ICELAND

Republic of Iceland

Lveldi Ísland

CAPITAL: Reykjavík

FLAG: The national flag, introduced in 1916, consists of a red cross (with an extended right horizontal), bordered in white, on a blue field.

ANTHEM: O Guð; vors lands (O God of Our Land).

MONETARY UNIT: The new króna (k), introduced 1 January 1981 and equivalent to 100 old krónur, is a paper currency of 100 aurar. There are coins of 5, 10, and 50 aurar and 1, 10 and 50 krónur, and notes of 10, 50, 100, 500, 1,000 and 5,000 krónur. k1 = $0.01571 (or $1 = k63.65) as of 2005.

WEIGHTS AND MEASURES: The metric system is used.

HOLIDAYS: New Year's Day, 1 January; Labor Day, 1 May; National Holiday, 17 June; Bank Holiday, August; Christmas, 25–26 December. Movable religious holidays include Holy Thursday, Good Friday, Easter Monday, Ascension, and Whitmonday. Half-holidays are observed on Christmas Eve, 24 December, and New Year's Eve, 31 December.

TIME: GMT.

LOCATION, SIZE, AND EXTENT

Iceland, the westernmost country of Europe, is an island in the North Atlantic Ocean, just below the Arctic Circle and a little more than 322 km (200 mi) e of Greenland, 1,038 km (645 mi) W of Norway, and 837 km (520 mi) nw of Scotland. It has an area of 103,000 sq km (39,769 sq mi), extending 490 km (304 mi) e–w and 312 km (194 mi) n–s. Comparatively, the area occupied by Iceland is slightly smaller than the state of Kentucky. The total length of coastline is about 4,988 km (3,099 mi). The republic includes many smaller islands, of which the chief are the Westman Islands (Vestmannaeyjar) off the southern coast.

Iceland's capital city, Reykjavík, is located on the country's southwest coast.

TOPOGRAPHY

Iceland consists mainly of a central volcanic plateau, with elevations from about 700 to 800 m (2,297–2,625 ft), ringed by mountains, the highest of which is Hvannadalshnúkur (2,119 m/6,952 ft), in the Örfajökull glacier. Lava fields cover almost 11% of the country, and glaciers almost 12%. Among the many active volcanoes there is an average of about one eruption every five years. The largest glacier in Europe, Vatnajökull (about 8,400 sq km/3,200 sq mi), is in southeast Iceland. There are also many lakes, snowfields, hot springs, and geysers (the word "geyser" itself is of Icelandic origin).

The longest river is the Thjórsá (about 230 km/143 mi) in southern Iceland. Most rivers are short and none are navigable, but because of swift currents and waterfalls, Iceland's rivers have important waterpower potential. There are strips of low arable land along the southwest coast and in the valleys. Good natural harbors are provided by fjords on the north, east, and west coasts.

CLIMATE

Despite Iceland's northern latitude, its climate is fairly mild because of the Gulf Stream, part of which almost encircles the island. There are no extreme temperature variations between seasons, but frequent weather changes are usual, particularly in the south, which experiences many storms and heavy precipitation. Temperatures at Reykjavík range from an average of 11°c (52°f) in July to -1°c (30°f) in January, with an annual mean of about 5°c (41°f). Humidity is high, and there is much fog in the east. Annual rainfall in the north ranges from 30 to 70 cm (12–28 in); in the south, 127–203 cm (50–80 in); and in the mountains, up to 457 cm (180 in). Winters are long and fairly mild, summers short and cool. Summer days are long and nights short; in winter, days are short and nights long.

FLORA AND FAUNA

Although there are a few small trees (ash, aspen, birch, and willow), the chief forms of vegetation are grass, mosses, and small shrubs (heather, willow, dwarf birch). Some 340 different species of flowers have been listed, but most of these are sparse.

The fox, the chief indigenous animal, is common. Wild reindeer, introduced in the 18th century and once abundant, were almost exterminated and therefore have been protected in recent years; they are found chiefly in the northeastern highlands. The waters around Iceland abound in whales, many types of seals, and many kinds of fish. Dolphin, grampus, porpoise, and rorqual are numerous. Cod, haddock, and herring are particularly abundant, but there are also sole, shark, halibut, redfish, saithe, and other fish. Salmon abound in many rivers and trout in rivers and lakes. There are about 88 species of breeding birds; most are aquatic. The chief resident birds are eiderduck (raised commercially for their down) and ptarmigan. Other characteristic indigenous birds are swan, eagle, falcon, and gannet, all rare now and protected. Iceland has no reptiles or frogs and very little insect life.

ENVIRONMENT

Because of Iceland's sparing use of hydrocarbon fuels, its air is cleaner than that of most industrialized nations. However, its water supply is polluted by excessive use of fertilizers (current estimates put Iceland's yearly usage of fertilizers at 2,500 lbs per acre). Population increases in the cities also contribute to water pollution. Iceland has 170 cu km of renewable water resources with 6% used for industrial purposes. Industrial carbon dioxide emissions totaled 2.1 million metric tons per year in 1996. Protected lands, which account for 9.5% of Iceland's total land area, include four national parks, with a total area of 619,300 hectares (1,530,315 acres) and 27 nature reserves, covering 256,861 hectares (634,714 acres). Principal environmental responsibility is vested in the Ministry of Social Affairs.

According to a 2006 report issued by the International Union for Conservation of Nature and Natural Resources (IUCN), threatened species included 7 types of mammals and 8 species of fish. Endangered species include the leatherback turtle and four species of whales. The great auk has become extinct.

POPULATION

The population of Iceland in 2005 was estimated by the United Nations (UN) at 295,000, which placed it at number 168 in population among the 193 nations of the world. In 2005, approximately 12% of the population was over 65 years of age, with another 23% of the population under 15 years of age. There were 100 males for every 100 females in the country. According to the UN, the annual population rate of change for 2005–10 was expected to be 0.8%, a rate the government viewed as satisfactory. The projected population for the year 2025 was 335,000. Iceland is one of the least densely populated countries in the world, with an overall population density of 3 per sq km (7 per sq mi). The interior of the country is largely uninhabited.

The UN estimated that 94% of the population lived in urban areas in 2005, and that urban areas were growing at an annual rate of 0.71%. The capital city, Reykjavík, had a population of 184,000 (more than half the nation's population) in that year. The next largest towns and their estimated populations are Kópavogur (25,291), south of Reykjavík; Hafnarfjördur (21,300), about 10 km (6 mi) from Reykjavík; and Akureyri (16,475), on the north coast.

MIGRATION

Little immigration has occurred since the original settlement in the 9th and 10th centuries. In the last quarter of the 19th century, because of unfavorable economic conditions, about 12,000 residents of Iceland emigrated to Canada and the United States. After 1900, net emigration decreased substantially.

As of 1997, just 375 refugees had arrived in Iceland since 1956. During the Kosovo crisis, Iceland offered to take up to 100 refugees under the UNHCR/IOM Humanitarian Evacuation Programme. A total of 70 people were actually evacuated to Iceland, 16 of whom returned to Kosovo by 1999. There were 16,000 migrants living in Iceland in 2000. In 2004 Iceland had 239 refugees, and 19 asylum seekers. In 2005 the net migration rate was estimated as 2.06 migrants per 1,000 population. The government views the migration levels as satisfactory.

ETHNIC GROUPS

The population is almost entirely Icelandic, many of whom descended from the Norse and Celtic settlers who came in the late 9th and early 10th centuries.

LANGUAGES

Icelandic, the national language, derives from the Old Norse language that was spoken throughout Scandinavia at the time of settlement. It has changed little through the centuries, partly because of the country's isolation and partly because of the people's familiarity with the classical language, as preserved in early historical and literary writings. There is comparatively little difference between the old language and the modern, or between the written language and the spoken. To this day, Icelanders are able to read the great 13th-century sagas without special study.

RELIGIONS

The Church, the national church, is endowed by the state, but there is complete freedom for all faiths, without discrimination. All of Iceland constitutes a single diocese of the national church, headed by a bishop with his seat at Reykjavík; there are 281 parishes. As of 2004, about 86% of the population were nominally members of this established church, though it is believed that most do not practice actively. A 2003 Gallup poll indicated that 43% of Lutherans did not attend church at all and only 10% said that they attend church one or more times a month. About 4.3% of the population belong to one of three Lutheran Free Churches: the Reykjavík Free Church, the Hafnarfjordur Free Church, or the Reykjavík Independent Church. Another 4.4% (about 13,025 people) belong to one of 21 different denominations that are registered and recognized by the state. The largest of these groups is the Roman Catholic Church (5,582 members); the smallest is the First Baptist Church (10 members). Seventh-Day Adventists, Jehovah's Witnesses, Buddhists, Baha'is, Muslims, and Jews are also represented by small congregations.

TRANSPORTATION

There are no railways or navigable inland waters. All important towns and districts can be reached by bus and truck via interurban roads. In 2004, Iceland's roadway system totaled 13,004 km (8,088 mi), of which only 4,331 km (2,694 mi) were paved or were surfaced with oiled gravel. Registered passenger cars in 2003 numbered 161,721 and there were 27,977 commercial vehicles.

In 2005, Iceland's merchant marine fleet consisted of three ships of 1,000 GRT or more, with a total capacity of 4,341 GRT. In addition, there are about 1,000 civilian vessels, mostly small fishing craft. Most of the import and export trade is handled in Reykjavík. Akureyri, on the north coast, is the largest port serving the outlying areas.

Iceland had an estimated 98 airports in 2004, of which 5 had paved runways as of 2005. The principal airport is Keflavik at Reykjavík. In the 1950s, Icelandic Airlines was the first transatlantic airline to offer fares drastically lower than those of the major carriers. Icelandair, formed by a merger of Icelandic Airlines and Iceland Air in the early 1970s, operates domestic routes as well as international flights to the United Kingdom, Scandinavia, and Germany, and transatlantic flights with stopovers at Reykjavík. In 2001 (the latest year for which data was available), 1,357,900 passengers were carried on scheduled domestic and international flights.

HISTORY

Iceland's first known settler, Ingólfur Arnarson, sailed from his native Norway to Iceland and settled at what is now Reykjavík in 874. During the late 9th and early 10th centuries, the island was settled by other Norwegians fleeing the oppressive rule of their king and by smaller groups of Scottish and Irish emigrants. In 930, a central legislative and judicial assembly, the Althing, was established, and a uniform code of laws for the entire country was compiled. Christianity was introduced in 1000, but the memory of the old pagan religion was preserved in 12th and 13th-century Icelandic literature. Many of the early settlers were great seafarers and continued their westward voyages of discovery and exploration from Iceland. Most famous of these were Eric the Red (Eiríkur Thorvaldsson), who discovered and settled in Greenland in 982, and his son Leif Ericsson (Leifur Eiríksson), who around the year 1000 discovered the North American continent, which he called Vinland ("wineland") because of the grapes he found there. Icelanders acknowledged the sovereignty of Haakon IV of Norway in a treaty of 1262, which established a purely personal union, ending the independent republic or commonwealth in Iceland. When all the Scandinavian countries came under the rule of Denmark at the end of the 14th century, Iceland became a Danish dominion. Lutheranism was introduced in the 1540s. Exclusive trading rights with Iceland were given in 1602 to a private Danish trading company. Danes had a complete monopoly of trade with Iceland until 1786, when trade was opened to all subjects of the kings of Denmark, including Icelanders.

The last decades of the 18th century were a period of economic ruin for Iceland, compounded by poor harvests, epidemics, and volcanic eruptions (notably that of 1783, the worst in Iceland's history); the population dwindled to 38,000 by 1800, less than half the number in the period of independence. In that year, the king abolished the Althing, long since reduced in power. Within a few decades, however, a nationalist movement had attained considerable strength, winning the reestablishment of the Althing (but only as an advisory body) in 1843, followed by the opening of trade with all countries in 1854. After a long constitutional struggle—led by a national hero, Jón Sigurðsson, who was both statesman and scholar—limited home rule was granted in 1874, and almost complete home rule in 1903. By agreement with Denmark in 1918, Iceland was declared a free and independent state, but personal union with the Danish crown was retained. The Danish king continued to function as king of Iceland, and Denmark conducted Iceland's foreign affairs; but Iceland had the right to terminate this union after 25 years.

Cut off from Denmark during World War II by the German occupation of that country, Iceland established diplomatic relations with the United Kingdom and the United States. British forces took over the protection of the island in 1940 and were replaced the following year by US troops that remained in Iceland until early 1947. In a referendum held in May 1944, more than 97% of those participating voted to end the union with the king of Denmark and, on 17 June 1944, Iceland became an independent republic. In 1946, it was admitted to UN membership. Three years later, Iceland became a party to the Atlantic Pact (NATO), and a bilateral defense agreement was signed in 1951 providing for a US military presence. In March 1970, Iceland joined EFTA, and a tariff agreement was ratified with the EC in February 1973. To protect its fishing industry, Iceland unilaterally extended its fishing zone in 1958, and again in 1972 and 1975, provoking conflict with the United Kingdom and other countries. Casualties resulted from the most serious outbreak of the "cod war" with the United Kingdom in late 1975 and in February 1976. An agreement ended the conflict in June 1976 and relations with the United Kingdom improved. Disputes over fisheries resources have also arisen with the Norwegians periodically, though both Norway and Iceland are united in their opposition to the international ban on whaling.

In 1985, the parliament unanimously voted to declare Iceland a nuclear-free zone, banning any deployment of nuclear weapons. Reykjavík was the scene of the October 1986 summit meeting between US president Ronald Reagan and Soviet leader Mikhail Gorbachev on arms control and nuclear disarmament.

Depressed world fish prices weakened the economy in the early 1990s, resulting in a no-growth GDP and higher unemployment. A number of factors have combined to reinvigorate the Icelandic economy. The government launched an austerity program to trim the Icelandic welfare state which included measures such as increasing the retirement age from 65 to 67 years of age (with future increases to age 70 envisioned). Icelanders are also being asked to pay for a greater portion of social services out of their own pockets. Demand in Europe and the United States for Icelandic fish has rebounded and fish exports account for 70% of exports and 50% of foreign earnings. Liberalization of many sectors of the economy such as telecoms and banking, required under the EEA (European Economic Area) agreement with the European Union in exchange for greater access to the EU market, has reduced public expenditures and positively affected governmental finances. By 1999, Iceland had experienced four years of more than 5% GDP growth, and purchasing power was increasing at four times the OECD average. Unemployment had dropped to 2%, and Iceland has dealt with its labor shortage by initiating labor immigration from the Philippines. The economic boom years from 1996–2001 slowed in 2002, and Iceland experienced a mild recession with a GDP growth rate of -0.5%. Growth of GDP increased from 2003–05, however, nearing 6% by 2005.

Iceland was in the international headlines at the end of 1998 for altogether different reasons. In December 1998, the Icelandic parliament agreed after two full revisions of the legislation to create a health database of medical records of all Icelanders for use by a private company seeking to decode the human genome. Iceland's isolated, homogeneous population is a boon to medical researchers seeking to decode the genetic sequences of many hereditary diseases, but the lack of informed consent by individuals in the legislation became a heated political issue.

A public opinion poll taken in June 2002 indicated a 50–50 split between supporters and opponents of EU membership. However, conservative Independence Party leader and Prime Minister Davíð Oddsson remained resolutely opposed to EU membership, stating in 2002 that Iceland's affairs should not be dictated by conditions in "Paris or Berlin." Oddsson in 2005, however, indicated in a speech that a policy change was not ruled out depending upon how the EU evolved.

Iceland rejoined the International Whaling Commission in 2002 with reservations. It declared it would engage in whaling for scientific purposes, and resume commercial whaling of Minke and Fin whales after 2006.

President Ólafur Ragnar Grímsson was reelected president in June 2004. In September of that year, Prime Minister Davíð Oddsson switched positions with Foreign Minister Halldór Ásgrímmson. Oddsson had held the position of prime minister for a record 13 years.

GOVERNMENT

Iceland is an independent republic. Executive power is vested in the president and the government, legislative power in the president and the legislative assembly (Althing). The president is elected by universal suffrage for a four-year term. Effective executive power is exercised by a prime minister enjoying the confidence of the Althing: the prime minister is appointed by the president, and the prime minister in turn selects a cabinet composed of ministers responsible to the Althing for their acts. The president must sign all legislation before it becomes law.

All citizens who have reached the age of 18 may vote, provided they have resided in Iceland for the five years immediately preceding an election. In 2003, 87.5% of Icelanders eligible to vote in the parliamentary elections did so. By a system of proportional representation, voters elect the 63 members of the unicameral (since 1991) Althing from eight constituencies at a general election held every four years, but sooner if the governing coalition loses its ability to command a legislative majority. Because of the widely varying populations of the constituencies (Reykjavík constitutes one-third of the nation's population), each constituency has a minimum of five seats, and more populous regions have more. Three-quarters of the seats in any constituency are divided by the parties according to proportional representation of that region, while the final quarter of the seats in each constituency are apportioned according to the national vote tally to ensure national proportional representation. Any citizen qualified to vote is eligible to run for a seat in the Althing. When any amendment to the constitution is voted, the Althing is dissolved and new elections are held; if the new Althing accepts the proposed amendment, it becomes law when ratified by the president.

The institution of the Althing has parliamentary immunity and its members swear allegiance to the constitution. Government ministers are normally members of the Althing and enjoy full parliamentary privileges. The constitution and the rules of procedure of the Althing specify the rights and duties of parliamentarians, and the legislative year of the Althing begins on 1 October. The legislative agenda of the Althing is divided among 12 standing committees. At the first meeting following the inauguration ceremony, the president of the Althing is elected. In addition to acting as the chief executive of Althing, the president sits on the five-person presidium along with the four vice presidents. The presidium is responsible for the organization of parliamentary activities. Sessions of the Althing are normally held four days a week.

POLITICAL PARTIES

No one major party in recent years has been able to command a majority of the electorate, and coalition governments have been the rule. Principal parties include the Independence Party (Sjálfstoeðisflokkurinn) (IP), a conservative grouping; the Progressive Party (Framsóknarflokkurinn) (PP), an agrarian, left-center party; the Progressive Alliance (Althýðubandalag) (PA), a formerly Communist-oriented party, now a far-left party; and the Social Democratic People's Party (Althýðuflokkurinn) (SDP), a center-left group. An Independence Party splinter group, the Citizens' Party (CP), lost its parliamentary representation by securing no seats. Iceland is unique among the Nordic states (which lead the OECD countries on all indicators of gender equality) in that it is the only one to have a women's party, which has gained a foot-hold in parliament. In 1995, the Icelandic Women's Alliance, a political party devoted to feminist issues, gained three seats in the Althing.

Of these parties, the Independence Party dates back to 1929, and the Progressive and Social Democratic People's (formerly Labor) parties to 1916; all three have been the source of various splinter groups. The People's Alliance became a distinct political party in 1970; it grew out of an alliance among Communist-oriented elements in the Social Democratic People's Party and other groups, and in effect replaced the earlier People's Union–Socialist Party (Sameiningarflokkur althyðu-Sósíalistaflokkurinn).

It was the issue of NATO and the US military presence that in March 1956 broke up an early alliance between Progressives and Independents, and the elections that year led to a new coalition of the Progressive, Labor, and People's Union–Socialist parties, all of which opposed the US military base on Iceland. (After the Hungarian uprising of October 1956, however, the Progressive and Labor parties reversed their stand.) That government fell because of Communist opposition to a proposed wage freeze, and after elections in October 1959, a government formed by the Independence and Labor parties came into office. This coalition endured for some time. But after the loss of four seats in the June 1971 general elections, a new government, composed of the Progressive Party, the People's Alliance, and the Liberal and Left Alliance (a party established in 1969 on a platform opposing Iceland's participation in NATO and its defense agreement with the United States) came into power under Prime Minister Olafur Jóhannesson. Then, on 29 August 1974, after gains by the Independence Party in June elections, a coalition of Independents and Progressives was sworn in under Geir Hallgrímsson of the Independence Party.

Two short-lived coalition governments followed. The first, a leftist coalition including the Social Democrats, People's Alliance, and Progressive Party, led by Olafur Jóhannesson, was dissolved when the Social Democrats left the coalition in October 1979. Following an election that December, a second coalition was eventually formed from members of the Independence Party, the People's Alliance, and the Progressives, with Gunnar Thoroddsen, deputy chairman of the Independence Party, as prime minister. After three unsuccessful attempts by party leaders to form a governing coalition following the April 1983 elections, Vigdís Finnbogadóttir—who in August 1981 had been elected president, becoming the first woman to become democratically elected head of state—threatened to request the formation of a government of civil servants. Eventually, Progressive leader Steingrímur Hermannsson formed and headed a coalition of the Independence and Progressive parties. Following the 1987 elections, Thorsteinn Pálsson of the Independence Party replaced Hermannsson as prime minister.

The general election of April 1991 resulted in a new center-right coalition led by Davíð Oddsson of the Independence Party and members of the Social Democratic People's Party. Vigdís Finnbogadóttir was reelected unopposed for a fourth four-year term in June 1992. The left-right coalition of the IP and SDP was dissolved after the elections of April 1995 when Oddsson formed a new coalition government composed of the Independence Party and the Progressive Party, chaired by Halldór Ásgrímsson, minister for foreign affairs and external trade. This coalition remained in power after the 1999 elections in which the Independence Party increased its share of the popular vote while the Progressives polled more poorly. Two new parties gained representation in the Althing in 1999, the environmental Left-Green Party (Vinstrihreyfing-Grnt framboð) and the Liberal Party (Frjáslyndi Flokkurin). Of all 63 parliamentarians, 41 were men and 22 were women. In the presidential elections of 29 June 1996, Vigdís Finnbogadóttir chose not to run and Dr. Ólafur Ragnar Grímsson won with 41.4% of the vote. In 2000, Grímsson was reappointed president, unopposed, to a second four-year term. Grímsson faced two opponents in the 2004 presidential election, but beat them soundly (with 85.6% of the vote).

In the 10 May 2003 elections for the Althing, the Independence Party secured 33.7% of the vote and 22 seats in parliament. The opposition Social Democratic Alliance (which now includes the People's Alliance, Social Democratic Party, and Women's List) won 31% of the vote and took 20 seats. The Progressive Party won 17.7% of the vote and 12 seats, and entered into a coalition with the Independence Party. Therefore, the Independence/Progressive coalition held a slim majority of 34 seats in parliament, compared with the 43 it held after the 1999 elections. The Left-Green Alliance secured 8.8% of the vote and 5 seats, and the Liberal Party won 7.4% and held 4 seats. Following the election, Prime Minister Oddsson stated that in 2004, Minister of Foreign Affairs Halldór Ásgrímsson would become prime minister in a new government. He held true to his pledge, and Ásgrímsson became prime minister on 15 September 2004.

