Iceland is an island nation of 311,000 people in northern Europe, between the Greenland Sea and the North Atlantic Ocean, northwest of the United Kingdom, its northern edge situated just south of the Arctic Circle.
The second largest island in the North-Atlantic Ocean, is entirely volcanic (being located on the Mid-Atlantic Ridge and being pulled apart at the rate of one centimeter per year) and composed of basaltic rock. Weather is usually cold and wet, and blanket bogs are common. The surface is only partly covered with vegetation, the rest being bare rock, snow, and glaciers. The interior of the country is largely arctic desert, with mountains, glaciers, volcanoes and waterfalls.
Its major environmental issues include: water pollution from fertilizer runoff; and, inadequate wastewater treatment.
Iceland is susceptible to earthquakes and volcanic activity. Iceland, situated on top of a hotspot, experiences severe volcanic activity. Eyjafjallajokull (elev. 1,666 m) erupted in 2010, sending ash high into the atmosphere and seriously disrupting European air traffic. Scientists continue to monitor nearby Katla (elev. 1,512 m), which has a high probability of eruption in the very near future, potentially disrupting air traffic.
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.
Iceland has a strategic location between Greenland and Europe. It is the westernmost European country and Reykjavik is the northernmost national capital in the world.
Iceland has more land covered by glaciers than in all of continental Europe. See: Glaciers and ice sheets in the Arctic
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 Reykjavik, the average temperature is 11°C (52°F) in July and -1°C (30°F) in January.
Location: Northern Europe, island between the Greenland Sea and the North Atlantic Ocean, northwest of the United Kingdom
Geographic Coordinates: 65 00 N, 18 00 W
Area: 103,000 sq km(land: 100,250 sq km; water: 2,750 sq km)
Coastline: 4,970 km
Terrain: mostly plateau interspersed with mountain peaks, icefields; coast deeply indented by bays and fiords. The highest point is Hvannadalshnukur (2,110 m) (at Vatnajokull glacier).
Climate: temperate; moderated by North Atlantic Current; mild, windy winters; damp, cool summers. See: Arctic weather patterns
Topgraphy of Iceland. Source: Max Naylor/Wikimedia Commons.
Ecology and Biodiversity
The World Wildlife Fund ecoregion Iceland boreal birch forests and alpine tundra covers the island. The almost total lack of woodland is a striking feature in Iceland, as is the bareness of the country, whereby vast areas are either devoid of vegetation or only have a very sparse vegetation cover. New lava flows and ash from the volcanoes have sometimes covered vast areas of land, damaging or destroying the vegetation cover in the process. This ecoregion is rich in bird diversity, over three hundred species have been observed. Sixty-one Important Bird Areas cover seven percent of this country. Although not technically an artcic area, many typical arctic species are found here.
See also: Iceland Shelf large marine ecosystem
|Summer temperatures melt snow and ice on much of Iceland's surface, as shown on this satellite image. The lack of uniform snow cover allows permanent (though shrinking) icefields to show through (particularly Vatnajokull in the southeast), and highlights the island's rugged coastline. Scores of fjords edge the island, resembling feathers waving out into the waters of the northern Atlantic Ocean (bottom) and Greenland Sea (upper left). Though Iceland's climate is relatively mild and humid thanks to the North Atlantic Drift, and though the island's active volcanism provides inexpensive heating, only about the a quarter of the island is habitable, most of that along the coastlines. Photo courtesy of NASA.|
|A river with volcanic black sand banks meanders to the sea through farm fields near the southern coast of Iceland.|
|Eyjafjallajökull major eruption, photo taken May 10, 2010. Source: David Karnå /Wikimedia Commons|
|The Nesjavellir Geothermal Power Plant, the second largest geothermal power station in Iceland. Source: Gretar Ívarsson, geologist at Nesjavellir.|
|Map showing the Mid-Atlantic Ridge splitting Iceland and separating the North American and Eurasian Plates. The map also shows Reykjavik, the capital of Iceland, the Thingvellir area, and the locations of some of Iceland's active volcanoes (red triangles), including Krafla. Source: USGS|
|Photo taken from the Eurasian continental plate (foreground rock ledge) looking across to the North American plate and to the Thingvellir, the plains on which the Icelandic republic was founded in 930 and independence declared in 1944. The tabletop mountain on the horizon was formed by a volcanic eruption beneath a glacial ice sheet when Iceland was covered by ice.|
People and Society
Most Icelanders are descendants of Norwegian settlers and Celts from the British Isles, and the population is remarkably homogeneous. According to Icelandic Government statistics, 94% of the nation's inhabitants live in urban areas (localities with populations greater than 200) and about 63% live in the Reykjavik 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. The Icelandic alphabet contains letters not found in modern English. For example, Þ is transliterated as "th", and ð is transliterated as "d". About 83% of the population belongs to the state church, the Evangelical Lutheran Church, or other Lutheran Churches. However, Iceland has complete religious freedom, and about 35 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 Petur, would hold the surname Petursson and Petursdottir, respectively. Magnus' children, in turn, would inherit the surname Magnusson or Magnusdottir, 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.
