Advanced search
image
Travel & living abroad

Europe

Iceland

 Flag of Iceland

Last reviewed: 03 April 2009 

Country information

Map of Iceland

Area: 103,000 sq km (40,000 sq mi)
Population: 309,000 (Apr 2007)
Capital City: Reykjavik (Population 116,466)
People: Icelanders
Languages: Icelandic
Religion(s): Evangelical Lutheran (93%), Protestant, Roman Catholic
Currency: Icelandic Krona (exchange rate £1 = ISK 122 ISK June 2007)
Major political parties: Independence Party (Geir Haarde), Social Democratic Alliance (Ingibjorg Solrun Gisladottir), Progressive Party (Gudni Agustsson), Left-Greens Movement (Steingrimur Sigfusson), Liberals (Gudjon Kristjansson)
Political System: Constitutional Republic
Government: Centre-Right/Left majority coalition of the Independence Party and Social Democratioc Alliance – since May 2007 (last election May 2007)
National Day: 17 June (Inauguration of the Republic of Iceland 1944 – union with Denmark terminated 16 June 1944)
National Anthem: Ó, Guð vors lands ('O, God of Our Land')
Head of State: President Olafur Ragnar Grimsson (1996, 2000, 2004)
Prime Minister: Geir H Haarde
Foreign Minister: Ingibjorg Solrun Gisladottir
Membership of international groupings/ organisations: Arctic Council (Chair 2002-2004), Barents Euro-Arctic Council, Council for Baltic Sea States (Chair 2005-06), Council of Europe, European Bank for Reconstruction and Development, European Economic Area, European Free Trade Area, International Bank for Reconstruction and Development, International Civil Aviation Authority, International Criminal Court, International Monetary Fund, International Maritime Organisation, Interpol, Intelsat, International Whaling Commission, NATO, OSCE, OSPAR, Convention for the Protection of the Marine Environment of the North East Atlantic, Nordic Council of Ministers (Chair 2004), Schengen, UN, Western European Union (associate), World Trade Organisation.

DID YOU KNOW

  • The Althingi, the world's oldest functioning legislative assembly, was established in the year 930 AD.
  • Icelandic retail group Baugur, food company Bakkavor and Landsbanki, KB and Glitnir Banks, as well as a number of other Icelandic companies, now own or control businesses that provide some 120, 000 jobs in the UK. The most recent high profile acquistions have been West Ham United FC and House of Fraser.
  • The world's first public commercial filling station for hydrogen-powered vehicles opened in Reykjavik in 2003.
  • 90 per cent of the population have their heating and power supplied from hydro-electric and geothermal sources.
  • 79 per cent of Iceland's land area consists of glaciers, lakes and lava fields It is one of the world's most volcanically active regions with more than 200 volcanoes. Over the past 500 years Iceland has thrown up a third of the earth's total lava flow.
  • Volcanic eruptions in Iceland probably caused an unusual rise in deaths in England during the summer of 1783 - a cloud of volcanic gases and particles sweeping south from the Laki Craters event of that year may have killed more than 10,000 people. In Iceland some 9,000 people - about a quarter of the population - were killed due mainly to a famine that took hold after most of the island's sheep were killed by eating grass contaminated with fluorine from the eruptions.
  • Per capita, publication of books and magazines is the highest in the world.
  • Famous Icelanders: Leif Eriksson, Vigdis Finnbogadottir (world's first elected female president in 1980), Nobel Literature Prize winner Halldor Laxness (The Atom Station, Iceland's Bell, Independent People, The Fish can Sing) Bjork, rock group Sigur Ros, opera singer Kristjan Johannsson, Magnus and Sally Magnusson, Crime writer Arnaldur Indridason (Jar City), footballer Eidur Gudjohnsen (Barcelona, formerly Chelsea).
  • Iceland's first and only quadruplets, the four Gudjonsdottir girls, were conceived in Bourn Hall clinic Cambridgeshire in 1991.
  • Icelandic food specialities: Cured skate (pungently laden with ammonia), Dried fish (usually eaten with butter), Rams' testicles (pickled in whey), Svid (charred sheep's head), Shark (putrefied), Slátur (haggis-like concoctions made from sheep's blood and intestines).