LOCAL GOVERNMENT

Iceland is divided into eight regions (landshluta ), 23 counties (sýslur), and 23 independent towns (kaupstaðir). A magistrate or sheriff (sýslumaðour) administers each county. Within the counties are 101 municipalities (as of 2004), each governed by a council: town councils are elected by proportional representation, rural councils by simple majority. The local government units supervise tax collections, police administration, local finances, employment, and other local affairs.

JUDICIAL SYSTEM

District courts are courts of first instance. There are eight district courts in Iceland, which have jurisdiction in both civil and criminal cases. Appeals are heard by the Supreme Court, consisting of nine justices (all appointed for life by the president), who elect one of their number as chief justice for a two-year term. There are special courts for maritime cases, labor disputes, and other types of cases.

The courts are free from political control. Although the Ministry of Justice administers the lower courts, the Supreme Court oversees independent and fair application of the law.

A recent reform project transferred all judicial authority for criminal and civil cases from local officials (chiefs of police) to newly established district courts. This complete separation of judicial and executive power in regional jurisdictions was completed in 1992. Iceland did not accept compulsory ICJ jurisdiction.

ARMED FORCES

Iceland is the only NATO member with no military force of its own, although the government does maintain a 130-member coast guard with three patrol and one logistical/support vessels. US forces (1,658 personnel), along with Dutch forces, are stationed in Iceland.

INTERNATIONAL COOPERATION

Iceland became a member of the United Nations on 19 November 1946 and belongs to ECE and most of the nonregional specialized agencies, such as FAO, UNESCO, ILO, IFC, IFAD, the World Bank, and WHO. It belongs to the Council of Europe, the WTO, European Bank for Reconstruction and Development, the Euro-Atlantic Partnership Council, EFTA, NATO, the OECD, and the OSCE. The country is an associate member of the Western European Union. Iceland hold membership in the Council of the Baltic Sea States, the Nordic Council, the Nordic Investment Bank, the Arctic Council, and Barents Euro-Arctic Council. In 2001, the government established the Icelandic Crisis Response Unit (ICRU), which is designed to expand national support for cooperation in peacekeeping initiatives through the United Nations.

Iceland belongs to the Australia Group, the Nuclear Energy Agency, and the Organization for the Prohibition of Chemical Weapons. In environmental cooperation, Iceland is part of the Basel Convention, Conventions on Biological Diversity and Air Pollution, Ramsar, CITES, the London Convention, the Kyoto Protocol, the Montréal Protocol, MARPOL, the Nuclear Test Ban Treaty, and the UN Conventions on the Law of the Sea, Climate Change and Desertification.

ECONOMY

Iceland's economy, once primarily agricultural, is now based overwhelmingly on fishing. Crop raising plays a small role, since most of the land is unsuitable for cultivation and the growing season is short. Sheep raising and dairying are the chief agricultural activities, with horse breeding also substantial. Iceland is generally self-sufficient in meat, eggs, and dairy products, but sugar and cereal products must be imported. Since Iceland has almost no known mineral resources and has had no concentrations of population until recent decades, industry is small-scale and local, depends heavily on imported raw and semi-manufactured materials, and cannot compete favorably with foreign industry, especially with imports from low-income countries.

Although the economy is based on private ownership and operates mainly on a free-enterprise basis, public enterprises account for a sizable share of GDP (about 30% in the mid-1990s). The cooperative movement is important in rural trade, and the national and local governments own some productive facilities in certain fields requiring large amounts of capital not available from private sources. The economy developed rapidly after World War II, with a rate of capital investment so high at times as to strain available resources. GNP growth fell from 9% in 1977 to -3% in 1983 but recovered to 9% in 1987. After that, it averaged -0.4% through 1993. From 1992–2001 the economy grew impressively. GDP per capita reached one of the highest levels among OECD countries. This performance was largely due to market liberalization, privatization, and other factors that spurred entrepreneurship and investment.

For a time, inflation ran rampant, rising from 30 to 45% in the late 1970s to nearly 50% annually during 1981–85. It then moderated, dropping to only 3.7% in 1991 and 1.7% in 1998; it rose again to 9.4% at the beginning of 2002. Unemployment, traditionally low, was 2% in 1999 and 3.2% in 2002.

After 2001, the overheated economy slowed. The government tightened monetary policy and exercised fiscal restraint to reduce domestic demand. The króna went through a period of devaluation and inflation rose. However, the weak currency resulted in a surge in exports, which was also helped by increased production. Aluminum exports were up 22% in 2002. Iceland is in the process of reducing its dependence upon fishing, and the aluminum industry is one sector that is contributing to the diversification of the economy; in addition, the government is taking advantage of Iceland's inexpensive and abundant supply of geothermal energy. Iceland was in a mild recession in 2002, but the economy was expected to recover by 2003 or 2004.

The GDP growth in 2004 was 5.2%, up from 4.2% in 2003; in 2005, the economy was expected to expand by 5.9%. The inflation rate has been fluctuating, but at 3.2% in 2004, it was well under control and did not pose any problems to the economy. A similar trend was registered by the unemployment rate, which reached 3.2% in 2004, and was expected to decrease to 2.1% in 2005. The government of Iceland continues to oppose EU membership for fear of losing control of the fishing industry, which is one of the country's main economic engines.

INCOME

The US Central Intelligence Agency (CIA) reports that in 2005 Iceland's gross domestic product (GDP) was estimated at $10.3 billion. The CIA defines GDP as the value of all final goods and services produced within a nation in a given year and computed on the basis of purchasing power parity (PPP) rather than value as measured on the basis of the rate of exchange based on current dollars. The per capita GDP was estimated at $34,600. The annual growth rate of GDP was estimated at 5.9%. The average inflation rate in 2005 was 4.1%. It was estimated that agriculture accounted for 11.8% of GDP, industry 22.3%, and services 65.9%.

Approximately 16% of household consumption was spent on food, 8% on fuel, 3% on health care, and 10% on education.

LABOR

The labor force was estimated at 160,000 in 2005. In 2003, agriculture, fishing or fish processing accounted for 10.3% of the work-force, with 18.3% in manufacturing, and 71.4% in the services sector. In 2005 the estimated unemployment rate was 2.1%.

As of 2002, about 85% of workers are union members. Principal unions are the Icelandic Federation of Labor (associated with the ICFTU) and the Municipal and Government Employees' Association. Labor disputes are settled by direct negotiations or by special courts, however strikes are permitted. Collective bargaining is used to negotiate pay, hours, and other conditions.

The customary workweek is 40 hours. Workers are entitled to overtime pay in excess of eight hours per day. There is no legal minimum wage, but wages are negotiated through collective bargaining. Even the lowest paid workers earn sufficient wages to provide a decent standard of living. Child labor standards are stringent and strictly enforced.

AGRICULTURE

About 78% of Iceland is agriculturally unproductive, and only about 1% of the land area is actually used for cultivation. Of this amount, 99% is used to cultivate hay and other fodder crops, with the remaining 1% used for potato and fodder root production. There were about 4,000 full-time farmers in the 1990s, with about 75% living on their own land; some holdings have been in the same family for centuries. In the 19th century and earlier, agriculture was the chief occupation, but by 1930, fewer than 36% of the people devoted their energies to farming, and the proportion has continued to fall. Hay is the principal crop; other crops are potatoes, turnips, oats, and garden vegetables. In hot-spring areas, vegetables, flowers and even tropical fruits are cultivated for domestic consumption in greenhouses heated with hot water from the springs. Besides hay and other fodder crops, about 7,500 tons of potatoes were produced in 2004. There are agricultural institutions in Borgarfjörður, Hjaltadalur, Hvanneyri, and Reykir; between 15–20% of all farmers have finished an agricultural degree program.

ANIMAL HUSBANDRY

Sheep raising is extensive, and mutton and lamb are primary meat products. Sheep are permitted to find their own grazing pasture during the warmer months and are rounded up toward the middle of September and put in shed for the winter. Cattle are raised mainly for dairying, and their number has been rising steadily; beef production is negligible. Sheep in 2005 numbered an estimated 454,000; cattle, 64,000 head; horses, 72,000; and poultry, 190,000. Estimated livestock production in 2005 included milk, 112,000 tons; mutton and lamb, 8,500 tons; and eggs, 2,600 tons. Iceland is self-sufficient in meat, dairy products, and eggs.

Icelandic farm animals are directly descended from the sheep, cattle, goats, pigs, poultry, dogs, cats, and especially horses (which were an invaluable means of travel) brought by 10th century Scandinavian settlers. In sparsely populated areas, such as the western fjords and on the east coast, farming is chiefly limited to raising sheep, although sheep farming exists in all areas of the country. Milk is produced mostly in the south and north. Except for poultry, egg, and pig production, farms are small in acreage and usually family-run. About 2,000 farmers are engaged in full-time sheep farming, and 1,000 more in mixed farming. There also are about 1,800 dairy farms in operation; Icelanders consume on average 175 liters (46.2 gal) of milk per capita per year, one of the highest amounts in the world. Cheese consumption is fourth highest, after France, Germany, and Italy. Horse-breeding is also a growing branch of animal husbandry in Iceland, as the popularity of the Iceland horse (which has five gaits) grows at home and abroad.

Animal farming is a highly mechanized industry carried out by well-educated farmers; nearly one fifth of all farmers matriculate at one of three agricultural colleges in Iceland.

FISHING

Accounting for about 9% of Iceland's employment, fishing and fish processing provide the primary source of foreign exchange. Exports of fish products were valued at $1.5 billion in 2003. Icelanders consume more fish per capita annually (over 91.5 kg/201 lb live weight equivalent) than any other people in Europe. Cod is caught during the first five months of the year off the southwest coast. Herring are taken off the north and northeast coasts from June to September and off the southwest from September to December. In 2005, the fish catch was 1,984,349 tons (12th in the world), up from 1,502,445 tons in 1990. The 2003 catch included 680,291 tons of capelin, 501,494 tons of blue whiting, 250,039 tons of Atlantic herring, 206,670 tons of Atlantic cod, 60,402 tons of haddock, and 57,940 tons of pollock.

The fishing fleet as of 2004 consisted of 70 stern trawlers totaling 86,048 GRT and 869 other decked fishing vessels of 101,031 GRT. Most fishing vessels are now equipped with telecommunications devices, computers, and automated equipment. Through the early 1980s, about 250 whales a year were caught off the coast, providing lucrative export products. Although Iceland had agreed to phase out whaling in order to comply with the 1982 ban by the International Whaling Commission, in 1987 it announced its intention to take 100 whales a year for scientific purposes. The FAO reported that Iceland took 39 whales in 2003.

Abundant quantities of pure water and geothermal heat give Iceland an advantage over other nations in fish farming. Aquaculture is being developed to offset lean years in the natural fish catch, and to produce more expensive and profitable species of fish.

FORESTRY

There are no forests of commercial value, and the existing trees (ash, birch, aspen, and willow) are small; only about 1% of the total land area is considered forested. The originally extensive birch forests were cut down for firewood and to clear land for grazing sheep. In recent years, the remaining woods have been protected and reforestation has begun. Imports of forestry products amounted to about $76.4 million in 2004.

MINING

Diatomite was a leading export commodity in 2004, and ferrosilicon production and geothermal power were Iceland's major mineral industries. Diatomite production, from Lake Myvatn, was estimated at 28,000 metric tons in 2004. Iceland also produced hydraulic cement, nitrogen, pumice, salt, scoria, sand (basaltic, calcareous, and shell), sand and gravel, and crushed stone (basaltic and rhyolite); these minerals were used by local industries. Among Iceland's other mineral resources, spar and sulfur deposits, once mined, were no longer worked extensively. Peat was common, but little used and sulfur and lignite were being processed experimentally, the former with the use of subterranean steam. The country's aluminum plant and ferrosilicon plant relied on imported raw materials and inexpensive hydroelectric and geothermal energy. Ferrosilicon production in 2004 totaled an estimated 118,000 metric tons in 2004.

ENERGY AND POWER

Iceland has no known reserves of oil, natural gas or coal. Thus, the country is entirely reliant upon imports to meet its demand for fossil fuels. However, the country does rely upon hydroelectric power and geothermal/other sources to generate electric power and to provide heat.

In 2002, refined oil imports were reported at 15,760 barrels per day, while demand was reported at 18,050 barrels per day. Coal imports and consumption for 2002, were each placed at 161,000 short tons There were no imports of natural gas in 2002.

Hydroelectric power is the main source of electric power for Iceland, followed by geothermal and conventional thermal sources, respectively. In 2002, electric power generating capacity totaled 1.460 million kW, with hydropower accounting for 1.109 million kW, geothermal at 0.202 million kW, and conventional thermal at 0.149 million kW. Electric energy output in 2002 was 8.277 billion kWh, with hydroelectric output accounting for 83%, alternative sources for 16%, and conventional thermal fuels at less than 1%. Electric power demand in 2002 totaled 7.698 billion kWh. Peat, formerly an important source of heat on the farms, has been virtually abandoned.

Hot springs are used for heating greenhouses in which vegetables, fruit, and flowers are raised, and for heating public buildings. Since 1943, most of Reykjavík has been heated by water from hot springs at Reykir, some 160 km (100 mi) from the city. About 85% of the population lives in homes heated with geothermal power. In recent years, however, a significant decline in flow from geothermal drill holes has raised concern that this energy resource may not be so boundless as was once thought.

INDUSTRY

Fish processing is the most important industry. Facilities for freezing, salting, sun-curing, and reducing to oil or fish meal are flexible enough to allow shifting from one process to another in accordance with demand. Byproducts include fish meal and cod-liver oil.

Although Iceland's industry is focused on fish processing, the country in the 21st century needs to diversify its economy, as fish stocks are declining. (Nevertheless, fishing accounted for 12% of GDP in 2001 and 40% of total exports.) The manufacturing of energy-intensive industries, particularly aluminum, are rising. The ISAL aluminum smelter has expanded its capacity, and in 2002, construction of another aluminum smelter was underway. Production exports rose 22% in 2001. Other projects included the construction of a magnesium plant and the enlargement of the ferro alloy plant. Other industry is small-scale and designed to meet local needs. Chief manufactures include fishing equipment, electric stoves and cookers, paints, clothing, soaps, candles, cosmetics, dairy products, confectionery, and beer. Clothing factories are situated in Reykjavík and Akureyri. Icelandic ammonium nitrate needs are more than met by a fertilizer plant at Gufunes with an annual production capacity of 60,000 tons. A cement factory in Akranes with a capacity of 115,000 tons per year supplies most domestic cement requirements; total production in the mid-1990s amounted to 83,100 tons per year. Production of aluminum rose from 40,000 tons in 1970 to 99,300 tons per year in the same period. A ferrosilicon smelter, which began production in 1979, produced some 66,000 tons per year and a diatomite processing plant produced 25,000 tons.

In 2004, the industry had a 9.6% share in the GDP and employed 18.3% of the labor force; agriculture made up 11.2% of the economy, and together with fishing and fish processing employed 10.3% of the work force; services was by far the largest economic sector, with a 79.2% share in the GDP, and a 71.4% representation in the work force. The industrial production growth rate was 8.8% in 2004, higher than the GDP growth rate, which indicates that industry is currently a growth engine in Iceland.

SCIENCE AND TECHNOLOGY

The Icelandic Research Council coordinates science policy and advises the government on scientific matters. It has five research institutes devoted to marine science, technology, agriculture, the fish industry, and the construction and building industries. Other research institutes and learned societies include the Surtsey Research Society, the Icelandic Meteorological Office, the Association of Chartered Engineers in Iceland, the Agricultural Society of Iceland, the Iceland Glaciological Society, the Icelandic Natural History Society, and the Icelandic Society of Sciences, all located at Reykjavík.

The Icelandic Council of Science, an independent agency under the Ministry of Culture and Education, aims to stimulate and encourage scientific research. The University of Iceland has faculties of medicine, engineering, dentistry, and science. Two agricultural colleges are located in Hólum i Hjaltadal and Hvanneyri. The Icelandic College of Engineering and Technology is located at Reykjavík. In 1987–97, science and engineering students accounted for 41% of university enrollment. In 2002, of all bachelor's degrees awarded, 17.2% were in the sciences (natural, mathematics and computers, and engineering).

In 2001, there were 6,592 researchers and 2,082 technicians per million people that were actively engaged in research and development (R&D). For that same year, R&D expenditures totaled $262.371 million, or 3.08% of GDP. Of that amount, business accounted for the largest slice at 46.2%, followed by the government sector at 34%, with foreign sources and higher education accounting for 18.3% and 1.6%, respectively.

DOMESTIC TRADE

Foreign firms do not have branches in Iceland. Their business is conducted by Icelandic agents. Imports are handled by these agents, by wholesale or retail importers, or by the Federation of Iceland Cooperative Societies, and distribution is through private channels. Most advertising is translated and disseminated directly by agents. Foreign trade fairs are held from time to time.

Of the wholesale enterprises, 80–90% are concentrated in Reykjavík; more than half the retail establishments are likewise in the capital. Much trade is handled by cooperative societies, most of which are joined in the Federation of Iceland Cooperative Societies. A sales tax of 14% applies to most food items and books. A 24.5% tax applies to most other goods and services.

Business hours are from 9 am to 6 pm on weekdays, and from 9 or 10 am to noon on Saturdays. Banking hours are from 9:15 am to 4 pm, Monday–Friday, with an additional hour from 5 to 6 pm on Thursday.

FOREIGN TRADE

The fishing industry of Iceland supports most of its commodity export market (60%). It supplies the world export market with 10.5% of its salted, dried, or smoked fish, second only to Norway in volume. Other important exports include aluminum (19%), animal feed (6.3%), iron (2.6%), diatomite, and ferrosilicon.

In 2004, exports reached $2.9 billion (FOB—Free on Board), while imports grew to $3.3 billion (FOB). The bulk of exports went to the United Kingdom (19.1%), Germany (17.2%), the Netherlands (11.5%), the United States (9.8%), Spain (6.8%), and Denmark

(4.6%). Imports included machinery and equipment, petroleum products, foodstuffs, and textiles, and mainly came from Germany (12.3%), the United States (9.9%), Norway (9.7%), Denmark (7.9%), the United Kingdom (7.2%), Sweden (6.7%), and the Netherlands (6%).

BALANCE OF PAYMENTS

The difference between imports and exports since World War II has been met by drawing from large wartime reserves, by Marshall Plan aid, and, since 1953, by income from US defense spending at Keflavík, the NATO airbase. Widely fluctuating current account deficits, attributable mainly to the trade imbalance, averaged more than 6.5% of GNP during 1971–75. During the next four years, although still largely negative, the current account balance improved; from 1980 through 1985, however, Iceland's current accounts position again deteriorated, this time because of large deficits in services.

Iceland suffered a prolonged recession during 1987–93 due to cuts in fish catch quotas necessitated in part by overfishing. Again, there was a significant deterioration in the balance of payments, especially on the current account and merchandise trade balances. In 1994 the economy recovered with the help of a 6.3% growth in exports, due to a better than expected performance in the fishing sector. The external current account balance was positive for the first time since 1986. Iceland experienced successful economic performance in the 1990s but fell into recession in 2001, which negatively impacted the current account deficit.

The US Central Intelligence Agency (CIA) reported that in 2002 the purchasing power parity of Iceland's exports was $2 billion while imports also totaled $2 billion.

The International Monetary Fund (IMF) reported that in 2000 Iceland had exports of goods totaling $1.9 billion and imports totaling $2.38 billion. The services credit totaled $1.05 billion and debit $1.16 billion.

Exports of goods reached $2.9 billion in 2004, and were expected to grow to $3.2 billion in 2005. Imports were expected to reach $4.6 billion in 2005, up from $3.4 billion in 2004. The resource balance was consequently negative, reaching -$0.4 billion in 2004, and -$0.6 billion in 2005. The current account balance was also negative, at -$1.0 billion in 2004, and an expected -$2.1 billion in 2005. Foreign exchange reserves (including gold) grew to $935 million in 2004, covering less than four months of imports.

BANKING AND SECURITIES

In March 1961, the Central Bank of Iceland was founded to issue notes and assume other central bank functions previously exercised by the National Bank of Iceland, a wholly state-owned bank established in 1885. Other banks are the Agricultural Bank, a state bank founded in 1929; the Fisheries Bank, a private joint-stock bank founded in 1930, with most of its shares held by the government; the Industrial Bank, a joint-stock bank established in 1953, with part of the shares owned by the government; the Iceland Bank of Commerce, founded in 1961; the Cooperative Bank of Iceland, founded in 1963; and the People's Bank, founded in 1971. All banks have main offices in Reykjavík, and some have branches in other towns. Savings banks are distributed throughout the country.

In 1955, Iceland took the first step toward indexation of financial assets. The Economic Management Act of 1979 established a system of full indexation of savings and credit, most provisions of which were gradually implemented over the next two years. Most deposits are now indexed, and legislation that took effect in November 1986 gave banks increased power to determine their interest rate.

In 1990 the number of commercial banks in Iceland were reduced from seven to four. A number of banks were forced to merge into the Islandbanki because of financial trouble. In 1997 there were four commercial banks, two of which, the Landsbanki and Bunadar banki, are still state-owned. The country's two other banks, Islandsbanki and Sparisjodabanki, are privately-owned.

The whole basis on which the financial system is supervised and regulated, however, has been transformed by Iceland's accession to the European Economic Area (EEA) in 1994. Under the agreement, Iceland has been required to implement into national law the common minimum standards for the supervision of financial institutions—banks, insurance companies, and securities firms—developed at EU level.

Since 15 June 1973, the market rate of the Icelandic króna has been floating vis-à-vis other currencies. A currency reform that took effect on 1 January 1981 introduced a new króna equivalent to 100 old krónur. The money supply, as measured by M2, totaled k135,353 million in 1995. The International Monetary Fund reports that in 1998, currency and demand deposits—an aggregate commonly known as M1—were equal to $820.5 million. In that same year, M2—an aggregate equal to M1 plus savings deposits, small time deposits, and money market mutual funds—was $3.2 billion. The money market rate, the rate at which financial institutions lend to one another in the short term, was 8.12%. The discount rate, the interest rate at which the central bank lends to financial institutions in the short term, was 8.5%.