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 was the 1955 Nobel Prize winner Halldor Kiljan Laxness. The literacy rate is 99.9%, and literature and poetry are legendary passions 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.
Population: 313,183 (July 2012 est.)
Ethnic Groups: homogeneous mixture of descendants of Norse and Celts 94%, population of foreign origin 6%
0-14 years: 20.2% (male 31,929/female 31,034)
15-64 years: 67.1% (male 105,541/female 103,202)
65 years and over: 12.7% (male 17,974/female 21,378) (2011 est.)
Population Growth Rate: 0.674% (2012 est.)
Birthrate: 13.23 births/1,000 population (2012 est.)
Death Rate: 7.02 deaths/1,000 population (July 2012 est.)
Net Migration Rate: 0.53 migrant(s)/1,000 population (2012 est.)
Life Expectancy at Birth: 81 years years (2012 est.)
Total Fertility Rate: 1.89 children born/woman (2012 est.)
Languages: Icelandic, English, Nordic languages, German widely spoken
Literacy (age 15 and over can read and write): 99% (2003 est.)
Urbanization: 93% of total population (2010) growing at an annual rate of change of 1.5% (2010-15 est.)
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 was then 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 was 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. 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. Responsibility for Iceland's defense passed to the United States in July 1941.
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 Keflavik.
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. 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 half a century. Iceland is the only NATO country with no standing military of its own.
European Union (EU) membership was one of the top campaign issues in the 2009 parliamentary elections. The parliament voted in favor of applying for EU membership in July 2009, and Iceland was granted candidate status on June 17, 2010. Formal accession negotiations began at an intergovernmental conference in Brussels on July 27, 2010 and are expected to last several years. After the negotiations are concluded, the Icelandic people will determine by national referendum whether the country joins the EU. Icelanders also 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.
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, the expectation is that the president should play the same limited role as a monarch in a traditional parliamentary system. The president can force a public referendum on a proposed law by refusing to sign it. President Olafur Ragnar Grimsson has referred legislation to referendum three times (one time the legislation was withdrawn before the referendum could be held).
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.
As of October 2011, parliament was debating a new draft constitution based on the work of a constitutional committee. The members of the constitutional committee had been elected in November 2010, but the Supreme Court nullified the election results in January 2011 due to voting irregularities; members were instead appointed by the government.
Government Type: constitutional republic
Capital: Reykjavik - 198,000 (2009)
Administrative divisions: 8 regions;
Legal System: civil law system influenced by the Danish model. Iceland has not submitted an International Court of Justice (ICJ) jurisdiction declaration; and accepts International criminal court (ICCt) jurisdiction
Reykjavík. Source: Andreas Tille/Wikimedia Commons
International Environmental Agreements
Iceland is party to international agrements on: 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, and Whaling. It has signed, but not ratified international agrements on: Environmental Modification and Marine Life Conservation.
Total Renewable Water Resources: 170 cu km (2005)
Freshwater Withdrawal: 0.17 cu km/yr (34%/66%/0%) (34% domestic, 66% industrial, 0% agricultural)
Per Capita Freshwater Withdrawal: 567 cu m/yr (2003)
Natural Resources: fish, hydropower, geothermal power, diatomite.
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. See: Molten Rock as a Source of High-Grade Energy
Iceland, a stable democracy with a dynamic consumer economy, suffered an economic crisis in October 2008. The banking sector collapsed, and the Icelandic Government turned to the International Monetary Fund (IMF) for assistance. Iceland successfully completed its IMF program on August 31, 2011.