ECONOMY

Basic Economic Facts

GDP: US $15.8bn (2005)
GDP per head: US $53,472 / £28,391 (2005)
Annual Growth: 5.5% (2005)
Inflation: 7.3% (Dec 2006)
Major Industries: Fish processing, aluminium smelting, ferrosilicon production, geothermal power, tourism, pharmaceuticals
Major trading partners: UK, Germany, Netherlands, Denmark, US, Norway
Exchange rate: £1 = 123 Icelandic Krona (ISK) (May 2007)
Unemployment: 1% 2006

Icelanders enjoy a per capita income amongst the highest in Europe, but Iceland's economic outlook has always depended on its large fishing industry, which, as its main export earner (60 per cent of its merchandise exports and 30% of its total are marine products), is also responsible for 7-8 per cent of its GDP. Fish remains important to Iceland's economy but is no longer as susceptible to movements in the world price of fish products and to fluctuations in the size of its catches as it once was. Because of over-fishing in the 1980s the Icelandic government has introduced a successful management system to allow stocks to recover. Direct foreign investment in the fishing industry is not allowed. Less than five per cent of Iceland is arable land, but good grazing keeps the country self-sufficient in meat and dairy products. The breeding and export of Iceland horses is a growing business.

Iceland's efforts of the last 15 years to diversify away from fishing is now reflected by excellent economic figures. With plenty of clean, cheap fuel, energy intensive industry is high on the list. Two aluminium smelters are in operation, the capacity of both has been expanded and will be expanded more in the next few years. A third - Alcoa owned and by far the largest capacity - is being built and is to start operations in April 2007. Information technology and bio-genetics are of growing importance in an increasingly knowledge-based economy. As is finance and overseas investment. The three main banks (KB, Landsbanki and Glitnir) have been among the fastest growing in the world over the last 2 or 3 years (2004-2006) with some 60% of their profits now coming from their overseas operations - much of it in the UK.

Tourism is now a major foreign exchange earner with some 400,000 coming in 2005-2006. Whale-watching has been growing and now attracts some 20% of visitors to Iceland and makes a significant contribution to the economy. In 2006, 70-80,000 visitors from Britain came to Iceland (the largest national group).

Further information about Iceland's economy can be found at UK Trade and Investment and Statistics Iceland.

www.hagstofa.is

HISTORY

Iceland was the last country in Europe to be settled, by Vikings and Celts, in the 9th and 10th century AD. The nation converted to Christianity in 1000 (the year in which Iceland-born Leif Eiríksson was the first European to set foot in the Americas). From the Middle Ages she was a Norwegian and later a Danish colony. She gained Home Rule in 1904 and then separate sovereign status under the Danish crown in 1918. During WW II, the country was benignly occupied, first by British and then by US forces. Iceland became an independent republic on 17 June 1944.

BBC News Country Timeline: Iceland

INTERNATIONAL RELATIONS

The Icelandic government has made clear its continued support for the EEA agreement between EFTA and the European Union, which came into force in January 1994 and was extended to cover the 10 new EU members in May 2004, but opted for a two-year delay in allowing the free movement of labour provision, which has now been implemented. The same delay two-year delay has been applied to Romania and Bulgaria following their EU accession in January 2007. Iceland's EU membership has still to find itself onto the political agenda, with the most frequently heard comment being that the EEA addresses Iceland's needs in full. However, this may change following the formation of a new coalition government in May 2007, though EU membership was not an election issue. The Social Democratic Alliance are supportive of EU accession, and PM Geir Haarde, though not outwardly supportive, is at least prepared to allow discussion of the issue, unlike his predecessor David Oddsson. The coalition agreement between the Independence Party and the Social Democratic Alliance advocates the creation of an Althing committee to monitor how EU developments might impact on Iceland’s interests and how changes in Iceland (such as instability of the Krona) might prompt a rethink on EU membership.