The Securities Exchange of Iceland (SEI) was established in 1985 on the basis of rules set by the Central Bank. A new Act on the Icelandic Stock Exchange was passed in February 1993, granting a monopoly to the exchange. As of 2004, a total of 34 companies were listed on the stock exchange, which had a market capitalization that year of $17.629 billion. In 2004, the ICEX-15 rose 58.9% from the previous year to 3,359.6.

INSURANCE

There are many mutual insurance societies in addition to the national health and social insurance scheme. Almost all direct insurance is written by domestic companies that conduct business in the various kinds of property and life insurance. Automobile liability insurance and homeowners' coverage against fire, floods, earthquakes, and volcanic eruptions are compulsory. The Ministry of Insurance Affairs is the principal supervisory body. In 2003, direct premiums written totaled $345 million, of which nonlife premiums accounted for $314 million. In 2002, Sjova Almennar was Iceland's top nonlife and life insurer, with gross written non-life premiums (for nonlife and life insurers) and life premiums of $112.7 million and $14.4 million, respectively.

PUBLIC FINANCE

Since 1984, Iceland's budget has shown a deficit averaging nearly 2% of GDP, raising its net indebtedness relative to GDP to almost 30% in 1994. Government attempts to balance the budget were frustrated by the economic downturn during 1987–93 and by fiscal concessions to expedite wage settlements. Consequently, the deficit has been larger than expected, reaching 34% of GDP in 1999.

The US Central Intelligence Agency (CIA) estimated that in 2005 Iceland's central government took in revenues of approximately $6.9 billion and had expenditures of $6.7 billion. Revenues minus expenditures totaled approximately $234 million. Public debt in 2005 amounted to 34% of GDP. Total external debt was $3.073 billion.

The International Monetary Fund (IMF) reported that in 2002, the most recent year for which it had data, central government revenues were k259,012 million and expenditures were k262,231 million. The value of revenues was us$2,826 million and expenditures us$2,861 million, based on an exchange rate for 2002 of us$1 = k91.662 as reported by the IMF. Government outlays by function were as follows: general public services, 18.5%; public order and safety, 4.9%; economic affairs, 15.7%; housing and community amenities, 0.9%; health, 26.2%; recreation, culture, and religion, 3.1%; education, 10.0%; and social protection, 20.7%.

TAXATION

Recent tax reforms in Iceland have produced a steady drop in corporate income tax rates throughout the 1990s and, since 1995, decreased marginal rates and increased thresholds for personal income tax. The corporate income tax rate, at 50% in 1989, was decreased from 30% in 2001 to 18% in 2002. The income tax on partnerships, was decreased from 38% in 2001 to 26% in 2002. Since March 1999, Iceland has also offered an offshore corporate tax rate of 5% to international trading companies (ITCs) that exclusively trade in goods and services outside of Iceland. Capital gains are taxed as ordinary income at 18%, although gains may be offset by extraordinary depreciation. Dividends paid to nonresident companies are subject to a 15% tax rate, while dividends paid to nonresident persons are subject to a 10% tax rate.

The personal income tax schedule in Iceland consists of a tax free allowance (about $10,457 in 2002 increased to $10,785 in 2003); a total tax rate that is the sum of the central government's general rate (25.75% in 2002 and 2003) and the municipal tax rate (12.8% in 2002 and 2003) giving a total tax rate of 38.55%; and a central government surtax (7% in 2002 reduced to 5% in 2003) which is applied to income above a certain threshold ($51,404 in 2002 and $52,818 in 2003) creating a three-bracket structure with maximum tax rate of 45.54% in 2002 decreased to 43.54% in 2003. Seamen are allowed special a special tax reduction amounting to about $9.40 a day in 2003. The social security tax, paid by the employer, is 5.73%. Since 1999, reductions in social security taxes (0.2% in 1999 and 0.4% as of May 2000) have been offered to employers in exchange for their contribution to supplementary employee pension premiums. In 2003 the wealth tax rate, applied to assets above about $61,000, was halved from 1.2% to 0.6% and a 0.25% surtax on net wealth above approximately $81,800 was abolished largely because of increases in real property values following an assessment review by the Valuation Office in 2002. Inheritance and gift taxes range from 11–15%. There is a 2–6% tax on the transfer of housing, and a 10% tax on the transfer of large estates. Local authorities may levy individual income and corporate taxes.

The major indirect tax is Iceland's value-added tax (VAT) with a normal rate of 24.5% on domestic goods and services. There is a reduced rate of 14% applied to most foodstuffs, books, newspapers and periodicals, subscriptions to radio and the TV, hotels, electricity, geothermal heating. Exempted from VAT are exports of goods and services, as well as services connected with imports and exports. Other categories for exemption include health services, social services, education, libraries, the arts, sports, passenger transport, postal services, rental of property, insurance, and banking.

CUSTOMS AND DUTIES

Over 90% of imports are not subject to import restrictions or duties other than the same value-added tax applied to domestically produced goods. Special excise taxes are levied on sugar and some sugar products, potatoes, and motor vehicles. Agricultural products remain the most heavily taxed. In March 1970, Iceland acquired full membership in EFTA. On 28 February 1973, Iceland ratified a trade agreement with the European Community (later named the European Union) leading to the elimination of tariffs on industrial goods. A law authorizing the establishment of free trade zones went into effect in 1992. Iceland's trade regime underwent considerable liberalization in the 1990s with accession to the European Economic Area (EEA) in 1993, and the Uruguay Round in 1994.

Current duty rates generally range from 0–30% ad valorem and the average weighted tariff is 3.6%. Some goods enter duty-free, such as meat, fish, and dairy products.

FOREIGN INVESTMENT

Icelanders have been reluctant to permit substantial foreign investment; nearly all such investment is limited to participation in joint ventures in which Icelandic interests hold a majority share. There is only one wholly foreign-owned industrial facility in the country, a Swiss aluminum-processing facility. Two others, a ferro-silicon and a diatomite plant, have foreign equity participation. From the beginning of 1993, Icelanders have been free to invest abroad.

For the period 1988 to 1990, Iceland's share in world foreign direct investment (FDI) inflow was only 30% of its share in world GDP. For the period 1998 to 2000, its share of world FDI inflows was 40% of its share of world GDP, a marginal improvement. Except for a fall to $66 million in 1998, yearly FDI inflows to Iceland have in the range of $146 million (2001) to $158 million (2000).

Energy-intensive industrial activities is one of the main areas for foreign investments, due to the inexpensive energy resources available in Iceland. The national telephone company was expected to be privatized by the end of 2005, and the government has started discussing about opening part of the fishing industry to limited foreign investment. Biomedical and genetic research are two areas with future potential for investments.

ECONOMIC DEVELOPMENT

The national government and some local governments are involved in trawler fishing, herring processing, merchant shipping, electric power facilities, and certain other industries. To a considerable degree, the central government supervises the export-import trade and the fishing and fish-processing industries. It may set uniform prices of export commodities and may shift export and import trade to specific countries as balance-of-payments considerations require. It channels investment funds into fields it considers desirable.

The government supports farmers in the rebuilding or enlarging of their homes, livestock sheds, and barns, and assists them in the purchase of machinery. Equipped with crawler tractors and excavators, a government agency helps farmers enlarge cultivated areas and break, drain, and level new lands for the establishment of homesteads. Thousands of new acres have thus been brought under cultivation.

The government fixes prices of essential foods and other basic consumption items and subsidizes them, both to limit prices for the consumer and to maintain farm incomes. It also fixes mark-ups that manufacturers, wholesalers, retailers, and importers may place on a wide variety of products.

In the early 1990s, the government concentrated on maintaining the value of the króna by bringing down inflation, even at the cost of economic growth. Wage gains were restricted. In late 1992, plans were made public for a Fisheries Development Fund that would buy and scrap unneeded vessels and thereby promote efficiency. The Fund would also be used to help firms establish joint ventures abroad and buy fishing rights. Plans were also under way to sell several state-owned companies, with the money used for research and development and reducing the deficit. Entry into the European Economic Area (EEA) in 1994 and the Uruguay Round brought increased trade liberalization and foreign investment. The country experienced rapid economic growth during the late 1990s, but high domestic spending led to a widening current account deficit that peaked at 10% of GDP in 2000.

The economy went into recession in 2001, and inflation rose. The government tightened monetary and fiscal policy that brought inflation down, but GDP growth remained negative in 2002. The government adopted a floating exchange rate for the króna in March 2001. Gross external debt amounted to 130% of GDP at the end of 2002. The government is looking to diversify exports, which is expected to stabilize the economy.

More than 70% of export revenues are contributed by the fishing industry, which makes the Icelandic economy susceptible to declining fish stocks and fluctuations in world prices for fish and fish products. To better equip for the future, Iceland has started diversifying its economic base, and branched out into software production, biotechnology, and financial services. At the same time, it has started expanding its manufacturing and tourism sectors. The current economic growth is expected to be sustained until 2007, and will have private consumption as its prime engine.

SOCIAL DEVELOPMENT

There is a universal pension covering all residents and a mandatory occupational pension covering all employees and self-employed persons. Universal pensions covering all residents are paid by employer and government contributions, while the cost of employment pensions is shared by employees and employers. Benefits include old age, disability, and survivorship pensions. Sickness and maternity benefits are available to all residents. The first laws covering sickness and maternity were instituted in 1936. Medical benefits cover all residents.

The number of women in the work force is high, partially due to a comprehensive subsidized day care program. In 2004 more than 75% of women were actively engaged in the work force. Equal pay for equal work is required by law although men continue to earn more than women. The government takes serious measures to protect women against violence and sexual abuse, though many cases remain unreported.

The constitution provides for the freedom of speech and press, assembly and association, and religion. These rights are generally respected by the government. There is very little discrimination based on race, gender, religion, disability, language, or social status.

HEALTH

The Director of Public Health is responsible for all health matters. Iceland had an estimated 347 physicians, 893 nurses, 77 midwives, 120 dentists, and 85 pharmacists per 100,000 people in 2004. In the 1990s there were an estimated 53 hospitals, with 3,985 beds. Two-thirds of the beds were in nursing and senior living homes, with the remaining one-third in hospitals. Public expenditures on health were among the highest in industrialized countries at 19.3% of the gross domestic product.

As of 2002, Iceland had estimated birth and death rates of, respectively, 14.4 and 6.9 per 1,000 people. Life expectancy was estimated at 80.19 years, among the highest in the world. Infant mortality in 2005 was estimated at 3.31 per 1,000 live births, one of the lowest in the world. The total fertility rate was two children per woman during her childbearing years. The incidence of tuberculosis, once widespread, has been greatly reduced. Leprosy, also common in earlier times, has been virtually eliminated, with no new cases reported in recent decades. Approximately 99% of Iceland's children were immunized against measles. The HIV/AIDS prevalence was 0.20 per 100 adults in 2003. As of 2004, there were approximately 220 people living with HIV/AIDS in the country. There were an estimated 100 deaths from AIDS in 2003.

The major causes of death were circulatory system diseases, cerebrovascular disease, malignant neoplasms (cancers), and diseases of the respiratory system.

HOUSING

In 2003, there were about 111,157 dwellings in the nation; about 383 dwellings for every 1,000 inhabitants. About 53% of all dwellings were one- or two-family houses; 45% were apartments. About 37% of all dwellings had five or more rooms and a kitchen. Most rural buildings were at one time made of turf, then of wood, and most recently of stone and concrete. In the towns, turf houses long ago gave way to wooden ones, but for some decades most new housing has been concrete. Virtually all dwellings have electricity, piped water, and central heating.

EDUCATION

Education is compulsory for 10 years of basic education (ages 6 to 16). Students may then choose to attend a general or technical secondary school, each offering four-year programs. Specialized vocational schools are also available to secondary students, including a commercial high school, a school of navigation, two schools of agriculture, and a health professions school. In some remote rural areas, a system of "alternate teaching" is in effect. This allows children to study intensively for a week or two at a boarding school, then return home for the same period of time. The academic year runs from September to May.

Most children between the ages of three and five are enrolled in some type of preschool program. Primary school enrollment in 2003 was estimated at about 100% of age-eligible students. The same year, secondary school enrollment was about 86% of age-eligible students. Nearly all students complete their primary education. The student-to-teacher ratio for primary school was at about 11:1 in 2003; the ratio for secondary school was about 13:1.

There are at least eight háskóli; a term that refers to both traditional universities and other institutions of higher education that do not have research programs. The University of Iceland in Reykjavík, founded in 1911, has faculties of law and economics, theology, medicine and dentistry, philosophy (art and humanities), and engineering. Tuition is free; only nominal registration and examination fees must be paid. In 2003, about 63% of the tertiary age population were enrolled in some type of higher education program; with 45% for men and 81% for women. The adult literacy rate has been estimated at about 99.9%.

As of 2003, public expenditure on education was estimated at 7.6% of GDP.

LIBRARIES AND MUSEUMS

The National and University Library in Reykjavík (founded in 1818; 900,000 items) serves as a national library as well as a public lending library. Other leading libraries, in the Reykjavík include the City Library of Reykjavík, which sponsors seven branch location and bookmobile, and the National Archives, which contains a collection of documents covering 800 years of Icelandic history. In 2000, there were about 106 public libraries in the country.

The important museums, also all in Reykjavík, are the Icelandic National Museum (founded in 1863), the Natural History Museum (1889), and a museum devoted to the sculptures and paintings of Einar Jónsson. The Arni Magnusson Institute contains Iceland literature and documents that were somewhat recently returned to the Icelandic government after being held by Denmark for centuries. Also in the capital are the National Gallery of Iceland, the Living Art Museum, and the Sigurjón Ólaffson Museum, among others. The Kopavogur Art Museum contains exhibits primarily on modern and contemporary art. A Salt Fish Museum opened in Grindavik in 2002 to commemorate the country's fishing industry.

MEDIA

Radio and radiotelephone communications are maintained with Europe and America and an underwater telegraph cable connects Iceland with Europe. The telephone, telegraph, and radio systems are publicly owned and administered. In 2003, there were 190,700 mainline phones and 279,100 mobile phones in use throughout the country.

The government-owned Icelandic National Broadcasting Service (RUV) provides the primary national radio and television broadcasts. There are, however, several smaller private stations. As of 1999 there were 5 AM and 147 FM radio stations and 14 television stations. In 1997 there were 260,000 radios and 98,000 television sets throughout the country. In 2003, there were about 195,000 Internet subscribers nationwide served by about 122,175 Internet hosts.

There are five daily newspapers, four of which are published in Reykjavík. With their political orientation and average daily circulation in 2002, they were: Morgunblaid, Independence Party, 53,000; DV Dagblaid, 44,000; Tíminn, Progressive Party, 14,000; Althydublaid, 4,000; and Dagur-Tíminn (Akureyri), Progressive Party. Icelandreview.com is an English-language news site. Nondaily newspapers are published in Reykjavík and other towns. Various popular and scholarly periodicals are published in Reykjavík.

The law prohibits the production, showing, distribution, and/or sale of violent movies, which are defined as containing scenes depicting the mistreatment or the brutal killing of men or animals. The Motion Picture Review Committee, which includes six members, is appointed by the Minister of Education and Culture to review all movies before they are shown. The committee also rates the films based on their suitability for children. By their evaluation, the committee may ban a film or require edits before its release.

The constitution provides for freedom of speech and press, and the government is said to respect these rights in practice.

ORGANIZATIONS

The Iceland Chamber of Commerce and the Confederation of Icelandic Employers are based in Reykjavík. Organizations representing laborers, businesses, and industries include the Farmers Association of Iceland, the Federation of Icelandic Industries, and the Federation of Icelandic Trade.

There are professional associations representing a wide variety of fields, such as the Icelandic Teachers Union and the Icelandic Nurses' Association. Many of these promote research and education in particular fields, such as the Icelandic Medical Association. There are several other associations dedicated to research and education for specific fields of medicine and particular diseases and conditions, such as the Icelandic Heart Association.

Notable national youth organizations include the Federation of Young Progressives, Independence Party Youth Organization, National Council of Icelandic Youth, National Union of Icelandic Students, Social Democratic Youth Federation, Youth Movement of the People's Alliance, YMCA/YWCA, and The Icelandic Boy and Girl Scouts Association. There are several sports associations in the country representing such pastimes as football (soccer), badminton, squash, mountain biking, skiing, skating, and track and field.

Learned societies include the Icelandic Archaeological Society, the Icelandic Historical Society, the Icelandic Literary Society, the Music Society, the Icelandic Natural History Society, and the Agricultural Association. There are also the Icelandic Artists' Association, the Iceland Association of Pictorial Artists, the Icelandic Actors' Association, the Icelandic Musicians' Association, the Icelandic Composers' Society, the Icelandic Architects' Association, and the Icelandic Writers' Association. Among other cultural organizations are the Icelandic-American Society, the Danish Society, the Danish-Icelandic Society, the Anglo-Icelandic Society, the Alliance Française, the Nordic Society, and the Union of Women's Societies.

The Salvation Army, Caritas, Amnesty International, and the Red Cross all have active chapters within the country. Volunteer service organizations, such as the Lions Clubs and Kiwanis International, are also present.

TOURISM, TRAVEL, AND RECREATION

Iceland offers such diverse and unusual natural attractions as active volcanoes, glaciers, and hot springs. Among popular participatory sports are swimming (possible year-round in geothermal pools), salmon fishing, pony trekking, bird-watching, skiing, river rafting, and golf. Tourists may arrange to stay in modern hotels, guest houses, on farms, or in youth hostels.

Citizens of the Scandinavian countries do not require a passport when visiting Iceland. All other visitors need valid passports and visas, except residents of some 60 countries (including the United States, Australia, and Canada). Visas are good for up to three months. A certificate of vaccination against yellow fever is required if traveling from an infected country.

In 2003, there were 569,194 tourist arrivals, almost an 11% increase from 2002. There were 7,330 hotel rooms with 14,948 beds and an occupancy rate of 42%.

In 2005, the US Department of State estimated the daily cost of traveling in Reykjavík from May through September at $442, and $352 the rest of the year. The cost of a stay in Keflavik-Grindavik was estimated at $367 per day.

FAMOUS ICELANDERS

Famous early Icelanders were Eric the Red (Eiríkur Thorvaldsson), who discovered and colonized Greenland in 982, and his son Leif Ericsson (Leifur Eiríksson, b.970), who introduced Christianity to Greenland and discovered the North American continent (c.1000). Two famous patriots and statesmen were Bishop Jón Arason (1484–1550), who led the fight for liberty against the power of the Danish king, and Jón Sigurðsson (1811–79), Iceland's national hero, champion of the fight for independence. Vigdís Finnbogadottír (b.1930) served four consecutive terms as president from 1980 to 1996, becoming the first female elected to the presidency of any republic.

Prominent writers were Ari Thorgilsson (1067–1148), father of Icelandic historical writing; Snorri Sturluson (1178–1241), author of the famous Prose Edda, a collection of Norse myths; and Hallgrímur Pétursson (1614–74), author of Iceland's beloved Passion Hymns. Leading poets include Bjarni Thorarensen (1786–1841) and Jónas Hallgrímsson (1807–45), pioneers of the Romantic movement in Iceland; Matthías Jochumsson (1835–1920), author of Iceland's national anthem; Thorsteinn Erlingsson (1858–1914), lyricist; Einar Hjörleifsson Kvaran (1859–1939), a pioneer of realism in Icelandic literature and an outstanding short-story writer; Einar Benediktsson (1864–1940), ranked as one of the greatest modern Icelandic poets; Jóhann Sigurjónsson (1880–1919), who lived much of his life in Denmark and wrote many plays based on Icelandic history and legend, as well as poetry; and the novelist Halldór Kiljan Laxness (1902–98), who received the Nobel Prize for literature in 1955.

Niels Ryberg Finsen (1860–1904), a physician who pioneered in the field of light (ray) therapy, received the Nobel Prize for medicine in 1903. Stefán Stefánsson (1863–1921) was the pioneer Icelandic botanist. Helgi Pjeturss (1872–1949), geologist and philosopher, was an authority on the Ice Age and the geology of Iceland. Einar Jónsson (1874–1954), Iceland's greatest sculptor, is represented in European and American museums.

Singer, songwriter, and composer Björk (b.1965), formerly the lead singer of the Icelandic band The Sugarcubes, works in a variety of musical genres. The former world chess champion Bobby Fischer (b.1943) became an Icelandic citizen in 2005. Russian pianist and composer Vladimir Ashkenazy (b.1937) has been a citizen since 1972.

DEPENDENCIES

Iceland has no territories or colonies.

BIBLIOGRAPHY

Durrenberger, E. Paul. The Dynamics of Medieval Iceland: Political Economy and Literature. Iowa City: University of Iowa Press, 1992.

Images of Contemporary Iceland: Everyday Lives and Global Contexts. Iowa City: University of Iowa Press, 1996.

International Smoking Statistics: A Collection of Historical Data from 30 Economically Developed Countries. New York: Oxford University Press, 2002.

Jochens, Jenny. Women in Old Norse Society. Ithaca, N.Y.: Cornell University Press, 1995.

Karlsson, Gunnar. The History of Iceland. Minneapolis: University of Minnesota Press, 2000.

Magnusson, Magnus. The Icelandic Sagas. London: Folio Society, 2002.

Ross, Margaret Clunies (ed.). Old Icelandic Literature and Society. New York: Cambridge University Press, 2000.

Sullivan, Paul. Waking Up in Iceland. London, Eng.: Sanctuary, 2003.

Tulinius, Torfi H. The Matter of the North: The Rise of Literary Fiction in Thirteenth-Century Iceland. Odense, Denmark: Odense University Press, 2002.

Iceland

History & Background

Iceland, one of the world's first independent, democratic nations, is the second largest island in Europe (39,769 square miles). Located 180 miles south of the Arctic Circle, Iceland's nearest neighbor is Greenland to the west (180 miles), followed by Scotland to the south east (495 miles), and Norway to the east (590 miles). Iceland is largely a classless society composed of the descendents of farmers and warriors who fled the tyranny of Scandinavia many centuries ago. The strength of the people, mirrored by the powerful landscape, is evident in the thriving independent culture. Visitors to Iceland typically find the people to be courteous and friendly, are surprised by the cold yet temperate climate (mild winters and cool summers), and are struck by the breathtaking natural beauty of the country. Despite physical isolation, Iceland has maintained its place in European civilization.