In the years before the crisis, Iceland enjoyed an economic boom with several years of strong economic growth spurred by economic reforms, deregulation, and low inflation. The economy suffered an initial 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 (ISK), but the market recovered temporarily.
The financial sector was hit hard by the global credit crisis beginning in 2007. In the first 6 months of 2008, the Icelandic krona began devaluing and inflation rose to nearly 12%. Difficulties increased as Icelandic banks could not get financing on the global market and, with liabilities estimated at approximately 10 times GDP, they were forced to turn to their lender of last resort, the Central Bank of Iceland. The Financial Supervisory Authority took possession of the three large commercial banks, and Iceland turned to the IMF for a $5 billion loan package that included bilateral loans from the Nordics and other countries. A letter of intent sent to the IMF outlined the strategy for the recovery of the economy. Its main components were to stabilize the currency, establish trust in Iceland’s monetary policy, revise fiscal policy to meet the increased debt burden, and restructure the banking system. The Executive Board of the IMF approved the loan package in November 2008 and the program was successfully completed in August 2011.
The financial crisis resulted in a dramatic rise in unemployment from less than 2% to 9.3% in March 2010, and widespread business closures and bankruptcies. Political turmoil resulted in the resignation of the cabinet and installation of an interim government in January 2009 and early elections, as well as the replacement of the Central Bank and Financial Supervisory Authority leadership. At the end of 2008, inflation was at 18.6% and the currency had depreciated by roughly 90%. Inflation has since subsided to a large degree and is expected to be around 3.6% for 2011. The government has made good progress in restructuring the banking system. Following the takeover of the three big commercial banks, new banks were established around Icelandic assets, transferred from the old banks. The majority shares of two of the new banks have been sold to private investors, while the government still holds a majority stake in the third one. The old banks are still in receivership.
In April 2010, the Special Investigatory Commission (known informally as the Truth Commission) released a 2,000-page report on the banking meltdown. The report detailed the banks’ questionable practices, while the banking sector exploded exponentially in size. It provided the basis for investigation by the Special Prosecutor, who later arrested some suspects and froze their assets. In response to the report, three members of parliament took temporary leaves of absence in 2010; all of them returned to parliament in 2011. A parliamentary review committee established to determine whether ministerial responsibilities were breached recommended that four government ministers be indicted and tried by the Court of Impeachment. In September 2010, parliament voted to indict only one, former Prime Minister Geir Haarde, to stand trial in the Court of Impeachment.
As a small and undiversified economy, Iceland depends heavily on imports for consumption and industry. Its main exports are aluminum and marine products. Aluminum exports exceeded marine product exports in value for the first time in 2008. The tourism industry is the third-largest provider of foreign currency to the economy. 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, primarily in the aluminum sector. In February 2011, a U.S. company signed an investment agreement with the Government of Iceland to build a silicon metal facility in southwest Iceland. The agreement represents the largest new foreign direct investment in Iceland since the economic collapse of 2008. A Trade and Investment Framework Agreement (TIFA) with the United States was signed in January 2009.
Iceland's relatively liberal trading policy was strengthened by accession to the European Economic Area in 1994 and by the World Trade Organization (WTO) 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. However, following the financial turmoil in fall 2008, movements of capital to and from Iceland were restricted by the Rules on Foreign Exchange issued by the Central Bank. These rules are intended to be temporary measures to strengthen and stabilize the exchange rate of the Icelandic krona. In November 2009, the Central Bank implemented the first step of its strategy to lift the restrictions, permitting the inflow of foreign currency for new investments and the outflow of capital converted to foreign currencies from such investments. Subsequent phases will be introduced as conditions allow, but the Central Bank of Iceland has been acquiring ISK-denominated assets held by foreign entities in order to make it easier to lift capital controls. In September 2011, parliament enacted legislation to extend the use of capital controls until the end of 2013.
Iceland has no railroads. Organized road building began around 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 connect Reykjavik with the other main population centers.
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 measures taken by Brussels during the ongoing Eurozone crisis.
GDP: (Purchasing Power Parity): $12.33 billion (2011 est.)
GDP: (Official Exchange Rate): $14.1 billion (2011 est.)
GDP- per capita (PPP): $38,000 (2011 est.)
GDP- composition by sector:
services: 69.8% (2011 est.)
Industries: fish processing; aluminum smelting, ferrosilicon production; geothermal power, hydropower, tourism
Currency: Icelandic kronur (ISK)
Image by Andreas Tille