Iceland is active in Nordic and Arctic regional co-operation. It chaired the Nordic Council of Ministers in 2004, and the Arctic Council from 2002-2004. In July 2005, Iceland took over the Chair of the Council for Baltic Sea States for 12 months. Iceland shares the main ideals and objectives of its NATO allies in world affairs. It has no armed forces but in 2001 established an Icelandic Crisis Response Unit (ICRU) with a roster of over 100 experts (police, medical, legal, engineers etc) specially trained to be deployed to trouble spots at short notice. The ICRU successfully managed Pristina airport in Kosovo in 2003/04 and took over management of Kabul airport in Afghanistan on 1 June 2004. It recently provided two eight person mobile observation teams, one based in the city of Meymana in northern Afghanistan and the other in Chaghcharan in the western part of the country and will provide additional support to the running of Kabul airport. Iceland has also committed funds to NATO (£500,00 approx) to pay for airlift of equipment to Afghanistan.

The United States has undertaken to defend Iceland under the terms of the 1951 bilateral defence agreement and Iceland also benefits from the mutual defence provisions of NATO. On 30 September 2006, the US withdrew the last of its aircraft and air-sea rescue helicopters together with personnel, from the Keflavik base. The US has, however, agreed to continue to abide by obligations under the 1951 defence agreement to defend Iceland. Iceland is campaigning for a seat on the UN Security Council for the 2009/10 session.

Iceland's relations with the UK

Despite the hiatus of the Cod Wars in the mid 1970s, bilateral relations are excellent, reflecting historical ties and many common interests including free trade, defence, environmental protection and international peace and good order. 2006 is the 30 Anniversary of the end of the last Cod War. There is a steady flow of visits in both directions, most recently by the Icelandic Foreign Minister and Prime Minister in January and February 2006.

However, there have been disagreements about whaling. The UK, on behalf of 22 other countries, presented a demarche to Iceland on 10 September 2003, which was followed in 2005 by a joint statement by the Ambassadors of the UK, France and Germany, protesting against the killing of Minke whales for scientific purposes. In October 2006, Iceland announced it was to resume commercial whaling, in contravention of a global moratorium. The British Government was swift to condemn this move. Marine Affairs Minister Ben Bradshaw summoned the Icelandic Ambassador to the UK to explain this decision and convey the British government’s dismay. On 1st November 2006, the British Ambassador to Iceland, H.E. Alp Mehmet, delivered a demarche on behalf of 25 countries, including Britain, expressing extreme disappointment at Iceland’s decision. The text of the demarche declared: “We repeat our countries’ opposition to this operation and urge the Government of Iceland to reconsider its position and reverse this unnecessary decision and to abandon its current whaling operations.”

Recent Visits

Outward to Iceland

  • Denis MacShane, FCO Europe Minister - 20-22 July 2004
  • Ben Bradshaw, Fisheries Minister - 10-12 August 2004
  • Cherie Blair - 26-30 August 2004, University of Reykjavik Conference on Women and Law
  • Sylvia Heal, Deputy Speaker of the House of Commons - 6 October 2004
  • Suzanna Becks, Deputy Assistant Commissioner, Metropolitan Police - 8 October 2004, to the Icelandic Police Chiefs Annual Conference
  • Sir Howard Davies, Director of the London School of Economics - January 2005
  • Cherie Blair- 27-31 August 2005, Conference: "Women's Empowerment: Measuring the Global Gender Gap."
  • Sir Michael Jay, Permanent Under Secretary, Foreign & Commonwealth Office, 9-11 October 2005
  • Baroness Amos, 1 December 2005
  • George Reid, MSP, Presiding Officer, Scottish Parliament, and Scottish Parliamentary delegation, 10-13 April 2006
  • Sir John Bourn, Auditor General, 8-11 September 2006
  • Allan Wilson, MSP, Deputy Enterprise Minister, Scottish Executive, 11-13 October 2006