Iceland has a rich literary tradition and unusually high standards of education, with 15 percent of the national budget devoted to education. Illiteracy is unknown in the small island country. Icelanders are generally very open to new ideas and trends, and they have rapidly developed, implemented, and embraced new technology throughout their society. Approximately 82 percent of Icelanders between the ages of 17 and 75 have access to the Internet at home, school, or work. With artists frequently deriving inspiration from the extraordinary terrain and the ancestral culture, the arts are flourishing in Iceland. Painting in particular has thrived since the end of the nineteenth century. Nearly every district has its own museum reflecting the local cultural history, while magnificent galleries and museums grace the capitol. Literature has always played a prominent role in Icelandic culture. Manuscript illumination, woodcarving, and folk music have been associated with periods of heightened interest. There are numerous theater companies in Iceland, and Reykjavik is home to a symphony orchestra, an opera house, and a ballet company. The National Theater of Iceland celebrated its fiftieth anniversary in the year 2000. Icelandic nightlife is famous for its vibrancy, with night clubs, cafes, and cinemas in all major towns.

The Evangelical Lutheran Church is the official state church, but freedom of religion exists for all other congregations. Although the state provides financial support to the church, it extends considerable freedom. The bishop is elected by pastors and members of the theological faculty at the University of Iceland; and the one diocese is divided into districts, which are further subdivided into parishes. An elected church congress serves as an advisory board to the church. Roughly 90-94 percent of Icelanders are Protestants (73 percent Evangelical Lutheran) and 1 percent are Catholic.

With an excellent health care system available to all citizens at no cost, the life expectancy in Iceland is among the highest in the world (76.5 years for males and 81.5 years for females) and infant mortality is among the lowest in the world (5.5 per 1,000 live births). The health-care system receives 40.5 percent of the national budget and the nation operates one of the most expensive health-care systems in the world. Welfare services include unemployment insurance, old age and disability pensions, family and childbearing allowances, and sickness benefits. The medical and welfare systems are jointly financed through taxation by the national and local government.

Geologically, Iceland is a very young country and the process of its formation is still in progress. Iceland's interior consists mostly of uninhabited mountains and high plateaus. Much of the uninhabited regions, encompassing more than 80 percent of the island, are covered with permanent snow and ice (glaciers) or volcanic surface, preventing many agricultural activities. The settlements are limited to a narrow coastal belt, valleys, and lowland plains in the south and southwest. With a population of approximately 272,000 people, Iceland is one of the smaller nations in the world, yet it is the least densely populated of all European nations. More than 60 percent of the country's population resides in or near the capital city of Reykjavik ("Bay of Smokes" named for the geo-thermal stream), situated in the southwestern region of the island. Since WWII Iceland has maintained a high standard of living that is comparable to other Nordic countries. The strong Icelandic economy is based on the use of renewable natural resources and a highly educated and skilled labor force. Unemployment is nearly non-existent in contemporary Iceland. Over the course of the twentieth century, Iceland, which is situated on major shipping and air lanes of the North Atlantic Ocean, has effectively transformed itself from a subsistence economy to an exchange economy. The cost of living is very high because so many purchases from cars to paper are imported. Households require two or more incomes, with most women working outside the home and many men holding two jobs.

The principal employers are fishing, industry, agriculture, and health services. Icelanders as a group are very committed to their work regardless of the specific form. Whether employment involves intellectually challenging desk work, farming, or fishing, for the Icelander there seems to be an intrinsic association between one's work life and both one's personal contentment and the meaning ultimately attached to one's life. A common belief in Icelandic society is that an individual who is not very busy and actively involved in his or her work is not living life fully. Casual conversations over a meal frequently involve discussions about work. All Icelandic youth are expected to work as soon as possible, particularly during the summer months when school is out of session.

Although Irish monks were the first people to inhabit Iceland in the eighth century, it was not until the period extending from 870 to 930 A.D. that Iceland was systematically settled by both Norsemen from Scandanavia and Celts from the British Isles. The monks are believed to have left shortly after the arrival of the pagan Norsemen. Because the ruling class was Nordic, both the language and the culture have been predominantly Scandinavian from the beginning. There are, however, traces of Celtic influence in the literature and in the names of people and places. Immigration from other parts of the world has been minimal since the time of the first settlement.

Iceland's present day parliament, Althing, is the oldest existing national assembly in the world. When established in 930 A.D., the power of the Althing was distributed among four local courts and a supreme court. In 1000 A.D., Christianity was peacefully adopted at the Althing, which met for two weeks each summer and attracted a significant portion of the population. The first bishopric, or center for learning, was established at Skal-holt in south Iceland in 1056, and a second was developed at Holar in the north in 1106. These first schools were devoted primarily to educating men for the priesthood, but many others who were prominent in secular affairs were taught as well.

During the late twelfth and the early thirteenth century, dramatic Icelandic tales of early settlement, the colonization of Greenland, romance, disputes, and the development of Iceland were translated into a rich literary tradition dominated by Sagas. These fact-based works, which provided the early settlers with a source of entertainment as well as cultural heritage, represent some of the classics of world medieval literature and continue to be widely read and treasured by Icelanders. A common custom on farms was for families to sit with handiwork (weaving, tool making, carving, spinning, or knitting) while participating in shared reading, storytelling, and verse making. A study by Weingand conducted in 1989 revealed that 86 percent of well-educated Icelanders, 71 percent of the general population, and 53 percent of students reported recalling oral reading of sagas and folk-tales in the home during childhood.

The enlightened period of peace, or the "Golden Age," lasted 200 years until internal feuds resulting in civil war led to submission to the king of Norway and a new monarchical code in 1271. The infamous Sturlung Age, which followed the era of peace, was marked by political treachery and violence. During this time, the eruption of Mt. Hekla brought physical destruction, widespread epidemics, and death. At the end of the fourteenth century, Iceland was brought under Danish rule and conflicts between church and state culminated in the Reformation of 1550 with Lutheranism declared the country's official religion. The next three centuries were troubled by Danish profiteering, international pirates, a series of natural disasters, and famines.

Denmark's hold on Iceland was significantly reduced in 1874 when a constitution was drafted granting Iceland permission to handle domestic affairs. In 1918 Iceland became an independent state under the Danish king. After the occupation of Denmark and Iceland's declaration of sovereignty, the island's vulnerability was responded to by British and U.S. troops. On June 17, 1944, the Republic of Iceland was formally declared at Thing-vellir.

Iceland joined the United Nations in 1946 and it is a charter member of the North Atlantic Treaty Organization (NATO). In the post WWII era, Iceland has based its foreign policy on peaceful international cooperation and has participated in Western defense efforts. Iceland does not maintain armed forces. However, the United States, which has assumed responsibility for Iceland's defense, maintains a naval air station at the Keflavik International Airport.

Icelandic, the national language, has changed very little from the original tongue of the Norse settlers. A strong movement for linguistic purism gained strength in the nineteenth century and has persisted unabated. English, Danish, and German are also widely spoken and understood. A governmental agency, the Icelandic Language Committee, was established in 1965 and officiates over all language issues. New Icelandic terms are introduced in each discipline and foreign influence on the vocabulary is actively resisted.

Literacy has been universal in Iceland since the end of the eighteenth century. In 1700, less than half of the population of Iceland could read. However, literacy was accomplished in the eighteenth century as children were taught to read by their families or clergy in their homes. This practice of family members frequently teaching children to read continues in present day Iceland.

Constitutional & Legal Foundations

Iceland is a republic with a parliamentary democracy and a president elected for a four-year term by popular vote. The president functions as head of state but remains apolitical except when the two political parties fail to solve governmental crises. The Althing is a legislative body of 63 members elected by popular vote for a term of four years. With authority over finances, the Althing exercises considerable power over the executive branch of the government. The Althing also elects members of key committees and councils within state institutions. Local government is exercised by 162 separate municipalities.

Education in Iceland has historically been public with very few private institutions. Iceland's modern school system dates back to the late nineteenth century and the early twentieth century. In 1880, an education act required that all children be taught reading, writing, arithmetic, and Christianity according to the Lutheran confession. The act stipulated that parents were responsible for teaching their children with supervision provided by the pastors of the Lutheran Church.

The first major education act, a bill establishing the basic objectives and policies to serve as the foundation of educational practices, was passed by the Althing in 1907. With the act, education became compulsory and free of charge for all children between the ages of 10 and 14. In addition, a regional and administrative structure was introduced whereby rural areas, towns, and villages were subdivided into educational districts. Each district was to have a primary school paid for and run by the local authorities with supplementary government funds available based on need. The central Education Office was ultimately responsible for supervising all types of public education, the provision of textbooks and equipment, appointing inspectors, and the administration of final exams. A commissioner of Education was assigned the role of directing and supervising public education for the whole country.

The 1946 education acts divided the school system into four levels (primary, lower-secondary, upper-secondary, and higher), established an entrance exam for upper-secondary education, and introduced a double-track vocational and academic system designed to divert a large number of students into the vocational fields. In 1955, the State assumed full responsibility for the industrial-vocational schools in order to secure the future of this form of education.

In the late 1960s controversy surrounding educational reform became heated and led to the Education Act of 1973, the Primary School Act and the School Systems Act both of 1974, and other reforms during the 1970s. This legislation formed the basis of the contemporary educational system. In addition to providing all citizens the right to free compulsory (primary and lower-secondary), upper-secondary, and higher education, the various laws extended the compulsory education to grade 9, provided for municipalities to develop preschool classes for 5- to 6-year-olds, and enabled the establishment of an experimental comprehensive high school designed to balance the status of the two tracks (general academic and vocational) within one school.

Legislation adopted in 1995 and 1996 requires all compulsory and upper-secondary schools adopt methods for systematically evaluating the following components of educational practice: instruction and administrative practices, internal communication, and external relations. These methods of self-evaluation are examined by the Ministry in five-year cycles. Further, new legislation concerning compulsory schools placed the responsibility of operation with the local municipalities.

Educational discourse in the context of reform movements throughout the past few decades has revolved around topics such as active learning, mixed-ability grouping, hands-on math and science, thematic studies, projects and topic work, group work, peer tutoring, moral and social education programs, the whole language approach, and team teaching. Reform discussions have focused on school-based curriculum development, constructivist teaching and learning, performance-based assessment, teaching for multiple intelligences, learning styles, problem-based learning, life skills programs, inclusion, quality control and school self-evaluation, and information technology.

In 1996 the Ministry published a policy document regarding the role of information technology in education. Among the plans outlined was an extensive integration of information technology into instruction at all educational levels. All students are to have access to computers and high quality software.

Further, in 1998 the Ministry announced an ambitious education initiative with new school policy for compulsory and upper-secondary schools designed to provide Icelandic students with an education that is comparable to the best systems worldwide. The policy represents a concerted effort to create an efficient and flexible system that enables focused attention directed toward meeting the needs of individual students, and increased choices for students, while fostering academic discipline, good working skills, healthy competition, and enhanced student initiative and responsibility.

Educational System—Overview

Consistent with an overall philosophy of education based on tolerance, Christian values, and democratic-cooperation, perhaps the most fundamental principle embedded in the history of the Icelandic education system is that equal access to education should be granted to all irrespective of sex, economic status, area of residence, religion, physical handicap, cultural or social background. In recent years, carefully considered and articulated general aims of the education system in Iceland have been to encourage and preserve Icelandic culture, history, and language and to ensure that the Icelandic education compares favorably to the education provided by the leading nations in the world. Clear objectives have been specified to focus programs toward achieving these broad goals with the Ministry receiving widespread political and popular support for their efforts.

School attendance is obligatory for all children between the ages of 6 and 16 in Iceland. Those desiring to continue their education beyond the compulsory period attend various specialized schools or upper-secondary schools. Students can enroll in four-year secondary schools at age 16, with graduation entitling the student to admission to a university. There are also a number of technical, vocational, and specialized schools. Approximately 74 percent of the Icelanders under the age of 29 participate in Iceland's formal education system. This includes more than 42,000 young people of compulsory education age (6-16).

The language of instruction is Icelandic, and all educational institutions are publicly funded. Although the majority of schools are fully supported by the State, 6 percent are private grant-aided institutions (operated by nongovernment agencies but receiving a portion of their finance through the public sector). Students with special education needs are most typically integrated into the main stream classrooms, with only .3 percent of the special needs students educated in separate schools.

Preprimary education in Iceland is available on a fee basis and focuses on the developmental and educational needs of children between the ages of 1 and 5. More than 80 percent of children between the ages of 3 and 5 are enrolled in pre-compulsory education.

Children are admitted to compulsory education at age 6, with students usually attending their local school. Parents are permitted to transport their children to a more distant district. In the rural areas, children frequently attend boarding schools. Tuition and textbooks are free of charge at the compulsory level. Students in compulsory education are not grouped according to ability and no formal division is made between primary and lower-secondary education. However, students at the primary level have one teacher; whereas, lower-secondary school students have different teachers for each subject area.

The Ministry of Education, Science, and Culture oversees the curriculum and publishes a National Curriculum Guide. Core subjects include Icelandic (grammar and literature), mathematics, foreign languages, natural science, social science, religious study, arts and crafts, and physical education, with compulsory swimming practice. The curriculum guide also contains recommendations pertaining to assessment, progression, and examinations. Teachers select their own methods of classroom assessment and may adopt preferred instructional methods. The National Centre for Educational Materials publishes and distributes teaching and learning materials to assist compulsory education teachers. The school year runs for 170 days from early September through the end of May, with schools open 5 days per week.

Students who complete compulsory schooling have access to upper-secondary education, regardless of their achievement. Students pay an enrollment fee and may have to purchase books; however, there is no charge for tuition. The most prominent forerunner of the Icelandic upper-secondary schools is the Latin school devoted initially to training boys for the ministry. These schools eventually became more general as young people were trained for university education and civil service. Schools with a strong vocational mission and a classical academic curriculum were transformed into general education institutions. Upper-secondary education is of two forms in Iceland: general academic and vocational or specialized. The length of training varies from 6 months to 4 years depending on the course of study.

The upper-secondary school curriculum is set forth by the Ministry of Education, Science, and Culture in the National Curriculum Guide. All courses leading to matriculation include Icelandic, foreign languages, social studies, mathematics, computer science, and physical education. Academic education further includes compulsory specialist subjects and student electives. Vocational courses of study consist of the general core in addition to vocational theory and practice classes. Most of the upper-secondary schools award unit credits for individual courses and are flexible in terms of the amount of time students spend on given courses. Upper-secondary general and vocational assessment is based on two yearly examinations and, frequently, coursework. Students who fail to pass an examination are given three opportunities to try again.

Upper-secondary educational assessment had been the domain of the local school; however, national examinations in the general academic track were instituted. General academic training culminates in a General Certificate, which is a prerequisite to entering the higher education system in Iceland. Students completing vocational training are awarded a Journeyman's Certificate. Many schools offer both general academic and vocational training.

Higher education is offered at three universities in Iceland and 11 non-university institutions offering specialized training in areas such as the arts, agriculture, technology, preschool education, and physical education. Admission is dependent upon a matriculation certificate from an Icelandic upper-secondary school or an equivalent from an abroad institution. Instruction at most universities and colleges is conducted in Icelandic with many textbooks frequently written in foreign languages. Because the majority of the schools are financed by the state, tuition is free and students rarely have to pay fees.

Preprimary & Primary Education

Preschools are housed in buildings that are physically well-suited for their activities and are always situated in a location that allows for ample outdoor play space (30-40 square meters per child). Indoors, the law requires 7 square meters of space per child. With only one exception, preschool education is co-educational throughout Iceland. Very few preschools will accept children under the age of one, with most children not enrolling until age two. Children attend preschools for 4 to 9 hours daily. In municipalities where there are an insufficient number of spaces available to accommodate the need, preference is given to children of single parents and students. Children are typically divided into separate groups based on age; yet in the smaller communities children of various ages are kept together in a single group.

Icelandic law concerning the conduct of preschool education emphasizes several aims. These aims are provided in abbreviated form below:

1. To provide children with a safe and healthy environment in which to play and grow.
2. To give children the opportunity to participate in and enjoy group games and activities under the direction of a preschool teacher.
3. To encourage the optimal development of each child through cooperation with parents and sensitivity to each child's unique nature, with special emphasis on providing the emotional and physical support children need to enjoy childhood.
4. To encourage tolerance and open-mindedness while providing equal developmental and educational opportunities to all children.
5. To support Christian ethical development and provide the necessary foundation for children to become independent, conscious, active, and responsible citizens of an ever-changing democratic society.
6. To foster the children's creative and expressive abilities in ways that fortify their self-image, sense of security, and ability to solve problems in a non-aggressive manner.

The Ministry issues a preschool program defining the educational and pedagogic role of preschools with policy pertaining to how it should be implemented. The contemporary program is based on a child-centered philosophy emphasizing individuality and childhood as being a distinct stage of life with special qualities. A strong emphasis is placed on play, as it is believed to provide the best medium for fostering learning and socio-emotional development in preschoolers. Several specific educational areas are addressed in the preschool education program: caring and daily routine, play and playing conditions, speech and speech stimulation, visual creativity and expression, music, sound, and movement, nature, and society. Individual schools make decisions regarding the relative emphasis placed on each of these areas and decide how and when to integrate the different educational components. Preschool age children with special needs are accommodated with needed assistance and/or specialized training that is monitored regularly for results.

Preschools are not required by law to formally assess the progress of the individual children. In cases of suspected deviation from normal development, the pre-school staff or specialists do, however, conduct appropriate assessments. The directors of preschools evaluate their programs regularly and the Ministry is responsible for conducting comprehensive assessments.

Icelandic law governing compulsory education renders school attendance obligatory for all children between the ages of 6 to 16. The law sets the length of the academic year, the minimum number of lessons to be given weekly, and identifies required subjects. The law further makes it the duty of parents to register their children and see to it that they attend regularly. The law makes it the domain of the state and local municipalities to insure that education is implemented in accordance with the dictates of the Ministry.

Primary education (grades 1-7) and lower-secondary education (grades 8-10) are considered part of the same general level of education. However, primary teachers instruct one class in most academic subjects; whereas in lower-secondary school, teachers usually teach one or more subjects to several different classes. There are no entrance requirements. Local school districts cover the costs of school construction, teaching, and other personnel-related instructional expenses, as well as the costs of daily operation. In addition, they provide specialist services including pedagogic counseling, counseling related to particular academic subjects, educational counseling, and school psychology services. On the other hand, the state monitors adherence to educational law and National Curriculum Guidelines by evaluating individual schools while also supplying educational materials including textbooks.

Compulsory school in Iceland is divided into 10 grades, many schools housing all ten grades, some schools with grades one though seven, and others with grades eight through ten. The total number of Icelandic compulsory schools is slightly more than 200, and the size of schools varies from from 700 to 800 pupils in the largest schools located in and around the capital city to fewer than 10 students in some remote rural districts. Nearly 50 percent of all compulsory schools in Iceland have fewer than 100 pupils. All compulsory schools enroll both boys and girls. Home-room or advisory teachers offer pupils advice on their studies, with special school counselors employed mainly at the larger schools.

National Curriculum Guidelines developed by the Ministry set parameters with respect to the organization, execution, and evaluation of education within the compulsory schools. The staff at each school must write a school working guide or administrative plan based on the Guidelines with sensitivity to the unique features and circumstances of the institution. The plan, which includes an annual calendar, must detail the organization of teaching, the content and objectives of education provided, student assessment procedures, assessment of school-related work, extra-curricular activities, and various other aspects of school operation.

The Ministry issues guidelines regarding the hours of instruction required for each grade as well as the proportion of total teaching time to be devoted to individual subjects. The number of lessons increases lightly during the 2001-2002 academic year with 30 weekly lessons slated for grades 1 through 4, 35 lessons per week for children in grades 5 through 7, and finally, 37 lessons provided for students in grades 8 through 10. At the conclusion of 10 years of compulsory education, students' time will have been partitioned in the following way: Icelandic, 18 percent; mathematics, 15 percent; arts, crafts, and home economics, 20 percent; modern languages, 9 percent; natural sciences, 6 percent; social studies, 7 percent; religious studies, 3 percent; physical education, 10 percent; and electives and miscellaneous studies, 12 percent. Danish is studied from the sixth through the tenth grades, with English studied during grades 7 through 10.

Children are expected to cover the same material in approximately the same amount of time and the students are not separated into instructional groups based on ability. However, students who experience difficulty are provided with remedial help. Teachers are free to select the methods that they find best suited for their students, the instructional goals, and the teaching conditions. Teachers generally strive to use as much variety as possible in their instruction. Children with special needs are assisted by a remedial teacher within the regular classroom environment or they are brought to another small room for oneon-one help by the remedial teacher. Many schools also have special departments for students with severe learning disabilities.

Examinations and other forms of assessment are designed and administered by individual teachers and schools. Methods for reporting student progress varies considerably across schools. Many compulsory schools assign numerical or letter grades, while others use oral or written comments. All schools issue some form of student progress report at regular intervals throughout the academic year. When students complete compulsory education, they take a nationally coordinated exam in Icelandic, mathematics, English, and Danish. Grades ranging from 1-10 are assigned by the Institute of Educational Research, which is also responsible for designing the test. The results provide information related to the student's relative standing in their group and are used to assist students in choosing a course of study in upper-secondary school. Beginning in 1995, nationally coordinated exams in Icelandic and mathematics have been administered to children in grades 4 and 7. Similar to the requirement for preschools, each compulsory school must undertake extensive periodic self-evaluations that consider teaching, administration, and internal and external communication. Every five years the schools' methods of assessment are evaluated by an external agent and the Ministry regularly evaluates compulsory schools to ensure compliance with the law.

Secondary Education

In Iceland, upper-secondary education is governed by law that was enacted in 1996, with certain provisions having taken effect in stages and becoming fully implemented (2000-2001 school year). The law defines the framework for upper-secondary education outlining aims as well as the role of the state and local municipalities. Further, in accordance with the law, the Ministry issues National Curriculum Guidelines describing the content and objectives of each program of study. Although upper-secondary education is not obligatory, everyone who completes compulsory education has a right to pursue this level of education. Between 87 and 89 percent of students completing compulsory education enroll in upper-secondary programs, but the dropout rate is rather high. All upper-secondary schools are co-educational and free of charge. However, students must pay enrollment fees, cover textbooks, and provide partial costs for materials if in a vocational program. The law allows for different entrance requirements to the different programs depending on the demands of the courses of study. Students not meeting the minimal requirements for a desired program are offered the opportunity to receive remedial training in the core courses.

There are approximately 40 upper-secondary schools varying in size from fewer than 50 to more than 1,500. Four different types of upper-secondary schools are operated in Iceland:

1. general academic schools that offer four-year academic programs concluding with the matriculation examination that is required for entrance into the higher education programs;
2. industrial-vocational school offering theoretical and practical programs of study in skilled and some nonskilled trades;
3. comprehensive schools that provide programs of study comparable to those offered in the general academic and vocational-industrial schools in addition to other specialized vocational training programs; and
4. vocational schools that offer programs of study designed for specialized employment.

