

earthquakes and volcanic activity

water pollution from fertilizer runoff; inadequate wastewater treatment

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

homogeneous mixture of descendants of Norse and Celts 94%, population of foreign origin 6%

Icelandic, English, Nordic languages, German widely spoken

Lutheran Church of Iceland (official) 80.7%, Roman Catholic 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.)

313,183 (July 2012 est.)

13.23 births/1,000 population (2012 est.)

7.02 deaths/1,000 population (July 2012 est.)

0.53 migrant(s)/1,000 population (2012 est.)

REYKJAVIK (capital) 198,000 (2009)

5 deaths/100,000 live births (2010)

1.89 children born/woman (2012 est.)

3.934 physicians/1,000 population (2008)

5.79 beds/1,000 population (2007)

urban: 100% of population

rural: 100% of population

total: 100% of population

fewer than 1,000 (2009 est.)

fewer than 100 (2009 est.)

constitutional republic

8 regions; Austurland, Hofudhborgarsvaedhi, Nordhurland Eystra, Nordhurland Vestra, Sudhurland, Sudhurnes, Vestfirdhir, Vesturland

1 December 1918 (became a sovereign state under the Danish Crown); 17 June 1944 (from Denmark; birthday of Jon SIGURDSSON leader of Iceland's 19th Century independence movement)

Independence Day, 17 June (1944)

16 June 1944, effective 17 June 1944; amended many times

civil law system influenced by the Danish model

has not submitted an ICJ jurisdiction declaration; accepts ICCt jurisdiction

18 years of age; universal

unicameral Althingi (parliament) (63 seats; members elected by popular vote to serve four-year terms)

Supreme Court or Haestirettur (justices are appointed for life by the president); eight district courts (justices are appointed for life by the president)

Independence Party (Sjalfstaedisflokkurinn) or IP [Bjarni BENEDIKTSSON]; Left-Green Movement (Vinstrihreyfingin-graent frambod) or LGM [Steingrimur SIGFUSSON]; Liberal Party (Frjalslyndi flokkurinn) [Sigurjon THORDARSON]; The Movement (Hreyfingin) [Birgitta JONSDOTTIR]; Progressive Party (Framsoknarflokkurinn) or PP [Sigmundur David GUNNLAUGSSON]; Social Democratic Alliance (Samfylkingin) or SDA [Johanna SIGURDARDOTTIR]

Arctic Council, Australia Group, BIS, CBSS, CD, CE, EAPC, EBRD, EFTA, EU (candidate country), FAO, FATF, IAEA, IBRD, ICAO, ICC (national committees), ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IPU, ISO, ITSO, ITU, ITUC (NGOs), MIGA, NATO, NC, NEA, NIB, NSG, OAS (observer), OECD, OPCW, OSCE, PCA, Schengen Convention, UN, UNCTAD, UNESCO, UPU, WCO, WHO, WIPO, WMO, WTO

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, particularly within the fields of software production, biotechnology, and tourism. Abundant geothermal and hydropower sources have attracted substantial foreign investment in the aluminum sector, boosted economic growth, and sparked some interest from high-tech firms looking to establish data centers using cheap green energy, 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 6.8% in 2009, and unemployment peaked at 9.4% in February 2009. GDP rose 2.7% in 2012 and unemployment declined to 5.6%. Since the collapse of Iceland's financial sector, government economic priorities have included: stabilizing the krona, implementing capital controls, reducing Iceland's high budget deficit, containing inflation, addressing high household debt, 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. Iceland began making payments to the UK, the Netherlands, and other claimants in late 2011 following Iceland's Supreme Court ruling that upheld 2008 emergency legislation that gives priority to depositors for compensation from failed Icelandic banks. Iceland owes British and Dutch authorities approximately $5.5 billion for compensating British and Dutch citizens who lost deposits in Icesave when parent bank Landsbanki failed in 2008. Iceland began accession negotiations with the EU in July 2010; however, public support has dropped substantially because of concern about losing control over fishing resources and in reaction to worries over the ongoing Eurozone crisis.

$12.95 billion (2012 est.)

$12.61 billion (2011 est.)

$12.24 billion (2010 est.)

$13.55 billion (2012 est.)

14.5% of GDP (2012 est.)

40.3% of GDP (2012 est.)

-2.3% of GDP (2012 est.)

118.9% of GDP (2012 est.)

128.6% of GDP (2011 est.)

5.4% (31 January 2012 est.)

5.75% (31 December 2010 est.)

8.4% (31 December 2012 est.)

7.7% (31 December 2011 est.)

$4.466 billion (31 December 2012 est.)

$4.053 billion (31 December 2011 est.)

$12.57 billion (31 December 2010 est.)

$12.68 billion (31 December 2010 est.)

$22.36 billion (31 December 2012 est.)

$19.49 billion (31 December 2011 est.)

$2.021 billion (31 December 2011)

$1.996 billion (31 December 2010)

$1.128 billion (31 December 2009)

potatoes, green vegetables; mutton, chicken, pork, beef, dairy products; fish

-$700 million (2012 est.)

-$953 million (2011 est.)

$5.1 billion (2012 est.)

$5.344 billion (2011 est.)

fish and fish products 40%, aluminum, animal products, ferrosilicon, diatomite

Netherlands 32.4%, Germany 15%, UK 9%, Norway 4.4% (2011)

$4.699 billion (2012 est.)

$4.506 billion (2011 est.)

machinery and equipment, petroleum products, foodstuffs, textiles

Norway 15.9%, US 10.8%, Germany 7.8%, Netherlands 7.3%, China 6.2%, Denmark 6.2%, Brazil 5.8%, UK 5.1% (2011)

$9.095 billion (31 December 2012 est.)

$8.55 billion (31 December 2011 est.)

$124.5 billion (30 June 2011)

$3.073 billion (2002 est.)

$NA (31 December 2011)

$9.2 billion (31 December 2008)

$NA (31 December 2011)

$8.8 billion (31 December 2008)

Icelandic kronur (ISK) per US dollar -

16.77 billion kWh (2010 est.)

15.98 billion kWh (2009 est.)

2.571 million kW (2009 est.)

4.7% of total installed capacity (2009 est.)

0% of total installed capacity (2009 est.)

72.9% of total installed capacity (2009 est.)

22.4% of total installed capacity (2009 est.)

0 bbl/day (2011 est.)

0 bbl/day (2009 est.)

0 bbl (1 January 2012 est.)

0 bbl/day (2009 est.)

20,770 bbl/day (2011 est.)

1,209 bbl/day (2009 est.)

15,530 bbl/day (2009 est.)

0 cu m (1 January 2012 est.)

3.357 million Mt (2010 est.)

state-owned public TV broadcaster operates 1 TV channel nationally; several privately-owned TV stations broadcast nationally and roughly another half-dozen operate locally; about one-half the households utilize multi-channel cable or satellite TV services; state-owned public radio broadcaster operates 2 national networks and 4 regional stations; 2 privately-owned radio stations operate nationally and another 15 provide more limited coverage (2007)

Grundartangi, Hafnarfjordur, Reykjavik

no regular military forces; Icelandic National Police (2008)

0% of GDP (2005 est.)

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)

Iceland, the UK, and Ireland dispute Denmark's claim that the Faroe Islands' continental shelf extends beyond 200 nm; the European Free Trade Association Surveillance Authority filed a suit against Iceland, claiming the country violated the European Economic Area agreement in failing to pay minimum compensation to Icesave depositors