Inward to the UK

  • Prime Minister David Oddsson - 27 April 2004, to give a speech at Oxford University
  • MFA Permanent Secretary Gunnar Snorri Gunnarsson and Political Director Sturla Sigurjonsson - 23 November 2004
  • Thorgerdur Katrin Gunnarsdottir, Minister of Education, Science and Culture - January 2005
  • Geir Haarde, Foreign Minister to meet Jack Straw on 18 January 2006
  • Halldor Asgrimsson, Prime Minister, to meet Tony Blair, 22 February 2006
  • Fisheries Minister Einar Kristinn Gudfinnsson to meet Ben Bradshaw, UK Fisheries Minister 23 March 2006
  • Olafur Ragnar Grimsson, President of Iceland opened UK/Iceland inward investment seminar at Lancaster House, 25 May 2006
  • President Grimsson unveiled Seafarers' Sculpture by Steinun Thorarinsdottir in Hull, 22 June 2006
 

GEOGRAPHY

Iceland is a volcanic island in the North Atlantic, 103,000 km2 in size, situated to the west of Norway and to the east of Greenland. It is three hours flying time from London and two from Glasgow. Geologically speaking, it is the youngest country in the world. The Icelanders live in a beautiful, but rather fierce natural setting with extremes in the weather, and are continually reminded of the often-harsh natural elements with earthquakes and volcanic eruptions relatively commonplace. Iceland enjoys the midnight sun in summer and extensive darkness in winter, with the northern lights adding a touch of magic on clear winter nights.

TRADE AND INVESTMENT

Trade and Investment with the UK

Imports from Iceland were worth £292m in 2004 (19 per cent of its products), making the UK Iceland's most important market- over £200m of this was fish. Iceland is currently our 67th largest export market. The balance of trade remains in Iceland's favour. In 2004, UK exports to Iceland were worth £172m - up from £124m in 2003. UK exports consist of all types of machinery equipment: general industrial; office; and electrical. We also export road vehicles, and clothing. The UK is currently Iceland's fifth largest supplier, after Germany, USA, Norway and Denmark with a 6.8 per cent market share (2004).

UK Trade and Investment Country Profile: Iceland

POLITICS

The Icelandic Cabinet comprises:

Prime Minister: Geir H Haarde (IP)
Minister for Foreign Affairs: Ingibjorg Solrun Gisladottir (SDA)
Minister of Justice and Ecclesiastical Affairs: Bjorn Bjarnason (IP)
Minister of Finance: Arni M. Mathiesen (IP)
Minister of Fisheries and Agriculture: Einar Kristinn Gudfinnsson (IP)
Minister of Fisheries: Einar Kristinn Gudfinnsson (IP)
Minister of Industry: Ossur Skarphedinsson (SDA)
Minister of Commerce: Bjorgvin G. Sigurdsson (SDA)
Minister of Health: Gudlaugur Thor Thordarson (IP)
Minister of Social Affairs: Johanna Sigurdardottir (SDA)
Minister of Education, Science and Culture: Thorgerdur Katrin Gunnarsdottir (IP)
Minister for the Environment: Thorunn Sveinbjarnardottir (SDA)
Minister of Transport and Communication: Kristjan L. Moller (SDA)

Elections

Parliamentary elections took place in May 2007. The governing Independence Party again gained the largest share of the vote, which saw a turnout of 83 per cent. The previous junior government coalition partner, the Progressive Party experienced a fall in its share of the vote, so Independence Party leader Geir Haarde turned to the centre-left Social Democratic Alliance (SDA) to form the new government. Haarde retained his position of Prime Minister (a post he has held since 2006) and SDA leader Ingibjorg Solrun Gisladottir was appointed Foreign Minister. The new coalition has a majority of 21 in the 63 seat Althing, so will have little difficulty in getting its legislation through the uni-cameral parliament. The government is likely to continue with its pro-business and economic liberalisation agenda, though the SDA will bring greater focus on health, welfare and the environment.

President Olafur Ragnar Grimsson was re-elected in June 2004 by 67.5 per cent of those who voted. The turnout was 62.9 per cent - low for Iceland - and 20 per cent of ballot papers were spoiled in protest at the President vetoing a government bill on media ownership. In 1996 President Grimsson succeeded Vigdis Finnbogadottir who became the world's first elected female President in 1980.

Country information

Pick Another Country :

Share this with: