Country profilesIceland

Humanitarian profile

Iceland has a large number of volcanoes and many of them are classified as active. In 1783 a volcanic eruption on Iceland blotted out the sun and killed a quarter of the island’s population through resulting famine or poisoning. Although more recent volcanic eruptions have been less devastating, they have still been spectacular. In April 2010 a volcanic eruption on Iceland sent a cloud of ash into the air that scientists warned could cause engine failure in passenger jets, forcing European governments to ground aircraft.

Country snapshot

Settled by Vikings in the 9th and 10th centuries, Iceland is one of the most ethnically homogenous countries in the world. It also boasts one of the world’s most developed societies with free education and healthcare, high life expectancy and high levels of equality. In 2009 a lesbian became Iceland’s prime minister, the first openly gay woman to head a government in the modern era.

Some 320,000 people live in Iceland which is about the size of South Korea. Around 94 percent of the people are considered to be ethnic Icelanders. Volcanoes and glaciers dot Iceland and it is able to generate power naturally from the geothermal activity. Iceland has a temperate climate despite its northern location because it is warmed by the Atlantic Gulf Stream.

The capital of Iceland is Reykjavik, the world’s most northerly capital of a sovereign state. Iceland is a member of U.S.-led military alliance NATO but has no standing army. Iceland is not a member of the European Union although after the financial crisis of 2008-2009 when its banking system collapsed, public opinion shifted in favour of joining the European Union.

Government

Iceland gained full independence from Denmark in 1944. Under its 1944 constitution, Iceland has both a president and a prime minister. Iceland’s president is elected every four years and performs a largely ceremonial role. In 1980 Icelanders elected Vigdis Finnbogadottir to be their president, the world’s first directly elected female head of state.

The 63-seat single-chamber parliament, known as the Althing, is directly elected every four years. The Althing is one of the oldest parliaments in the world and can trace its roots back to the 10th century. No party has won an outright majority since Iceland became independent and all its governments have been coalition governments.

Economy

In 2008 Iceland’s banking sector collapsed. It was the first major casualty of the global financial crisis. Iceland’s banks had overborrowed and bought expensive assets around the world which were worth a fraction of their price after the financial downturn. The Icelandic krona started to lose value rapidly and the government was forced to raise interest rates to 18 percent and accept an emergency loan from the International Monetary Fund. Unemployment rose to around 10 percent and inflation jumped to 19 percent in January 2009 before falling back.

The economy has since stabilised but perceptions of Iceland as a global economic heavyweight punching above its size have also changed. Iceland has no natural resources other than geothermal power and fish. Fishing accounts for about 40 percent of export revenues and a tenth of GDP. Agriculture on Iceland is minimal.

Iceland has rebuilt its banking system since the 2008 collapse and the economy has stopped shrinking. Overall government spending in Iceland is high – about 40 percept of GDP according to an estimate by U.S.-based think-tank The Heritage Foundation.

History

Settlers from Norway and Denmark landed on Iceland in the late 9th and 10th centuries and colonised the island. In the late 13th century, Iceland became part of Norway’s hegemony. Iceland then became a subject of a union between Norway and Denmark.

When the union between Denmark and Norway disintegrated, Denmark retained control of Iceland and in 1874 granted it a constitution and limited self-government. In 1918 Denmark recognised Iceland as a sovereign state although with the Danish King as its head of state.

In 1944 Iceland voted to cut ties with Denmark and become a republic. Iceland was a founding member of NATO in 1949, although the decision to join the western military alliance triggered a riot in the capital. Under a Cold War agreement with the United States, the U.S. military stationed soldiers on Iceland from 1951 until 2006. Between the 1950s and the 1970s, Iceland and Britain clashed over the rights to fish for cod. Ships from both navies rammed each other in what became dubbed as the Cod Wars.

Legal snapshot

The Supreme Court is the highest court in Iceland. Beneath the Supreme Court are eight district courts. Judges are appointed for life by the justice minister.

Corruption is considered minimal in Iceland and the judiciary is independent from the executive. Iceland does not use juries in its legal system although cases are often judged by a panel of judges.

Iceland does not accept the jurisdiction of the International Court of Justice.