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.

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

306,694 (July 2010 est.)

13.43 births/1,000 population (2010 est.)

6.85 deaths/1,000 population (July 2010 est.)

0.83 migrant(s)/1,000 population (2010 est.)

1.9 children born/woman (2010 est.)

fewer than 100 (2003 est.)

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

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.)

Icelandic, English, Nordic languages, German widely spoken

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)

Independence Day, 17 June (1944)

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

civil law system based on Danish law; has not accepted compulsory ICJ jurisdiction

18 years of age; universal

unicameral Parliament or Althing (63 seats; members elected by popular vote to serve four-year terms)

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]

Arctic Council, Australia Group, BIS, CBSS, CE, EAPC, EBRD, EFTA, FAO, FATF, IAEA, IBRD, ICAO, ICC, ICCt, ICRM, IDA, IFAD, IFC, IFRCS, IHO, ILO, IMF, IMO, IMSO, Interpol, IOC, IPU, ISO, ITSO, ITU, ITUC, MIGA, NATO, NC, NEA, NIB, NSG, OAS (observer), OECD, OPCW, OSCE, PCA, Schengen Convention, UN, UNCTAD, UNESCO, UPU, WCO, WFTU, 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, 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.

$12.15 billion (2009 est.)

$12.99 billion (2008 est.)

$12.87 billion (2007 est.)

$12.13 billion (2009 est.)

8.2% (December 2009 est.)

4.8% (December 2008 est.)

14.1% of GDP (2009 est.)

107.6% of GDP (2009 est.)

55.9% of GDP (2008 est.)

11.5% (31 December 2009)

22% (31 December 2008)

NA% (31 December 2008)

19.29% (31 December 2007)

$4.83 billion (30 September 2009)

$4.71 billion (31 December 2008)

$3.44 billion (31 December 2008)

$3.55 billion (31 December 2008)

$NA (31 December 2008)

$49.67 billion (31 December 2006)

$1.67 billion (31 December 2009)

$5.557 billion (31 December 2008)

$40.56 billion (31 December 2007)

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

fish processing; aluminum smelting, ferrosilicon production; geothermal power, hydropower, tourism

16.84 billion kWh (2009 est.)

16.48 billion kWh (2009 est.)

0 bbl/day (2009 est.)

18,900 bbl/day (2009 est.)

2,975 bbl/day (2008 est.)

17,510 bbl/day (2008 est.)

0 bbl (1 January 2009 est.)

0 cu m (1 January 2009 est.)

-$409 million (2009 est.)

-$3.572 billion (2008 est.)

$4.02 billion (2009 est.)

$5.399 billion (2008 est.)

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

Netherlands 30.71%, UK 12.73%, Germany 11.21%, Norway 5.75%, Spain 4.82% (2009)

$3.311 billion (2009 est.)

$5.699 billion (2008 est.)

machinery and equipment, petroleum products, foodstuffs, textiles

Norway 12.97%, Netherlands 8.62%, Germany 8.3%, Sweden 8.03%, Denmark 7.27%, US 6.94%, China 4.98%, UK 4.55%, Brazil 4.09% (2009)

$3.883 billion (31 December 2009 est.)

$3.57 billion (31 December 2008 est.)

$3.073 billion (2002)

$9.2 billion (31 December 2008)

$8.8 billion (31 December 2008)

Icelandic kronur (ISK) per US dollar - 128.417 (2009), 85.619 (2008), 63.391 (2007), 70.195 (2006), 62.982 (2005)

state-owned public television broadcaster operates 1 TV channel nationally; several privately-owned TV stations broadcast nationally and roughly another half-dozen operate locally; about 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