The law stipulates that four general types of programs should be offered at the upper-secondary level. These include vocational programs, fine arts programs, a general academic program that leads to matriculation, as well as a shorter general academic program. Students in vocational programs are given the opportunity to complete additional course work if they are interested in university studies.

General academic education is organized into three subject areas: general subjects that all students are required to enroll in (approximately two-thirds of the curriculum), specialized subjects that fit with the aims of particular programs, and electives. There are three different academic programs leading to matriculation (foreign languages, natural sciences, and social sciences) with possibilities for more focused study within each of these broader programs. A shorter academic program is designed for students who are undecided about what particular course of study to pursue and for those who need additional preparation prior to committing to the longer academic track or a vocational program.

Although the length of vocational programs varies, most are four years with students choosing training in various skilled trades, agriculture, the travel industry, fisheries, food production, health, or commerce. A number of the vocational programs, in addition to those for skilled trades, award legal certification for certain types of employment. For example, certification is provided for nurses' aides and sea captains. The law of 1996 requires vocational councils composed of representatives from employers and employees in each vocation along with one representative from the Ministry to convene regularly for the purpose of defining knowledge and ability needs of each vocation and to make curricular recommendations.

The academic year is divided into autumn and spring terms with students attending 32 to 40 forty-minute lessons per week. Most upper-secondary schools operate under a unit-credit system that allows students to regulate the amount of time it takes to complete their programs. In this type of system each subject is divided into a number of defined course units lasting for one semester.

The objectives of upper-secondary level education, outlined by law, encourage the overall development of students to equip them for active participation in a democratic society, preparing students for employment and further study, and fostering several personal qualities including responsibility, broad-mindedness, initiative, self-confidence, tolerance, discipline, independence, critical thinking, appreciation for cultural values, and the desire to seek lifelong learning. The National Curriculum Guidelines prescribe the framework for individual courses of study including the content, duration, and assessment requirements. As with education at lower levels, students with special needs are provided appropriate instruction and training in the mainstream classrooms to the fullest extent possible.

Regardless of the type of school, upper-secondary schools typically have examinations at the conclusion of each semester, with grades on other course assignments figured into the final grades. For the skilled trades, there are the journeyman's and nationally coordinated subject area exams. Upper-secondary schools are required by law to write School Working Guides describing program offerings, teaching methods employed, and the role of the administration. They must also conduct regularly sequenced self-evaluations addressing teaching, administration, and communication.

Higher Education

Contemporary higher education in Iceland dates back to 1847 with the formation of the Theological Seminary. In 1876 the Seminary was followed by the Medical School and then in 1908 the School of Law. These three institutions merged in 1911 with the foundation of the University of Iceland in Reykjavik. The contemporary higher education system encompasses three universities with research responsibilities and more than one program of study in addition to 11 specialized technical, vocational, and art colleges. With the exception of the University of Iceland, fewer than 1,000 students are enrolled at all other higher education institutions. The University of Iceland with an enrollment of 5,900 students (59 percent female), remains the principal institution and it hosts nine faculties (economics and business administration, dentistry, engineering, humanities, law, medicine, natural sciences, social sciences, and theology). Many of the faculties are subdivided into departments. For example, the Faculty of Social Sciences offers majors in ethnology, library and information science, political science, psychology, social anthropology, and sociology. The University of Iceland is a rapidly expanding and diversified institution with a total of more than 50 degree programs. The National and University Library, with 15 branches on and off campus, contains approximately 700,000 volumes with regular subscriptions maintained for 2,600 foreign journals.

The University of Iceland does not have restrictions on admission for those who have passed the matriculation exam. However, in the Faculty of Medicine, the Departments of Medicine, Pharmacy, Nursing, and Dentistry operate under a system wherein the number of students permitted to continue their studies beyond the first semester is limited and based on their performance on an examination. Further, the Department of Pharmacy and the Faculty of Science require students to have matriculated from upper-secondary programs emphasizing math, physics, or natural science.

The University of Akureyri has four departments: Health Science, Management Study, Fishery Studies, and Education. The University College of Education is primarily responsible for the education of teachers at the compulsory school level. This institution also offers a Master of Education Degree with specialization in curriculum studies, special education, educational administration, and educational theory.

Colleges in Iceland offer technical and vocational courses in addition to training in the arts. Most colleges specialize in a single field of study with some colleges belonging formally to the upper-secondary school level while actually operating higher education programs. Courses of study are offered in several areas: physical education, social pedagogy, preschool education, drama, music, fine and applied arts and design, computer studies, management, civil and electrical engineering technology, laboratory and radiology technology, and agricultural science.

Icelandic is the primary language of instruction in higher education, although textbooks are frequently in English, a widely understood language in the country. Operating under a semester system, the academic year begins in September and lasts until May. There are no tuition fees at state-run Icelandic institutions, students only pay registration fees. The few private institutions do charge tuition. Icelandic students attending institutions of higher learning are eligible for state loans. The total loan amount is based on the student's income, with repayment deferred until two years after completion of one's studies. Grants are offered for post-graduate research-oriented studies at universities in Iceland and are based on proposals submitted jointly by a student and a professor.

Higher education assessment in Iceland is typically in the form of oral or written examinations in addition to other course-related assignments. Moreover, university degrees are only conferred with successful completion of a final thesis or research project.

A diploma or certificate is awarded for 2 to 3 years of postsecondary study in drama, fine and applied arts and design, music, computer studies, management, and civil and electrical engineering. A BA degree is granted to students who have completed 3 to 4 years of study in humanities, theology, and social sciences and have finished a final thesis or research project. The BS degree is awarded to students who have completed 3 to 4 years of study in economics, business administration, natural sciences, health subjects, fishery studies, agricultural sciences, and engineering. A BE degree is earned after 3 years of course work designed to prepare students to teach at the preschool, compulsory, or upper-secondary level or for 3 years of study in the area of social pedagogy. A BphilIsl degree (Baccalaureatus Philologiae Islandicae ) is granted upon completion of the program in Icelandic for foreign students. A Candidatus degree is offered only at the University of Iceland and qualifies the recipient for a particular profession or office. This type of degree is essentially an academic/professional degree offered in the fields of theology, medicine, pharmacy, law, business administration, engineering, and dentistry.

The University of Iceland offers a number of postgraduate degree programs. One year post-bachelor degree programs lead to certificates in education, social work, journalism, and mass communication. The MS degree is awarded following successful completion of two years of post-graduate study and a thesis research project in the faculties of medicine, economics and business administration, engineering, and natural sciences. Similarly, the MA degree is awarded after two years of postgraduate study in the Humanities and the Social Sciences in conjunction with a thesis research project. The MEd degree is awarded at the University College of Education following two-years of post-graduate study and completion of a thesis research project. Doctoral level training is only offered at the University of Iceland. There are two types of doctoral programs: a doctor of philosophy degree in Icelandic literature, language, and history and one that is not based on a predefined course of studies, but instead involves independent research by a candidate. As a rule, admission to doctoral programs requires completion of a professional degree (candidatus) or a master's degree.

Although there is no general legislation governing higher education, each institution is directly responsible to the Ministry of Education, Science, and Culture. The law pertaining to the operation of each institution defines its mission as related to education and research, the internal structure, and administrative roles. Within the framework outlined by the state, each university or college designs and updates the aims, scope, and length of programs offered as well as the content of courses.

Students in Iceland have a long history of traveling abroad to study, with 20 percent of higher education students (mostly post-graduate) studying overseas at any given time. The number of foreign exchange students enrolled in Icelandic universities and colleges has increased throughout the last several years. In response to their presence, the number of short intensive Icelandic courses has expanded along with services designed to enrich the daily lives of foreign students. For example, excursions and lectures pertaining to the country and Icelandic society are regularly available.

Administration, Finance, & Educational Research

The Icelandic parliament is responsible for education in Iceland, developing the basic objectives and administrative framework. More specifically, all forms of education fall under the jurisdiction of the Ministry of Education, Science, and Culture. Directed by a Secretary General, the Ministry is divided into three offices: 1) the Office of the Minister and Secretary General, which encompasses four departments (Administration, Financial Affairs, International Relations, and Legal Affairs), 2) the Office of Educational Research and Development, and 3) the Office of Cultural Affairs. Each of the offices is supervised by a Director General. The Ministry is directly responsible for insuring that legislation is implemented, planning system changes, and issuing educationally-based regulations. For example, the Ministry issues National Curriculum Guidelines for compulsory and upper-secondary schools that offer detailed educational objectives with specific information pertaining to how they should be met. However, responsibility for compulsory education shifted from the State to authorities within the local municipalities. While upper-secondary schools are managed by school boards with representation from the Ministry, the local authority, teachers, and students, higher education institutions are the sole responsibility of the Ministry. In general, supervision of education occurs at the local level with final responsibility residing with the Ministry. Eight regional authorities share responsibility for primary education; each authority, headed by a superintendent, appoints an education council of three to five members for four year terms. The eight educational regions are further subdivided into districts with local school boards responsible for running primary schools.

Between 1968 and 1995 an experimental Lab-school operated in conjunction with the University College of Education. The teachers experimented with various teaching methods and arrangements. Many of them were active in teacher education, and were promoters of topics such as educational drama, team teaching, integrated curriculum, the Scottish storyline approach, media-studies, hands-on science, new math, creative writing and inquiry-based reading instruction.

For more than a decade, two funds have assigned grants to developmental projects at the compulsory school level. Each year between 40 and 60 projects are provided support. The projects differ in size and scope, but most are small scale projects dealing with curriculum development in a limited area, small surveys, special education efforts, particular teaching projects, the compilation of curriculum materials or experimentation with teaching methods or assessment procedures.

Ingvar Sigurgeirsson, an Icelandic educational researcher, attempted to identify the extent to which innovative teaching methods have been adopted in schools throughout the country. Head teachers and deputy heads in 200 Icelandic schools (96.6 percent of all compulsory schools in 1994) were interviewed. Respondents in 28 schools (14 percent) emphasized that alternative (to the traditional model) teaching methods were frequently applied (thematic studies, topic work, work with various resources) in their classrooms. The remainder continued use of the traditional form of teaching. Despite this, pedagogical research has expanded dramatically and there has been considerable growth related to teaching ideas and models. In particular, research has focused on cooperative learning, "effective school" and "effective teaching" research, developments in authentic and constructivist learning, and the assessment and promotion of teacher research.

Nonformal Education

An Adult Education Act was introduced in the Althing in 1979 as an effort to organize and coordinate the various educational programs available for adults in Iceland. The Reykjavik School of Adult Education was founded in 1939 and is operated by the city. A variety of afternoon and evening courses are offered. Similar schools run by local authorities have been established throughout the country. In addition, there are private adult education schools devoted to adult education in foreign languages, fine arts, and music.

A few compulsory school and upper-secondary institutions have courses open to mature students. These schools have evening classes with programs comparable to those offered during the day in traditional schools and designed to meet the needs of adults with daytime commitments. Upper-secondary schools generally have educational counseling available to assist students in the selection of programs of study, design of a plan of study, and with academic and personal problems.

Distance education has a relatively strong presence in Iceland. A number of college courses and a few college programs are offered using only network communication. For example, the College of Education at the University of Iceland offers a B.Ed. distance education program. Available data gathered from both lecturers and students suggest some discrepancy in their views regarding the efficacy of the program. The majority of the lecturers felt that all of the aims of the curriculum were equally well-served in the distance program and the traditional program. However, students expressed a need for face-to-face courses as a supplement to the distance learning. A few secondary schools in Iceland have likewise adopted distance learning programs. For example, one program evolved in a rural school based on widespread adult interest in evening courses. When the interest spread beyond commuting distance, correspondence courses and a distance learning program were instituted to fulfill the need.

The Adult Education Center is located in Reykjavik with annexes in other locations throughout the country. Students range in age from 17 to 67 years and the center provides short courses for people who do not have access to other educational opportunities. The courses provide training for independent or semi-independent living to people possessing widely varying physical and psychological handicaps with the goal of enhancing their quality of life. The curriculum is divided into basic living skills training, reading, writing, arithmetic, computer skills, physical exercise, swimming, home economics, arts and crafts, music, and drama. The format of education is very flexible and the each student has his or her own curriculum that is constantly evaluated and modified. As is characteristic of other forms of education in Iceland, there is a strong emphasis on values and needs of the individual.

Teaching Profession

All teachers in Iceland are civil servants with the nature and length of training varying as a function of the educational level. Although preschool teachers are generalists and compulsory education teachers are specialists in one or more subject areas, at both levels, teachers must complete a three-year bachelor of education course of study. Upper-secondary teachers finish a four-year BA or BS degree in addition to 30 credits in pedagogy and didactics.

Teachers in Iceland's preschools complete a 3-year course of study that is two-thirds academic or theoretical and one-third practical at either the Icelandic College for Preschool Teachers or at the University of Akureyri. In-service training for preschool teachers is not officially mandated by law, yet preschool personnel frequently supplement their education after working for 3 or more years in a preschool setting.

Compulsory education teachers complete a three-year course at a teacher training college, and as with pre-school teaching, participation in in-service training is not mandatory. However, collective bargaining agreements enable teachers to attend training sessions.

Legislation requires upper-secondary general academic school teachers complete at least four-years of university-level education. A minimum of two years needs to be devoted to a major subject and one year to the study of education and instructional methodology. Teachers of vocational subjects must be qualified in their field or be a master craftsman with a minimum of two years experience working in the trade in addition to one year of study in education and instructional methodology. Teachers are paid by the state but hired locally. In-service training courses are held annually for upper-secondary school teachers.

Teacher education in Iceland has a history extending more than a century and leading to the founding of the Iceland University of Education. Legislation in 1997 resulted in the merging of three other colleges with the former University College of Education (founded in 1907). These three colleges were the Icelandic College of Early Childhood Education, The College for Developmental Therapists, and the College of Physical Education at Laugarvatn. There are two departments at the Iceland University of Education (the Department of Undergraduate Studies with five divisions and the Department of Graduate Studies).

The postgraduate program offers courses ranging from 15 to 60 units for professionals in education and social work. Study at this level is largely in the form of distance education, with a few periods of residency required. Students either complete their training with a diploma in Education (15-30 units) or with a Med degree (60 units). A full year of study is 30 units. Graduate students specialize in administration, curriculum and instruction, educational theory, special education or educational technology. Approximately 200 students are enrolled in graduate programs.

Icelandic teachers show considerable interest in keeping up with current developments in the education field. Most seminars, workshops, and in-service courses are well attended as are education conferences. A relatively large Institute of Continuing Education also operates within the University. The main purpose of the Institute is to provide education for professionals in education and social work. In addition, the Institute occasionally provides training for other groups and fosters research and development projects. There is a strong emphasis on distance learning and use of information technology within the Institute.

The Iceland University College of Education has approximately 170 faculty members and other permanent staff. All assistant, associate, and full professors teach and maintain a program of research. The University of Iceland has a Department of Education within the Faculty of Social Sciences. This Department offers a Teaching Certification Program designed to train lower-secondary and upper-secondary school teachers. The program is for four years (129 units) and involves specialized study in a particular discipline (BA/BS) along with one year of instructional methodology. An average of 50 students graduate from the program each year.

The University of Akureyri is the youngest of the three Universities offering teacher training. The Faculty of Education began operation in the Fall of 1993 with a BEd program for compulsory school teaching. A Pre-school Program and a Teaching Certification Program are offered as well. The Compulsory School Program has a special focus on science and training teachers for small rural schools. In 1998 the Ministry of Education, Science, and Culture released a report of an extensive external assessment of the Teacher Certification Program at the University of Iceland, the programs offered at the University College of Education, and both the Compulsory School Program and the Teaching Certification Program at The University of Akureyi. The review team, chaired by Dr. Benjamin Levin, Dean of the Continuing Education Division at the University of Manitoba, concluded that all three programs were making ambitious efforts to meet the needs of teachers in training. They commended the Icelandic institutions' use of information technology in teacher education training, concluding that efforts went well in comparison to similar institutions in other nations.

The team also identified areas needing more focused attention. For example, they recommended more long-range planning or a vision. Future aspirations seemed to be contingent upon the actions of others such as the Ministry, and the review team felt that the faculty at each institution should develop a public document outlining their plans for initial and continued training, graduate programs, and research. Other recommendations included greater coordination among the three institutions related to curriculum development, continuing education efforts, and access to and delivery of distance education, increased availability of computer facilities, the need for more active collection of student data, and improving conditions for research.

Teachers in Iceland have historically been relatively poorly paid by international standards. However, there is evidence that this trend is reversing. According to a wage contract, upper-secondary teachers with a BA or BS will receive a starting salary of US$2,083 rising to $2,380 by 2004. According to the previous contract, the minimum starting wage was US$1,309. Teachers with 10 to 15 years of experience will receive raises of US$773. The agreement also included fewer compulsory overtime hours. Although the status of teaching as an occupation has been rather low in the past, there is evidence to suggest that this is changing. One recent study of the vocational plans of Icelandic teenagers revealed that becoming a primary school teacher ranked in third place.

Summary

Compulsory education in Iceland is targeted for all children between the ages of 6 and 16, with those desiring to continue their education beyond the compulsory period pursuing programs of study of various forms in upper-secondary schools. A matriculation certificate from an Icelandic general academic upper-secondary school or an equivalent from an abroad institution is necessary for admission to a higher education institution. There are also a number of technical, vocational, and specialized upper-secondary schools that prepare students to enter the workforce upon completion of required class work and supervised practical experiences. Higher education is offered at three universities in Iceland and several colleges provide training in the arts, agriculture, technology, pre-school education, and physical education.

The majority of Icelandic schools at all levels are fully supported by the State (over 90 percent), yet private schools have become more common. Students with special education needs are usually taught in inclusive-type classrooms, with less than 1 percent of the special needs population educated in separate schools. More than 80 percent of Icelandic children between the ages of 3 and 5 are enrolled in fee-based pre-compulsory education.

The Ministry of Education, Science, and Culture generally oversees the curriculum and publishes a National Curriculum Guide for all levels of compulsory education and for both vocational and academic upper-secondary education. The curriculum guides also contain recommendations pertaining to teaching and assessment; however, teachers actually choose their own methods of classroom assessment and may adopt preferred instructional methods. No general legislation governs higher education in Iceland, but each institution is held accountable to the Ministry. Laws define the mission of each institution with respect to education and research, the internal structure, and administrative roles. However, each university or college is granted relative autonomy to develop and update the aims, scope, and length of programs.

Icelanders have an admirable respect for and interest in their past as well as a contemporary perspective that embodies enthusiasm for current trends and technology and careful planning for the future. Public education in Iceland combines a long history of devotion to learning, cultural values (tolerance, open-mindedness, responsibility to others), emphasis on the unique educational and socio-emotional needs of individual students, and appreciation for contemporary pedagogical knowledge.

Various cultural factors have unfortunately impeded the process of modernization of the educational system in the country over the last few decades. For example, the system has been one that has been highly regulated by a national government that has swayed considerably in terms of support for educational reform based on differing political party agendas. Another problem has been that language barriers have limited teachers' access to primary educational literature. Efforts to evaluate strengths and weaknesses of the education system at all levels have been less than systematic. Further, Icelandic teachers have been underpaid and the profession has tended not to be one associated with high status.

Nevertheless, several recent trends suggest that the future will bring a respectable system to compete with the best educational systems in the world. These trends include the following: 1) unified effort on the part of the state and the public to more effectively replace traditional teaching practices with contemporary ones by developing specific methods for translating accepted theory into practice, 2) transfer of many educational operations from the state to the local level, 3) more focused effort to gather data on school effectiveness, teaching competence, and teacher training, 4) higher pay for teachers and higher status associated with the profession, and finally 5) enhanced interest and use of technology in the classroom.

Iceland has experienced profound cultural shifts over the course of the last century from gaining independence to radical changes in the economy. Compared to transformations that occurred relative to these other realms, modifications to the educational system have been far less dramatic. However, with the consciousness shared by the government, industry, businesses, and the public, it seems inevitable that Icelanders will work to put their ideas into practice.

Bibliography

Durrenberger, Paul, and Gisli Palsson, eds. An Anthropology of Iceland. Iowa City: University of Iowa Press, 1994.

Edelstein, Wolfgang. "The Rise and Fall of the Social Science Curriculum Project in Iceland, 1974-84: Reflections on Reason and Power in EducationalProgress." Journal of Curriculum Studies, 19 (1987), 1-23.

Edelstein, Wolfgang, and David Hopkins. "The Challenge of School Transformation: What Works." A paper circulated in relation to theInternational Workshop for School Transformation in Berlin (February 1998).

Gisli, Palsson, and Paul Durrenberger. Images of Contemporary Iceland: Everyday Lives and Global Contexts. Iowa City: University of Iowa Press, 1996.

Hjalmarsson, Jon. History of Iceland: From the Settlement to the Present Day. Reykjavik, 1994.

Hreinsdottir, Helga. "Distance Teaching at a Secondary School in Iceland." The Delta, Kappa, Gamma, 61 (Spring 1995), 55-58.

Jonasson, Jon Torfi. A Forecast of Diverse Aspects of Education in Iceland, 1985-2010. Reykjavik, 1990.

Ministry of Culture, Science and Education. "Culture and Education: A Foundation for the Future." Reykjavik, February 1996.

——. "Education and the Making of a New Society." Reykjavik, April 1996.

——. "The Educational System inIceland." Reykjavik, 1998.

Ministry of Culture and Education. "External Assessment of the University of Iceland, University College of Education, and University of Akureyri: Report of the Peer Review Group," March 1998.

Sigurgeirsson, Ingvar. "The Challenge of School Transformation: What Works." A paper circulated in relation to the International Workshop for School Transformation in Berlin (February 1998).

Taylor, Ronald. "Functional Uses of Reading and Shared Literacy Activitiesin Icelandic Homes: a Monograph in Family Literacy." Reading Research Quarterly, 30, (1995), 194-219.

—Priscilla Coleman

ICELAND

Republic of Iceland

Lýðveldið Ísland

COUNTRY OVERVIEW

LOCATION AND SIZE.

A small volcanic island located between the Greenland Sea and the North Atlantic Ocean in the Arctic, Iceland is the westernmost European country. Found between Greenland and Europe, just northwest of the United Kingdom, Iceland has an area of 103,000 square kilometers (39,768 square miles) of which 100,250 square kilometers (38,707 square miles) is land and 2,750 square kilometers (1,062 square miles) is water. Its coastline is 4,988 kilometers (3,099 miles) long. Iceland is about the size of the state of Kentucky. Its capital, Reykjavík, is located on the country's southwestern coast. The climate is moderated by the North Atlantic current. In Iceland winters are mild and windy and the summers are cool. Approximately four-fifths of the country is unpopulated and uninhabitable. Glaciers cover more of the land in Iceland than in all of Europe. In addition to glaciers, the island has lakes, mountains, a lava desert, lush green areas, and natural hot springs, making Iceland a spectacle of nature.

POPULATION.

The population of Iceland was estimated as 276,365 in July of 2000, with a slow growth rate of 0.57 percent. Iceland is the most sparsely populated country in Europe, with an average of 3 inhabitants per square kilometer. In 2000, the birth rate stood at 14.86 births per 1,000 population and the death rate at 6.87 deaths per 1,000 population.

The majority of Icelanders live in a narrow coastal belt in the valleys and in the southwest corner of the country. The Icelandic government reports that 99 percent of the population live in urban areas and 60 percent of the people reside in the republic's capital, Reykjavík, or in suburban areas directly outside of the city.

Iceland has a relatively young and middle-aged population—65 percent are between 15 and 64 years, 23 percent less than 14 years, and 12 percent aged 65 and older. It enjoys one of the highest life expectancy rates in the world. Life expectancy at birth was estimated in 2000 at 79.39 years (male: 77.19 years, female: 81.77 years). Iceland also possesses one of the world's highest literacy rates at 99.9 percent (1997 est.). Literature and poetry are a passion of the people and its per capita publication of books and magazines is the highest in the world.

Icelanders descended from the Norwegians and the Celts (Scottish and Irish). The national language is Icelandic, which of all the Nordic languages is the closest to the Old Norse language. The Icelandic spoken in 2001 has changed little since the 12th century. About 91 percent of the people belong to the state church, the Evangelical Lutheran Church. However, Iceland has complete religious freedom, and other Protestant and Catholic churches exist. Given Iceland's remote geographic location, its long-established culture and language, and its small population, it is a tightly-knit homogenous society.

OVERVIEW OF ECONOMY

Iceland's economy is similar to that of its Scandinavian neighbors. It is mainly capitalistic, but the republic has an extensive welfare system, low to no unemployment due to labor shortages, and a wide distribution of wealth. Poverty is practically non-existent. Overall, Iceland's economy is strong and Icelanders enjoy a standard of living similar to many European countries.

Iceland's use of its natural resources has been central to its economic success. The country has achieved a high standard of living and many years of economic stability from the profits of its fish and energy resources. Given Iceland's dependence on fishing and fisheries, the economy is profoundly affected by declines in the number of fish living in its seas and in the Atlantic Ocean. The economy is also sensitive to drops in world prices for its main exports of fish and fish products, aluminum, ferrosilicon, equipment and electronic machinery for fishing and fish processing, and woolen goods.

Foreign trade also plays an important role in Iceland's economy. Exports and imports account for two-thirds of the GDP. Most of Iceland's exports go to the European Union (EU) and ETFA (European Free Trade Association) countries, the United States, and Japan.

Stability is a key aspect of the Icelandic economy, and the performance levels of the economy are not expected to change anytime soon. The policies adopted by Prime Minister Olafur Ragnar Grimsson's center-right government effectively reduced the budget and government deficits, restricted foreign borrowing, controlled rising inflation , and revised agricultural and fishing policies while diversifying the economy and selling state-owned industries. The economy should continue to prosper in the future.

However, one factor that remains the subject of great debate is whether Iceland should join the European Union (EU). The main reservation against EU membership is the fear of losing direct control of Iceland's fishing resources. History plays an important role in this debate, as Iceland was under Danish control for 5 centuries and only became an independent republic in 1944. Therefore it is understandable that freedom and control over their country's own natural resources is an important issue to Icelanders, and does not make EU membership very alluring.

The Icelandic economy has several strong, growing sectors outside of its economic mainstay of fishing. Since the 1990s, the economy has been branching out into the manufacturing and service industries. The financial services, biotechnology, and computer software industries are especially strong and growing. Tourism is another important industry that is increasing. The number of international visitors has risen greatly in 2000, as people are intrigued by the natural wonders of Iceland. Whale watching, visiting hot springs, and horseback riding are popular tourist activities.

Since 2000 one of the government's top priorities has been to manage and control Iceland's booming economy. To ensure stability, the government has adopted conservative fiscal policies and reduced its public debt. Privatization is another policy adopted by the government to better manage Iceland's economy. In the early 1990s, the government launched its privatization policy by selling off many state-owned industries to private buyers. In 2001, Iceland's privatization program continued with the sale of state banks and a state telecommunications company. Monetary policy will continue to focus on price stability and increases are expected in interest rates in order to contain accelerating inflation.

POLITICS, GOVERNMENT, AND TAXATION

Iceland is a constitutional republic that boasts the world's oldest parliament, the Althingi, which was established in 930 A.D. An independent country for over 300 years, Iceland was conquered by Norway in 1262. In the late 14th century, Iceland fell under the rule of Denmark when Norway and Denmark united under the Danish crown.

Abolished in 1800, the Althingi was reestablished in 1843 as a consultative assembly. The Act of Union, a 1918 agreement with Denmark, recognized Iceland as a fully sovereign state united with Denmark under the Danish crown. The British military briefly occupied Iceland in 1940 after Germany invaded Denmark, and then the United States became responsible for Iceland's defense in July 1942 under a U.S.-Icelandic defense agreement. In 1944, Iceland regained its independence and became a republic.

The Icelandic government consists of 3 branches. The executive branch is composed of the president who is chief of state, the prime minister who heads the government, and a cabinet of 9 ministers. The legislative branch consists of 63 members of the Althingi. Finally, the judicial branch has a supreme court and several district and special courts. There are 23 counties ( Syslur ) in Iceland, and there are currently 5 major active political parties: Independence (IP), Progressive (PP), Alliance (A), Left-Green Movement (LGM), and Liberal Party (LP). There is universal suffrage in Iceland and all women and men are eligible to vote once they turn 18 years old.

Iceland has a written constitution and a parliamentary form of government. The president, who is elected by direct popular vote for a 4-year term with no term limit, has limited powers and acts as a spokesperson and head of state. The prime minister and cabinet are responsible for policy-making. There are many women in the Icelandic government; 3 are heads of ministries, and 22 women have seats in the 63-member Althingi .

Members of the Althingi are elected to 4-year terms by popular vote, unless the Althingi is dissolved sooner. Anyone who is eligible to vote, with the exception of the president and the judges of the Icelandic Supreme Court, can run for election in parliament. Members are elected on the basis of proportional representation from 8 constituencies. After every election, the president gives one of the parliamentary leaders of the political parties the authority to form a cabinet, usually beginning with the leader of the largest party.

The present cabinet is a coalition government of the Independence Party (IP) and the Progressive Party (PP), which was formed in May 1999. The conservative Independence Party (IP) has dominated politics in Iceland since the 1990s. After the IP lost its majority in the Althingi with its former coalition partner, the liberal Social Democrat Party (SDP), the IP leader Prime Minister David Oddsson made an alliance with the more conservative Progressive Party (PP). The strategic move was a success and the IP regained its parliamentary majority with 40 Althingi seats. Since the 1990s, the SDP has not had much popular support because of its support of full EU membership for Iceland. The SDP are the only party to fully espouse the benefits of Iceland joining the EU, though in 2001 the PP and the Alliance party began to explore membership.

In 1996, Vigdis Finnbogadottir chose not to run for reelection as president of Iceland after serving 4 popular terms. She was the first woman elected president in the world. With a strong voter turnout, leftist party chairman Olafur Ragnar Grimsson became president by winning with a good margin against 3 other candidates.

In 2001, the center-right coalition government of the IP and PP continues to enjoy solid majority support and is expected to remain in office. However, harsh budgetary austerity measures introduced in the 2001 budget to control the rising economy could conceivably cause a decline in their popularity. The coalition partners remain in agreement on the importance of Iceland's current economic policy and have managed to avoid becoming embroiled in controversial issues, such as membership in the European Union. The largest opposition party, the left-of-center Alliance, has been preoccupied with reorganizing its infrastructure and is not a threat to the IP-PP coalition. The next round of parliamentary elections is scheduled for May 2003.

About 90 percent of the government revenue in 1998 came from income and wealth taxes, as well as indirect taxes such as those placed on corporations, payroll taxes, and value-added taxes on goods and services. The wealthy pay a high income tax , while the country's poorer citizens are exempt from taxation and receive a credit.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Iceland enjoys an extensive infrastructure. Roads started to be built in 1900 and construction increased during the 1980s. However, there are still a number of gravel roads in Iceland. The current national road system connects most of the cities and is largely in the coastal areas. It consists of about 12,691 kilometers (7,868 miles) of roads, with 3,262 kilometers (2,022 miles) paved. There are no railroads in Iceland.

Airplanes and ships conduct travel between Reykjavík and Iceland's smaller cities. Additionally, there are daily international flights from Iceland to Europe and North America. There are 12 airports with paved run-ways and 74 with unpaved runways. Because of Iceland's dependence on fishing revenues, there are 9 ports and harbors. The Icelandic merchant marine has a total of 3 ships: a chemical tanker, a container ship, and a petroleum tanker.

Telecommunications are completely modern, and a high percentage of the population use cellular phones (6,746 in 1997). Icelanders enjoy adequate domestic telephone service, and international telephone systems are run by 3 satellite earth stations, one of which is shared with the other Scandinavian countries.

As of 1998, Iceland had 3 AM radio stations and about 70 FM stations. There were 14 television broadcast stations (plus 16 low-power repeaters) in 1997. In 2001, there were 2 national state radio channels and many private stations that broadcast around the clock. The first privately owned station went on the air in 1986 and others soon followed.

In the 1960s the state television station was on the air for only 2 nights a week. Later, television programming was broadcast on the other nights of the week but for years there was no television on Thursdays. Icelanders did not watch television programs in their own language until 1966. Since the 1990s less than half of television programming is in Icelandic and most programs are from the United States and Great Britain and are subtitled.

Computer use is widespread in Iceland and about 82 percent of Icelanders have Internet access at home, at school, or at work. This is reflected in the republic's ever-growing information-technology industry, with the export of software rapidly increasing.

ECONOMIC SECTORS

Iceland's economic sectors reflect the small size of the country. Natural resources are important, especially the fishing industry. For this reason, fisheries dominate Iceland's trade policies and coincide with Iceland's overriding foreign trade interests, especially free trade of fish. All told, the fishing industry contributes 13 percent of GDP. However, other sectors such as biotechnology and tourism are growing.

AGRICULTURE

Agricultural production is a vital part of the Icelandic economy, accounting for 1 percent of its GDP (1998 est.) and employing over 16 percent of Iceland's workforce . Fish is the republic's main agricultural export but Iceland also produces potatoes, turnips, cattle, and sheep.

FISHING.

The fishing industry has grown to symbolize Iceland's economic independence from its Scandinavian neighbors. The Icelandic Ministry of Fisheries reported that in 1999 the total catch of fish by the Icelandic fleet was 1.7 million tons. In 2000, marine products accounted for more than 70 percent of Iceland's total export earnings, making Iceland's economy vulnerable to changing world fish prices. Cod and capelin are the most abundant fish in the catch. Full free trade in fisheries products has been established not only within the European Free Trade Association (EFTA) but also in a series of free-trade agreements with countries in Central and Eastern Europe and in the Mediterranean.

Iceland recognized in the 1970s that it was in danger of depleting its fisheries, and initiated a plan involving Individual Transferable Quotas (ITQs) and Individual Vessel Quotas (IVQs). While complex, the aim of the plan is to fairly allocate fishing rights to those in the fishing industry. Some argue that the plan, because it encourages efficiency and speed, has rewarded larger vessel owners at the expense of smaller operators, thus it is still a matter of some disagreement in Iceland. But overall, most observers feel that the plan has succeeded in managing Iceland's fisheries.

Friction exists between Iceland and its European neighbors over fishing rights. Norway and Russia have complained about Iceland's herring fishing in the Barents Sea between Iceland and Norway. Canada has objected to Iceland's shrimp fishing off the coast of Newfoundland.

The European market is the most important outlet for Icelandic agricultural products. Iceland is a member of the European Economic Area (EEA), which gives it full access to the EU without requiring membership in the body. But progress in fish-processing technology and transport has opened up new trade possibilities with other countries. Exports to Japan are increasing and emerging markets , like China and Korea, hold promise for the future. Attempts to further open markets in the fisheries sector have given Iceland virtually tariff -free access for most of its exports to Europe. While EEA membership has reduced pressure for Iceland to join the EU, it risks being left on the sidelines as the European Union expands.

INDUSTRY

While a small country, Iceland has a strong industrial sector that accounts for 21 percent of its GDP. Like its 2 other main economic sectors, industry in Iceland is centered on its natural resources. Fish processing, aluminum smelting, ferrosilicon production, and geothermal power are its main industries.

ENERGY

. Mineral resources are scarce in Iceland, though efforts are being made to develop deposits of diatomite (skeletal algae). Iceland has vast geothermal power sources (which develop power from the internal heat of the earth) and about 96 percent of the population enjoys geothermal heating in their homes. Geothermal energy plays an important role in Iceland's health-care system, which has shown interest in its medicinal possibilities. The Blue Lagoon, one of Iceland's most popular tourist attractions, is a good example of a combination of the traditional utilization of geothermal energy for economic reasons and its non-traditional utilization for healing. Geothermal energy is also used to generate electricity, and the effluents from power plants (extra thermal energy) can be used for many purposes in connection with spas and the tourist industry.

Iceland's abundant hydroelectric power sources are controlled by the government. The largest power station in Iceland has a capacity of 240 megawatts (mw). Other major hydroelectric stations are at Hrauneyjarfoss (210 mw) and Sigala (10 mw). Efforts are underway by the government to export hydroelectric energy to Europe by transporting it via submarine cables. The government is also investigating ways to expand its aluminum and ferro-silicon melting plants. One such venture is the Nordural aluminum plant, which accounted for a 1 percent growth rate in Iceland's 1998 GDP. Nordural is a wholly-owned $180 million investment by Columbia Ventures of the United States. As of 2001, plans were underway to build a new aluminum plant in the east of Iceland or expand existing ones. A new or expanded plant would increase investment and GDP growth.

SERVICES

Iceland's service sector accounts for approximately two-thirds of GDP, and has been rapidly increasing since the 1990s, particularly in the areas of financial services, tourism, software production, and biotechnology.

TOURISM.

Tourism is a growing and important industry in Iceland. In fact, the national airline, Icelandair, is one of the country's largest employers. According to Statistics Iceland, by 1999 tourism accounted for 4.4 percent of GDP on net receipts of Ikr282 million, up from 3 percent just 10 years earlier. The industry is expanding with the government's promotion of the country's magnificent natural attractions such as whale-watching, hot volcanic springs, glaciers, and horseback riding throughout the country. By 1999 the country boasted 24 hotels and guest-houses. It is a promising economic growth area and its numbers increased by 16 percent in 2000.

BIOTECHNOLOGY.

The sector that is showing the most rapid development is biotechnology. Iceland has unique natural resources and its position on the mid-Atlantic ridge is the source of its many hotsprings and the high-temperature areas where thermophilic bacteria (which thrive on heat) live, which can be utilized in various industries, especially pharmaceuticals. Scientists believe that thermophillic bacteria could lead to the development of better drugs and to more environmentally friendly forms of industry.

Iceland's rather limited human gene pool—due to its homogenous and cohesive population—makes it an invaluable laboratory for the study of the role of genes in the transmission of diseases. However, a fierce debate over genetics and individual rights erupted in Iceland in 1998. An Icelandic biotechnology company, deCode Genetics, wanted to include Icelanders' medical records, family trees (which are meticulously documented in Iceland; some can be traced as far back as over a thousand years ago), and genetic information into a single database. The company claimed the database would be beneficial to the health of Icelandic citizens, while critics argued such a project would simply serve the financial interests of deCode Genetics. The Althingi passed a bill in 1998 which allowed the Ministry of Health and Social Security to grant a license to create and operate an Icelandic Health Sector Database (IHD). In 2000, the Ministry awarded a 12-year license to Islensk erfdagreining, a subsidiary of deCode, to build and run the IHD, which has been operational since 2001.

FINANCE.

Three commercial banks, with branches and savings banks, operate in Iceland. Investment credit funds, insurance companies, private pension funds, and securities firms are among Iceland's financial institutions. During the 1980s, the financial sector was deregulated and reformed to help bring inflation under control.

INTERNATIONAL TRADE

Historically, Iceland has been late in joining major trade agreements. It joined the General Agreement on Tariffs and Trade (GATT) in 1968 and the European Free Trade Association (EFTA) in 1970. It entered into a free trade agreement covering all industrial products with the European Economic Community (now called the EU) in 1972. In the 1990s, Iceland was the last of the EFTA countries to ratify the European Economic Area Agreement (EEA) and did so only after the longest debate in the history of the Althingi. It comes then as no surprise that Iceland has decided at the moment not to become a full member of the EU. Self-protection and self-preservation have characterized Iceland's foreign trade policy since its independence from Denmark.

Iceland's international treaties have strengthened foreign trade. Membership in the EEA in 1994 and the Uruguay Round agreement brought greater market access for Iceland's exports, capital, labor, and goods and services, especially seafood products. Agriculture is heavily subsidized and protected by the government, with some tariffs ranging as high as 700 percent.

The question of Iceland's relationship with the EU and its possibility of becoming a member depend heavily on protection and control of its fishing industry and natural resources. The Icelandic government and the people pay close attention to the EU's resource policy, especially the Common Fisheries Policy, which is based on the premise that fisheries resources are in principle the common property of the member EU states. While this policy may not be a major obstacle to Iceland joining the EU, it could prove to be a stumbling block, calling for a creative solution in order for Icelanders to be comfortable with EU membership.

In 1999, Iceland had total exports of US$2.0 billion and imports of US$2.489 billion. Iceland's trade deficit widened in 2000 due to rapid import growth coinciding with a slow rise in exports. Exports did increase by 3 percent despite a slight contraction in the export of marine products. In 2000, marine exports accounted for 6 percent of total exports as compared with 68 percent in 1999. The drop in marine exports was attributed to a 31 percent growth in the value of aluminum exports—the result of increased production and favorable world prices.

In 1999, 69 percent of Iceland's exports and 66 percent of its imports came from trade with EEA countries. Germany and the United Kingdom are Iceland's most important trading partners in the EEA, with Germany accounting for 13.1 percent of Iceland's exports and 11.8 percent of its imports, and the U.K. accounting for 19.7 percent of exports and 9.2 percent of imports. The United States is the single largest trading partner outside the EEA, with 14.7 percent of exports and 10.9 percent of imports.

MONEY

In light of the recent depreciation of the króna and the threat of high inflation for 2001, the Central Bank of Iceland will likely continue its conservative fiscal policy in 2001-02 to tighten the money supply and lower domestic demand for goods and services. Inflation has eased slightly as a result, although it was recorded at a high 4.6 percent in November 2000 as Iceland's economy over-heated.

The Central Bank announced in March of 2001 that its desired inflation target was under 3 percent, and that it would take action when inflation deviated substantially from that figure.

Public finances are in good shape due to the government's conservative fiscal policies and debt consolidation, which it started in 2000. The government has implemented its program in response to the recent signals of economic troubles, which were caused by high inflation and a growing budgetary deficit.

Privatization and mergers between large private companies continued in 2001. In October of 2000, the government permitted the merger of 2 of the biggest Icelandic banks: the National Bank of Iceland and Agricultural Bank of Iceland. In May of 2000 the country's largest investment and corporate bank, Icelandic Investment Bank (FBA), merged with a leader in retail banking, Islandsbanki, creating IslandsbankiFBA.

POVERTY AND WEALTH

Icelanders enjoy a high quality of life, and poverty is practically nonexistent. Keeping in line with the reserved character of Icelanders, there is not much conspicuous consumption of wealth, despite the high standard of living. This contrasts to life in 18th century Iceland, which was marked by economic troubles and a drop in the population. Economic conditions improved and population numbers grew throughout the 19th and

early 20th centuries. Following World War II, Iceland experienced an economic boom with a marked rise in its standard of living.

Icelanders, regardless of their economic circumstances, have access to the excellent health services. The social security system provides for pension insurance, occupational injury insurance, health insurance, and maternity leave. The government finances health care through taxation, and hospitalization is free. All hospital inpatient services are free and other medical services cost little. Icelanders have one of the longest life expectancies in the world.

The Icelandic government provides a number of welfare services for its citizens, including unemployment insurance, allowances for families who have children, and pensions for the elderly and disabled. Nearly all schools and universities in Iceland are free for its citizens. All students are required by law to attend school until the age of 16. Most students attend a 4-year academic college when they turn 16 and then continue their studies at the University of Iceland. A number of technical and vocational schools exist as well. Access to higher education is quite good for the young men and women of Iceland.

WORKING CONDITIONS

In the 20th century, 2 societal trends affected the Icelandic labor market: higher participation of women and changes in education. More women of all ages—many highly educated—entered the labor market. On the average, though, women still earn less money than men do.

Unemployment is extremely low in Iceland, a trend that does not seem to be changing. One of the downsides of Iceland's low unemployment is that it has created an extremely tight labor market and most Icelanders have very long workdays, some of the longest in Europe. In 2000, the unemployment rate registered at 1 percent, and in October 2000 it reached its lowest level since 1988 at 0.6 percent. Accordingly, there is a high demand for labor, especially in Reykjavík, though less so in the rest of the country. To meet labor demands, the government allowed for an increase in the number of work permits issued to foreigners. Despite the demand for labor, wage increases have been slow to rise.

About 8 percent of Icelandic workers belong to unions. The Industrial Relations Act of 1938 gives workers the right to form unions open to all persons working in a particular trade within a district. For example, carpenters are allowed to form unions in their own home-town or city to ensure their employment rights are being met and protected.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

874. Iceland is settled by Norsemen. Ingólfur Arnarson is said to be the first settler, arriving with his family in present-day Reykjavík.

930. The ruling chiefs of Iceland establish a republican constitution and an assembly, the Althingi, the oldest parliament in the world.

1000. Christianity adopted in Iceland; Greenland discovered and colonized by Icelanders.

1262. Iceland enters into a treaty establishing a union with the Norwegian monarchy.

1397. Norway, Sweden, and Denmark form the Kalmar Union. Iceland falls under the sovereignty of the Danish crown but retains constitutional status.

1800. Althingi abolished. Iceland fully under the Danish crown.

1843. Althingi reestablished as a consultative assembly.

1874. Denmark grants Iceland home rule. Icelandic constitution written (revised in 1903).

1918. An agreement between Iceland and Denmark, the Act of Union, recognizes Iceland as a fully sovereign state under the Danish crown.

1940. When the German army occupies Denmark at the start of World War II, British military forces arrive to defend Iceland.

1941. The British pass responsibility for Iceland's defense to the United States under a U.S.-Icelandic defense agreement.

1944. Iceland formally becomes an independent republic.

1949. Iceland becomes a member of the North Atlantic Treaty Organization (NATO).

1968. Iceland joins the General Agreement on Tariffs and Trade (GATT).

1970. Iceland joins the European Free Trade Association (EFTA).

1972. Iceland enters a free trade agreement with the European Economic Community.

1980. Icelanders elect the world's first woman president, Vigdis Finnbogadottir; she goes on to serve 4 4-year terms.

1992. Iceland joins the Western European Union (WEU).

1994. Iceland becomes a member of the European Economic Area (EEA).

FUTURE TRENDS

Iceland has entered the 21st century on an economic high note. A tight fiscal policy, lowered inflation, exceptional social services, access to education, high literacy rates, and extremely low unemployment levels have all contributed to the good quality of life enjoyed by Icelanders.

Foreign trade and policy remain controversial areas, especially membership into the European Union, and the protection of fishing resources will remain high on Iceland's political and economic agenda. Debates over the pros and cons of EU membership will continue both inside and outside of the government, especially since the opposition leftist Alliance party is expected to adopt a pro-EU stance.

In 2001, the government looked to continue its policy of tight fiscal and budgetary restraint and the reduction of public debt. Privatization will likely continue, particularly with banks and financial companies. Interest rate increases are expected to lower any rising inflation. Economic growth is expected to slow somewhat in 2001. Overall, Iceland's economic policy and its political life appear to continue on a stable and carefully charted course.

DEPENDENCIES

Iceland has no territories or colonies.

BIBLIOGRAPHY

Central Bank of Iceland. The Economy of Iceland (Autumn 2000). Reykjavík, Iceland: Central Bank of Iceland, 2000.

Central Bank of Iceland: Welcome to the Central Bank of Iceland. <http://www.sedlabanki.is/interpro/sedlabanki/sedlabanki.nsf/pages/english-front>. Accessed June 2000.

Economist Intelligence Unit. Country Report: Denmark and Iceland, January 2001. London: Economist Intelligence Unit, 2001.

"Happy Family?" from "Survey: The Nordic Countries." The Economist. 21 January 1999.

Iceland. <http://www.iceland.org>. Accessed December 2000.

Information Centre of The Icelandic Ministry of Fisheries. Marine Stocks: Fish, Shellfish and Crustaceans. <http://www.fisheries.is/stocks/index.htm>. Accessed April 2001.

"Norse Code." The Economist. December 1998.

Statistics Iceland. Statistics Iceland, 2000. <http://www.statice.is>. Accessed April 2001.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed July 2001.

U.S. Department of State. Background Notes: Iceland. <http://www.state.gov/www/background_notes/iceland_9910_bgn.html>. Accessed July 2001.

World Trade Organization. "Trade Policy Reviews: Iceland: January 2000." World Trade Organization. <http://www.wto.org/english/tratop_e/tpr_e/tp12_e.htm>. Accessed February 2001.

—Lynn Mahoney

CAPITAL:

Reykjavík.

MONETARY UNIT:

Icelandic króna (Ikr). 1 króna (Ikr1) equals 100 aurar. There are coins of 5, 10, and 50 aurar, and 1, 10, and 50 krónur. Paper notes come in denominations of 10, 50, 100, 500, 1,000, and 5,000 krónur.

CHIEF EXPORTS:

Fish and fish products, animal products, aluminum, diatomite, ferrosilicon.

CHIEF IMPORTS:

Machinery and equipment, petroleum products, foodstuffs, textiles.

GROSS DOMESTIC PRODUCT:

US$6.42 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$2.0 billion (1998). Imports: US$2.489 billion (1998).

ICELAND

Republic of Iceland

Major Cities:
Reykjavík, Akureyri

Other Cities:
Akranes, Hafnarfjördur, Keflavík, Kópavogur, Vestmannaeyjar

EDITOR'S NOTE

This chapter was adapted from the Department of State Post Report 1999 for Iceland. Supplemental material has been added to increase coverage of minor cities, facts have been updated, and some material has been condensed. Readers are encouraged to visit the Department of State's web site at http://travel.state.gov/ for the most recent information available on travel to this country.

INTRODUCTION

A trip to Iceland can be a unique and rewarding experience. Reykjavik is the northernmost capital in the world, and for its size, has unique cultural and healthy lifestyle opportunities. Icelanders speak the ancient language of the Vikings, spoken nowhere else, and enjoy the benefits of a modern welfare state comparable to any in the world. They endure almost 3 months of near darkness (November-January) and revel in 3 months of total daylight (May-July). With an average wintertime temperature of 32°F, Iceland's climate is not as harsh as its name would suggest.

Weather permitting, ample opportunities are available to enjoy winter sports, such as downhill or cross-country skiing and ice skating; or summer activities such as camping, fishing, hiking, horseback riding, and trekking over some of Europe's most beautiful glaciers. Year round, you can swim in Iceland's famous natural hot springs or open-air swimming pools.

Iceland has good air connections to the rest of Europe.

Most Icelanders speak English, are open and friendly, and eager to share their ancient culture. A trip to Reykjavik will be remembered and cherished as one of the unique experiences of your life.

MAJOR CITIES

Reykjavík

Reykjavik is Iceland's capital and its largest city. Located on the southwest coast, it sits on a peninsula extending northwest into the sea. It lies at 64°N and 22°W.

Reykjavik is a modern, picturesque city. New buildings of reinforced concrete are rapidly replacing older wooden framed and corrugated iron structures similar to those found in northern Norway.

Small detached and semi-detached houses and numerous apartment buildings are found in the city. Houses are well built, comfortable, and modern.

All of the city's central heating is supplied by hot springs. Reykjavik is often referred to as the "smokeless city" because of this heating method.

Reykjavik is the seat of government and the focal point of Icelandic cultural activity. It is the site of the University of Iceland, founded in 1911. It has a museum of natural history, a national museum, four art museums, a municipal and a national theater, a symphony orchestra, an opera, a ballet company, art galleries, libraries, seven movie theaters, an outdoor stadium, an indoor arena, and private and state radio and TV stations. The city has thermally heated outdoor swimming pools that are open year round, three small lakes teeming with wild bird life year round, and several parks.

Reykjavik's terrain is essentially barren lava; however, the mountains and natural harbor form a scenic setting for the capital. The harbor, with its extensive shipping and fishing activities, is the lifeline of the city.

Reykjavik enjoys a high living standard. At around $26,300 per capita, income is comparable to that in the U.S.

Utilities

Electric current is 220v, 50-cycle, single-phase, AC. Motors not wired for 50 cycles will operate on the local current but can overheat and burn up when run continually. Electric appliances equipped for 110v, except clocks and record players, can be operated with a transformer on the local current. U.S. record players must be converted from 60 to 50 cycles to operate properly. Normally, this takes only a small, inexpensive device that is quickly installed. Step-down transformers may be purchased locally. Wall sockets are usually the European, two-pronged, tubular type, although other types of plugs and sockets are sometimes used in newer construction. In any event, conversion plugs to adapt U.S. plugs to Icelandic wall sockets are available.

The municipality provides geothermally heated water for heating and other purposes to all city housing. You quickly become used to the slight sulfur smell of the hot water. The natural hot water is excellent for washing clothes but will blacken silver not rinsed immediately in cold water, which is nonsulfurous.

Food

Every neighborhood in Reykjavik has a bakery, fish shop, and dairy store. Bread and cakes are baked and sold fresh daily. Dairy stores feature many types of cheese, yogurt, "skyr" (a type of Icelandic yogurt), cream and a number of milk products not found in the U.S. All Icelandic food items are of good quality and completely safe to eat.

Clothing

Bring a good supply of shoes and boots, especially rubber rain and snow boots. All are available on the local market or at the base exchange. But local stores are expensive and styles do not always appeal to American tastes. Strap-on "cleats" sold in Reykjavik can be useful on windy and icy winter days. Availability of such items at the Navy exchange is erratic.

In general, all family members should have adequate clothing for a cold, wet climate. Iceland produces fine woolen goods, especially sweaters, at quite reasonable prices, but all other clothing is expensive. The Navy exchange carries some basic

clothes for everyone, although styles, stocks and sizes are limited. Many people order clothing through U.S. catalog stores. A raincoat with removable lining is quite useful. Hikers should bring thermal underwear and sturdy boots or walking shoes as well as rain gear.

Men: Men wear wool suits year round, but bring fall-and summer-weight suits for travel outside Iceland and for those warm days of summer when lighter clothing may be more comfortable.

Women: Long dresses or skirts are sometimes worn, but cocktail-type dresses are suitable for all but the most formal occasions. Wool suits and dresses are useful. Hand-knit Icelandic sweaters are an outstanding value and are worn frequently. Head scarves and plastic rain bonnets are necessary. A long winter-weight raincoat with removable lining, a spring coat, and a summer-weight coat are useful. Bring weather-proof shoes for rain and/or snow.

Icelandic women dress fashionably, buying imported items here at prices three to four times higher than in the U.S. Local dressmakers are expensive.

Children: Children's clothing is expensive. Children tend to play outdoors year round even in the most inclement weather. Bring good rain gear and boots.

Supplies and Services

Common toiletries, cosmetics, and household needs are expensive at local stores. Selection is often limited, so bring your favorite brands.

Men's tailoring is fair. Laundries and drycleaning are adequate and conveniently located, but there are no laundromats. Local prices for laundry and drycleaning are higher than in New York and Washington, D.C.

Reykjavik has several hairdressers and barbershops. Services are expensive but the work is of the highest quality.

Domestic Help

Domestic help is extremely difficult to find. Icelanders do not normally employ full-time servants. Some women do housework and help cook and serve at dinners and receptions for about $12-$15 a hour. They normally expect to get paid for a minimum of four hours. The rate includes any taxes that might be owed by the employee.

Babysitters cost $5 or more per hour and are difficult to find on short notice.

Religious Activities

Protestant and Catholic services in Reykjavik are generally in Icelandic, but most clergymen speak English. The Catholic Church holds an English Mass on Sunday evenings. You can also participate in religious activities at the base. Services are held in English for Catholics, Protestants, and (occasionally) for Jews. A chaplain from the NATO base conducts a monthly nondenominational service at the University of Iceland chapel (in Reykjavik).

Education

The American Embassy School provides an American-style primary education from kindergarten through grade 6. Enrollment consists of Embassy children, Icelanders, and English-speaking children of foreign diplomats. The student population varies considerably from year to year (1996-97: 18 students; 1997-98: 14). Due to the school's size, classes are composed of mixed grades with different ages of children. The school is in three rooms in an apartment building close to the center of Reykjavik. The head teacher/principal is a U.S. citizen, as are some other teachers. Most hold degrees from American universities and all speak both English and Icelandic. The school is well equipped with modern educational materials and supplies.

Local nursery school is a problem because schools are few and waiting lists are long. Preference is given to Icelandic mothers who work.

Sports

The most popular family sport in Iceland is swimming, done year round in pools filled with natural hot water. Reykjavik has four outdoor and two indoor pools. Charges are nominal and facilities are excellent.

A number of other sports and activities are possible in Reykjavik, even during the long winter months. Interest in track and field is strong, and many joggers run in parks or at the University's 400-meter track. Several private gymnasiums are in town that typically offer exercise and weight lifting equipment, saunas, and aerobics classes. Fees for use of such facilities average Ikr5,000 per month. The city has two bowling alleys and there are two more at the base. The base also has a well-equipped gymnasium and swimming pool. It is possible to play a number of racket sports such as tennis, badminton, and squash on indoor courts in Reykjavik, but prices are high. Other more sedentary activities such as chess and billiards are also popular in Iceland.

Both downhill and cross-country skiing are popular in Iceland. The main ski area for Reykjavik is located in the Blue Mountains, approximately 45 minutes from the city. The facility has two chair lifts 800 and 1,200 meters long, six tow lifts, and two bunny slopes. Two other ski areas are also near Reykjavik. Skiing usually starts in January and continues through April, but you cannot count on having sufficient snow in the Reykjavik area for skiing every year. Skiing conditions are more reliable in the north near Akureyri. Glacier skiing is good throughout the summer. A ski school is on one of the glaciers. Rent skiing equipment in town, at the Blue Mountain resort, or from the base Morale Welfare and Recreation Association. The Recreation Association also organizes reasonably priced ski tours to well-known European ski areas.

Ice skating is another popular winter sport. Reykjavik's skating rink is open from late October through mid April. Skate rentals are available. During very cold winters, skating is permitted on the pond in downtown Reykjavik.

The Reykjavik area has about six golf courses. Another course is available near the base. Though weather has to be considered, Iceland has many golfing enthusiasts.

Horseback riding is possible on trails and unpaved roads in the Reykjavik area. Icelandic horses are small, powerful, and independent minded creatures. Rent horses near Reykjavik for approximately $17 an hour or $50 for 3 hours. Summer cross country trips on horseback are offered by various travel bureaus. This is a sport that both adults and children can enjoy. The usual riding dress is either riding breeches or jeans, knee-length rubber boots, and a weatherproof parka with hood. Rubber boots are used, since riders often ride in the surf or ford small streams. Horse shows, which include racing, are held on summer weekends. No betting is allowed in Iceland.

Bird watching is a popular activity. Iceland is world famous for its variety of birds. Beautiful Lake Myvatn in the north is noted for its water-fowl, including some which are not found anywhere else in Europe.

Fishermen from all over the world are attracted to the outstanding salmon streams in Iceland. Most of the better streams are rented to Icelandic clubs or to individuals, and fishing time must be reserved months in advance. Unless you are lucky enough to be invited as a guest, the average charge per rod a day for salmon fishing is a startling $250$850, varying according to which rivers you go to and whether your trip is catered. River trout fishing is considerably less expensive at $55-$85 per rod a day. Lake trout fishing is also excellent and much less expensive, averaging $14-$30 per rod a day. And good lake trout fishing can be found within 15 minutes of central Reykjavik. Sea trout and German brown trout are found in streams near Reykjavik. Faxa Bay has good deep sea fishing, especially codfish, halibut, and haddock. A boat may be chartered for fishing parties. Group rates are reasonable.

Extensive and unusual camping opportunities are available during Iceland's short summer. It is easy to find an area affording complete privacy, and once in the countryside you can pitch a tent almost anywhere. Organized campsites with modern facilities are also available. Campers must be hardy, since temperatures during summer range from 35°F to 60°F and rain and wind are common. Bring your own gear if you plan to make frequent camping trips.

Some hunting opportunities exist. The season for geese and ptarmigan varies from 11/2 to 3 months in the fall. Reindeer hunting during the autumn is occasionally permitted, based on the size of the herd, by the government in the eastern part of the country.

Touring and Outdoor Activities

Hiking and mountain climbing are interesting and rewarding. You must come equipped with sturdy hiking boots and suitable clothes for these activities.

The countryside is unique and beautiful, and summer sightseeing can be delightful, especially if the weather is good. Many sights, such as Heidmork Park, the Blue Lagoon, and Krisuvik hot springs, are within easy driving distance of Reykjavik. Thingvellir, seat of the ancient Icelandic Parliament, is about 30 miles east and has magnificent mountain views. It is on the north shore of Thingvallavatn, Iceland's largest lake.

Hveragerdi, a small settlement 25 miles east of the capital, has geothermal steam experiments in progress, including large, steam-heated greenhouses in which fruit and flowers are grown. Laugarvatn, 60 miles east of Reykjavik, has a summer hotel and a lake warmed enough by subterranean heat to make swimming possible At Geysir, a few miles farther east, is the world-famous spouter from which the word "geysir" derives. In the same area i; Gullfoss, a magnificent waterfall. The well-known semi-active volcano, Mt Hekla, is located southeast of Gullfoss.

Trips to remote areas are frequently organized by local travel agencies. Camping tours it four-wheel-drive buses are a good way to see remote areas.

The Akureyri area is about 280 mile; north of Reykjavik. Vaglaskogur is a lovely park near Akureyri with camping and picnicking sites. Nearby is Godafoss, a beautiful waterfall, and farther east Dettifoss, one of the world's largest waterfalls. Lake Myvatn, with its unique surroundings of lava and hot mud pools, is also in the Akureyri area.

Vestfirdir (the Westfjords) on the northwest peninsula has magnificent scenery. The chief town, Isafjordur, is about 20C miles from Reykjavik and can be reached by car, air, or ship. The roads, like those elsewhere in the countryside, are poor and often impassable in winter.

On the southeast coast of Iceland lies Vatnajokull, the largest glacier in the world outside the Antarctic and Greenland. Located about 185 miles from Reykjavik, the area has some of the country's most spectacular scenery. It takes a full day by car to reach this glacier. Hotel accommodations are scarce in this area, so bring camping gear unless you have made lodging reservations well in advance.

Another site of particular interest is the island of Heimaey in the West-mann Islands. It was here in 1973 that the volcano Eldfjall was created by an eruption in a pasture near the town. The island was evacuated during the eruption, but most of the population has since returned. Quite a contrast exists between the untouched part of town and the desolate part of the town that remains buried under the lava.

Entertainment

Ten movie theaters in the Reykjavik area show mainly English-language films with Icelandic subtitles. The films are recent releases.

Regular stage performances are first rate but are usually in Icelandic. Occasionally, the National Theater presents operas and musicals. The Iceland Symphony Orchestra presents a regular concert season averaging a concert twice monthly from October through May. Season tickets are available. The Ballet Company at the National Theater also has occasional performances. Numerous excellent, though somewhat expensive, restaurants (including its own Hard Rock Cafe) are located in Reykjavik. McDonald's, Pizza Hut, Kentucky Fried Chicken, and Domino's (delivery only) are established here and are popular places for those seeking fast food service.

Reykjavik has several nightclubs, including a few at local hotels. All restaurants and nightclubs are expensive.

Social Activities

Due to the American community's small size, social life among Americans is limited. The International Women's Club of Reykjavik offers activities and an opportunity to meet spouses from the American diplomatic community and growing numbers of Icelanders.

Home hospitality is valued in Iceland. American families have found coffees, luncheons, buffet dinners, and informal cocktail parties all congenial ways of entertaining Icelandic friends.

Some older school-age children, especially if coming directly from the U.S., may have adjustment problems. They may be heightened if they arrive in summer, long before school begins. Their playmates will be Icelandic children, many of whom may not speak English. Most older school children speak English. An effort needs to be made, but Icelandic and American children will often find common interests, such as sports.

Akureyri

Akureyri, located at the head of Eyjafjordur Fjord only 100 miles from the Arctic Circle, is the country's most important town in the north and the fourth largest population center (the second and third largest are suburbs of Reykjavík). Akureyri has a population of 14,400.

Founded in 1862 as a small farming and fishing post, today it is a modern commercial and industrial city with a frontier flavor. There are several shipyards in the area.

Accessible from Reykjavík by road, air, and a two-day steamer trip, Akureyri is Iceland's most important winter sports center. Several hotels, hostels, and camping areas (for summer use only) are located in or near the city. A folklore museum and the Museum of Natural History are both located in Akureyri, along with several Icelandic heritage homes of some of the nation's best known poets and writers. The botanical garden in the city is really a museum of every flower and plant grown in Iceland.

In June, the Akureyri Golf Club holds a 36-hole open international match, with tee-off just after midnight.

Guided tours of Akureyri are available, as well as flights north to view the midnight sun. The scenic Lake Mývatn area combines a placid lake, the world's most diverse duck colony, picturesque rock formations, lava fields, an active fissure volcano, and boiling water and mud pools. Nearby are two major waterfalls: Dettifoss, which in height and volume is Europe's largest waterfall, and Godafoss, which is noted for its beauty. Multitudes of birds of various species can be seen on Drangey Island and on Grimsey Island, which is right on the Arctic Circle. The fishing village of Husavík has both a natural history museum and a folk museum; Skagafjörthur has another folk museum and the well-preserved Vithmyri Church.

OTHER CITIES

Located in western Iceland, at the tip of a peninsula between Borgor and Hval fjords, AKRANES is 20 miles north of the capital. It is the site of Iceland's state-owned cement plant. Akranes is a fishing port and a market center with a population of around 5,400. The city has a road leading to Reykjavík.

HAFNARFJÖRDUR , chartered in 1908, is a port in southwestern Iceland, seven miles south of Reykjavík. It is a distribution and fishing center with refrigeration plants, fish-meal factories, and shipyards. German and English traders fought over this port, with its excellent harbor, in the 15th and 16th centuries. An aquarium and small zoo, with exhibits of fish, seals, birds, reindeer, and polar bear, are located here. Modern Hafnarfjördur is home to about 14,500 Icelanders. It became Iceland's third largest town in the late 1980s.

West of Reykjavík, on Faxa Bay, lies KEFLAVÍK , a major fishing port known for its international airport built by the United States during World War II. Originally called Meeks Field, the air base was given to Iceland in October 1946. The U.S. was given the right to station troops there in 1951. Three thousand NATO personnel and 2,000 dependents live at Keflavík. There are around 7,500 permanent residents.

KÓPAVOGUR is situated in southwestern Iceland, just south of the capital. The town is a fast-growing, modern Reykjavík suburb which has grown up entirely since World War II. In the early 1970s, it became one of the country's largest towns. Its current population is about 15,900. Located nearby is the town of Bessastadhir, home of Iceland's president.

VESTMANNAEYJAR is the chief town of the Westman Islands, a cluster of 15 islands of organic origin off the south coast of Iceland. It sits on Heimaey, the largest of the islands, and its 5,000 residents represent almost the entire Westman population. The inhabitants live by fishing and fowling—colonies of gannet and waterfowl breed here. The 17th century saw the islands ravaged by Algerian pirates, who carried off 400 people into slavery. In 1973, a volcanic eruption forced the evacuation of the entire population in the course of a few hours. The eruption lasted close to five months, engulfing half the town in lava and covering the remainder in ash. The harbor and fish-processing plants were saved by pumping sea water to control the flow and rate of cooling of the lava—the harbor was actually improved. Most of the inhabitants returned. In addition to the grandeur of the scenery and the number and variety of birds on these islands, a popular attraction is the barren island of Surtsey, created by a 1963 underwater eruption.

COUNTRY PROFILE

Geography and Climate

Iceland, the second largest island in Europe (39,706 square miles), is slightly smaller than the state of Virginia. Three-quarters of the country is a wilderness of deserts, lava fields, glaciers, and extinct volcanoes. This lunar landscape serve as a training ground for American astronauts preparing for the first moon landings. A distinct beauty is found here in the treeless landscape. The combination of crystal clear air and brilliant sunshine creates vistas that can only be described as breathtaking. This is big sky country, where rivers and waterfalls are abundant. In summer the inhabited coastal area is verdant, its pastures filled with sheep, horses, and cows. In the dark of winter, parts of the same area are wind-swept, sometimes snow-covered, forbidding, and often inaccessible.

Despite its location close to the Arctic Circle, Reykjavik's climate is similar to that of the northwestern U.S., although cooler and windier. The Gulf Stream helps keep the annual mean temperature at 40 °F. Changes between summer and winter are not extreme. It is rarely very cold in winter or warm in summer. Winter temperatures below 20 °F are unusual, as are summer temperatures above 60 °F. The wind blows year round, however, and a wind chill factor between-15 °F and 10 °F is common in winter.

Cooler weather lasts from October through April. Snow may fall in Reykjavik as early as September and as late as June, but the normal season is between October or November and March or April. Even in midwinter, rain is as likely as snow. A large accumulation of snow is rare. Average annual rainfall is 31 inches in Reykjavik. During winter and spring, winds in the capital can reach hurricane force. Overall, the winter climate is not as severe as that of New England or the Great Lakes; but on a yearlong basis, Iceland's weather is decidedly on the cool side.

Iceland is so far north that the amount of daylight varies considerably throughout the year. An average daily gain of 6 minutes of daylight follows the winter solstice on December 21, and a daily loss of 6 minutes follows the summer solstice on June 21. December and January days have only about 4 hours of daylight; in February the days rapidly begin to lengthen; and by April they are as long as at midsummer in the U.S. From late May to late July, there is no darkness at all-20 hours of sun (or clouds) and 4 hours of twilight. Following this period of "white nights," the sun slowly retreats, and by October the days begin to shorten as rapidly as they lengthened in the spring.

Earthquakes are common in Iceland, but are rarely felt in Reykjavik. Volcanic activity is infrequent but rather spectacular when an eruption does occur. The underwater volcano that created the new island of Surtsey in the Westmann Islands off the south coast began erupting in November 1963 and remained active through mid-1967. In January 1973, a volcanic eruption on Heimaey Island in the Westmann Islands forced the evacuation of all 5,000 residents and destroyed more than 300 homes and buildings. In the Krafla area, near Lake Myvatn, an eruption took place in December 1975, lasting several days; this area subsequently has seen seven lesser eruptions, and further volcanic activity is expected there. The most famous of Iceland's volcanoes, Mt. Hekla, which had been expected to remain dormant for a 100 years or so after its spectacular 1947 eruption, produced eruptions in August 1980, April 1981, and January 1991. A volcano under the Glacier Vatnajokull erupted in November 1996, melting tons of ice and creating destructive flooding.

Population

Iceland is the most sparsely populated country in Europe, averaging little more than five persons per square mile. About 60% of Iceland's total population of 270,000 live in and around Reykjavik. The capital's population is 105,500. The second and third largest towns, Kopavogur and Hafnarfjordur, are both suburbs of Reykjavik. Akureyri, on the central northern coast with 15,000 people, is the fourth largest population center. Keflavik is the town nearest the NATO base and 32 miles from Reykjavik. The NATO base has about 3,000 military personnel and 2,400 dependents. Most other Icelanders live in small fishing villages or farming communities around the coast. The center of the country is completely uninhabited.

Excluding the American-staffed NATO base, approximately 700 U.S. citizens reside in Iceland. Of the 355,340 tourists and business representatives who visited the country in 1995, about 30,000 were Americans.

Icelanders are descended from Nordic and Celtic peoples who first arrived in A.D. 874 and rapidly settled the island, previously inhabited only by a few Irish monks who lived as hermits. Most Icelanders are knowledgeable about their family history, some tracing it back to the time of the settlements.

The Icelandic language is of Germanic origin and was introduced from western Norway in the 9th century. It has gone through so few changes since the Viking age that an Icelander of today can read and understand 12th-and 13th-century literature-notably the famous Sagas. Despite the difficulty of the Icelandic language, some long-term visitors learn to read newspapers and carry on basic conversations. These efforts are greatly appreciated by Icelanders.

Foreigners are often confused by Icelandic family names. Few continuing family names are used. The given name is the primary name, and the surname tells only the given name of the father. Surnames for males are formed by adding "son" to the possessive form of the father's given name. For females, the suffix "dottir" is added to the father's given name. The wife keeps her maiden name. As a result, the Icelandic telephone book is arranged alphabetically by first names. Further differentiation is made on the basis of last name, profession and address.

Iceland's population is about 97% Lutheran. Although Lutheranism is the state religion, Iceland has complete religious freedom. Catholics number nearly 2,520 and have their own church. The population also includes some 3,700 members of other religious denominations.

Icelandic dress, housing, and food are similar to those in other Nordic countries. According to October 1997 statistics, about 4.5% of the population was earning its living from farming; 10.9% from fishing and fish processing; 11.1% from manufacturing; 6.5% from construction; 13.7% from commerce; 7.1% from transport and communications; and the remaining from other service industries. Unemployment is about 4%.

Public Institutions

Iceland elects a president every 4 years. The President has largely ceremonial responsibilities. Iceland elected the world's first female head of state in 1980. She served four terms. On August 1996, Olafur Ragnar Grimsson became the President of the Icelandic Republic.

Parliamentary elections take place at 4-year intervals unless the Althing dissolves itself before the end of its normal term. The smallest districts elect five members of parliament (MPs), giving them a disproportionate share of the seats; the largest, Reykjavik, elects 18 MPs based on the share of popular votes for each slate of candidates.

Legislative power rests with the Althing, or Icelandic parliament, which is a unicameral legislature. Executive power is vested in the Prime Minister and Cabinet. The Cabinet has always been formed by a coalition of political parties. A written constitution provides for a system of national and local courts to administer justice, and specifically guarantees personal liberties.

Iceland has an independent judiciary. A Supreme Court sits in Reykjavik, and criminal cases are handled by the state prosecuting attorney. The judicial system includes district and town judges, a Maritime Court, and an Arbitration Court for adjudication of labor disputes.

Iceland is divided into 34 districts and 22 towns. Each district and town is administered by a magistrate responsible to an elected council of 7-15 members. Normally, in the larger towns, a coalition of political parties within the council will form a governing majority. The principal responsibilities of magistrates include police administration of state old-age pensions and other social benefits. Historically, the mayor of Reykjavik has been an important political figure. Five post-war prime ministers of Iceland were former mayors of the city.

Arts, Science, and Education

Icelanders have traditionally had a strong interest in education and the arts. The literacy rate is 99.9%. Reykjavik has a variety of bookstores that also carry English language books. Book prices and tickets for all cultural performances are high.

Painting, sculpture, theater, and music are enthusiastically supported. Museums and legitimate theaters feature Icelandic creative works as well as foreign productions, including American productions.

The Icelandic Research Council (IRC) operates under the Ministry of Culture, Education and Science. Its mission is to reinforce and underpin the cultural and economic foundation of Icelandic society by promoting vigorous and well-coordinated scientific endeavors, technical development, and innovation. The IRC advises the Government of Iceland, publishes information, and serves as a liaison with research institutes and companies and with agencies and relevant international organizations.

Education is compulsory for children ages 7 to 15. The University of Iceland in Reykjavik had 5,826 students during the 1996-97 academic year. It has departments of law, philosophy, economics, Icelandic language and literature, theology, medicine, dentistry, science, and engineering. The Saga manuscripts, returned from Denmark in 1971, are housed in the university's Manuscript Institute.

The Reykjavik Music Society, the Iceland Opera, and the Iceland Symphony Orchestra, among other local musical organizations, offer frequent performances of classical music, and local social clubs sponsor Icelandic and visiting concert artists. The Iceland Symphony Orchestra offers a concert series every other week during the fall, winter, and spring, often featuring internationally famous guest artists.

Well-known jazz musicians perform several times a year in Iceland.

The Icelandic National Broadcasting Service, in cooperation with the City of Reykjavik, sponsors a Jazz Festival every September. It features classical, rock, jazz, and folk music concerts by well-known performers as well as art exhibits and theater performances. Reykjavik has 10 cinemas featuring mainly U.S. movies, many of which are first run. In addition, university and college film clubs offer classic and foreign films. A Film Festival is sponsored by the City of Reykjavik every other September.

Commerce and Industry

Iceland's 1998 estimated GNP was about $7.5 billion, or roughly $28,500 per capita. The economy is essentially market-based but with significant government intervention. While the cooperative movement historically played an important role in many aspects of the economy, this is changing rapidly under a private-sector oriented government.

The national and municipal governments, directly and through the banking system and investment funds, control a large share of the financial resources available to Icelandic business firms. Government involvement is widespread in shipbuilding, fish processing, communications, tourist facilities, and electric power generation and distribution. The national government owns and operates one cement and one fertilizer plant.

Iceland depends on imports for many of its needs. Fishery products comprise about 75% of exports. The biggest overseas market for Iceland's marine exports has traditionally been the U.S., but that has changed in recent years, and the U.K. has taken the top spot. The U.S. share of Icelandic fish exports has fallen from 21% in 1986 to about 18% in 1997. About 65% of Iceland's fish exports go to Europe. The U.S. supplied slightly more than 9% of Iceland's imports. Other major trading partners include Japan and Germany.

Iceland's future industrial development is likely to hinge on utilization of its abundant hydroelectric and geothermal power. The government actively encourages foreign investment in energy intensive industry that would make use of these resources. Nevertheless, apart from the fish processing industry, hydro-electric power installations, a diatomite plant, a ferrosilicon plant, and a Swiss-owned aluminum smelter, industry is rather small scale and geared mainly to meet local consumption needs. Ground was broken in 1997 for an American-owned aluminum smelter.

Transportation

Automobiles

As of July 1, 1992, all vehicles imported into Iceland must have a catalytic converter. Unleaded and diesel fuels are available here. All vehicles must pass a safety and emissions inspection before getting license plates. Equip all cars with shoulder seat belts in the front seat. Vehicles in Iceland must be driven at all times with their lights on. Automatic systems for turning lights on/off with the engine are mandatory. Required for registering the vehicle are a valid title, vehicle specifications, bill of lading, and a certificate of origin. Additional documentation is required for the importation of a brand new vehicle unless it has been registered in the U.S. before entering the country.

Jeeps and vans must have mud-flaps. These can be obtained locally, if you do not already have them installed. Use snow tires from November through April 15.

All vehicles must carry third-party liability insurance purchased through local insurance firms. You can buy other coverage from Icelandic, U.S., or European firms. Bring a valid U.S. or other national drivers license with you. Otherwise, it costs between $557 and $922, including the cost of driving lessons, to obtain an Icelandic drivers permit.

Local

Local taxi and bus service is safe and efficient. Monthly bus passes, as well as discounted individual tickets valid for use on all buses in greater Reykjavik, are available at reduced costs. Taxis are metered and zoned. They are widely used and readily available but cost more than in New York or Washington, D.C. Tipping is not customary.

Regional

Iceland has no railroads or streetcars. The two-lane highway from Reykjavik to Keflavik is one of the best roads in the country. A ring road circles the island (1,480 km., or 925 miles). Other roads outside Reykjavik are mainly dirt or gravel of good to fair quality. Nearly all inhabited parts of Iceland can be reached by car during summer (early June to mid-September). Use a four-wheel-drive vehicle with high road clearance for trips to the country's interior. Most of the popular tourist locations outside Reykjavik can be reached during summer without a four-wheel drive vehicle.

International

Icelandair (Flugleidir) is the only carrier with regularly scheduled service between Iceland and the U.S. Rates are two to three times the cost of U.S.-originating flights. Special bargain fares are available at low travel times. The airline flies daily to New York and Baltimore. It also flies five times a week to Boston, twice a week to Orlando, and four times a week to Minneapolis. A few charter air companies also provide service to Europe.

A car ferry operates with weekly sailings (June through August), between Seydisfjordur, 461 miles to the east of Reykjavik, and the Faroe Islands, Scotland, and Norway.

Communications

Telephone and Telegraph

State-owned telephone service is available to all parts of Iceland and principal points throughout the world. Connections to the U.S. are reasonably quick and clear. Direct-dial is available. Charges for direct-dial to the U.S. are about 75¢ a minute, slightly more for operator-assisted calls. There is a reduced rate from 11 p.m. to 8 a.m. at 56¢ per minute. Quarterly service costs are about $20. AT&T, Sprint, and MCI calling cards and call-back services can be used in Iceland as well.

Mail

International airmail to the U.S. takes 3-10 days, depending on the destination, and costs about 92 cents for the first 20 grams. Mail service is reliable.

Radio and TV

The Navy radio station broadcasts 24 hours daily and can be heard in Reykjavik on AM 1530. Icelandic radio operates primarily on FM. Numerous stations, both state and private, have coverage lasting virtually all day. You might want to bring a good shortwave radio, as VOA and BBC program reception is good and is an excellent supplement to Icelandic and U.S. publications.

Numerous TV stations can be received seven days a week. The state TV station broadcasts approximately 24 hours a day and can be received by any set operating on the PAL system. Channel 2 and Syn are private stations also broadcasting in PAL. With the exception of the daily news program and a few other shows, their signals cannot be received without the payment of a monthly subscription fee. Syn plus cable (Discovery, CNN, Sky News, Cartoon Network, TNT, Eurosport, MTV, NBC Europe, BBC Prime) costs about $38 a month. Channel 2 plus cable is about twice as much (about $78 a month). The "cable" stations without Channel 2 or Syn can be ordered at about $18 a month. Icelandic stations broadcast a variety of entertainment, news, cultural, and sports programs.

Many of the entertainment programs are in English with Icelandic subtitles. TV sets purchased for the U.S. (NSTC) system will not work in Reykjavik, but the Navy Exchange at the NATO base generally has a reasonable selection of multi-system TVs and VCRs, which will work in Iceland and in the U.S.

Video stores for PAL machines abound in Reykjavik. Cassettes are also available for rental at the NATO base, for the American NTSC system. So it is worthwhile to bring your present TV and VCR for operation with a transformer, even if they are American system only.

Newspapers, Magazines, and Technical Journals

American newspapers and magazines, such as the New York Times or Time, arrive approximately one week late. The Dutch edition of the International Herald Tribune is usually a day late.

European editions of Time and Newsweek are sold at local newsstands.

Reykjavik has three daily newspapers and one weekly, all in Icelandic.

Health and Medicine

Medical Facilities

Reykjavik's medical facilities equal those in comparably sized U.S. cities. The University of Iceland has its own medical school. Many Icelandic doctors and dentists have been trained in the U.S. and/or in Europe. Nurses and other medical staff do not usually study abroad, so they do not necessarily speak fluent English. Reykjavik has three well-equipped and well-staffed hospitals, but they are usually crowded. Iceland has a state-supported medical program, and doctor's fees are reasonable by U.S. standards. Drugs and pharmaceuticals are expensive for foreigners. All medicines are sold only by prescription. Facilities for standard laboratory work are available. Only rarely must tests be sent abroad for more sophisticated evaluation.

Neighborhood clinics in Reykjavik provide well-baby check-ups and routine childhood immunizations for reasonable fees.

Icelandic dentists are competent and their prices are comparable to those in Washington, D.C. Orthodontia is also available in Reykjavik, generally with American-trained dentists. Eyeglasses and contact lenses are available on the local market. Prices in the latter are comparable to those in the U.S.

Obstetric care in Reykjavik is excellent. Child delivery can be done in Reykjavik's National Hospital. Iceland-trained mid-wives deliver babies with a doctor available if there is an emergency. Iceland has one of the lowest infant mortality rates in the world.

Community Health

Reykjavik is a remarkably tidy city, with however a sooty black air pollution (especially in the winter), a developing smog problem, and an occasionally strong smell when the fishmeal plants are operating. Iceland has no serious endemic diseases or health hazards. Levels are similar to those in the U.S. and Western Europe. Influenza, whooping cough, measles, chicken pox, and pneumonia are the most common ailments. Many people suffer from the flu each winter.

Light deprivation can be a real problem for some people. Days are drastically shortened in winter. The sun rises after 11 a.m. and sets around 3 p.m. In reality, because the sun is so low in the sky, even a low hill range can block its already weak lighting effect. Street lights, activated by low-light sensors, are often on throughout the "daylight" hours. Many experience symptoms of Seasonal Affective Disorder (SAD)-depression, sleep problems, anxiety, difficulty in concentrating, etc. High intensity lights are issued to each family to help counteract these effects. But the long hours of darkness remain extremely debilitating.

Water throughout Iceland is potable, pollution free, and so tasty it is often called "Icelandic champagne." It is not fluoridated. You can drink water from streams without boiling it. Hot water in homes has a slightly sulfurous smell, and it is completely safe to drink. You must be cautious, as it comes out of the tap at 176°F Some people react to drinking the hot water. Others experience a dermatological sensitivity (especially during the first few weeks after arrival). Government standards for food inspection are high, and foods bought on the local market can be eaten without special preparation or treatment. Milk is pasteurized and government controlled, although it is not vitamin D fortified. Garbage is collected by the city once a week.

Preventive Measures

No special immunizations or therapeutic treatments are required before coming here, but German measles and mumps shots are advisable for infants and young children, as are polio vaccines and the other routine immunizations. Qualified pediatricians are readily available. Most children have no special health problems.

Those who suffer from respiratory ailments, rheumatism, or arthritis may find that Iceland's climate can aggravate these conditions. Dryness from the heating system and the constant winds may aggravate sinuses and dry skin.

NOTES FOR TRAVELERS

Customs, Duties, and Passage

Travel between the U.S. and Iceland is by air. Icelandair flies 757s daily between Keflavik and New York (a waiver on flying U.S. flag carriers applies). Flying time from New York is about five hours. Icelandair also flies daily to Baltimore, five times a week to Boston, twice a week to Orlando, and four times a week to Minneapolis. Icelandair also flies Luxembourg, Copenhagen, Oslo, Glasgow, and London. All international flights use Keflavik Airport.

A reasonably priced airport bus service takes passengers to the Hotel Loftleidir near downtown Reykjavik.

A passport is required, but no visa is needed for tourist or business stays of up to three months. U.S. citizens should be aware, however, that because of Iceland's participation in the Nordic Passport Union, the three-month period begins as soon as they enter the Nordic area (i.e., Denmark, Greenland, Faeroe Islands, Finland, Norway, Sweden or Iceland.) For further information concerning entry requirements for Iceland, contact the Embassy of Iceland at 1156 15th Street N.W., Suite 1200, Washington, D.C. 20005, tel (202) 265-6653, or the Icelandic Consulate General in New York at 800 Third Avenue, 36th Floor, New York, NY 10022, tel (212) 593-2700. See also the Embassy's web site at http://www.iceland.org.

Americans living in or visiting Iceland may register at the Consular Section of the U.S. Embassy in Reykjavik and obtain updated information on travel and security within Iceland. The U.S. Embassy is located at Laufasvegur 21, tel (354) 562-9100; fax (354) 562-9118.

Pets

Importation of live animals into the country is rigidly controlled by Icelandic law. You must apply to the Ministry for Agriculture for permission to bring a pet into the country. If permission is granted by the state veterinary surgeon, the pet owner must bring with the animal a certificate of health (issued within the week before departure from the U.S.) and a vaccination certificate. These documents must be attached to the permit upon arrival in Iceland. Precautions must be taken to ensure that the animal does not come into contact with other animals en route.

On arrival the pet will be taken immediately to the quarantine area in Hrisey (an island in the north of Iceland), where it will be examined by the quarantine veterinarian.

Quarantine. The quarantine period is 6 weeks for pets coming directly from the U.K., Norway, and Sweden. Animals coming from elsewhere have an 8-week quarantine. Pit Bulls and Sharpees are banned from Iceland. Special permission must be sought to import a Rottweiler or Doberman.

The cost of quarantining a cat coming from the U.S. is about Ikr70,000-85,000 (1999: $969-$1,176). The cost of quarantining a dog ranges from Ikr80,000-140,000 (1999: about $1,107-$1,937), depending on the size of the animal. Separate charges are made for medication and tests. The pet owner must also pay for the animal's transportation to and from Hrisey. If these conditions are not met, quarantine not implemented, or the animal becomes sick with a disease unknown in Iceland, the owner is obliged to agree to have the animal put to sleep without compensation. The owner is also responsible for any damage caused by the animal during quarantine. The importation permit can be canceled without notice or cause.

Be aware that once your pet reaches Reykjavik, you will need to pay additional fees to allow it to remain in the city. (1999: about $120 for first year, and about $105 for each following year.)

Firearms and Ammunition

The importation of firearms is restricted under Icelandic law.

Currency, Banking, and Weights and Measures

The official basic unit of currency is the Icelandic crown (krona, plural kronur abbreviated Ikr). In December 1999, the official exchange rate was U.S.$1=Ikr 72.27.

Currency exchange facilities are adequate. The National Bank in Reykjavik and the Merchants National Bank at the NATO base accept personal checks, travelers checks, and other negotiable notes in exchange for Icelandic kronur at the legal rate. It is difficult to change kronur to dollars outside Iceland.

Foreign (non-U.S.) currency may be imported from all Scandinavian and other European countries, according to the currency control regulations of the country concerned. The National Bank of Iceland in Reykjavik will accept such currency and exchange it for Icelandic kronur.

You can pay hotel room charges with travelers checks, major credit cards, or U.S. currency. Larger restaurants in Reykjavik may accept both currencies, and nearly all accept credit cards. Most business places (including McDonald's, most small kiosks, and grocery stores) in Reykjavik accept dollars in small denominations, as well as credit cards.

A sales tax is levied on all goods, services, and food items sold in Iceland. On most goods, the rate is 24.5%; for some food items, books and magazines, the rate is 14%.

While the English system of weights and measures is familiar to most Icelanders, the official system is the metric system, as in other European countries.

Special Circumstances

Extreme care should be exercised when touring Iceland's numerous nature attractions, which include glaciers, volcanic craters, lava fields, ice caves, hot springs, boiling mud pots, geysers, waterfalls and glacial rivers. There are few warning signs or barriers to alert travelers to the potential hazards. For example, several tourists are scalded each year because they get too close to an erupting geyser, or because they fall or step into a hot spring or boiling mud pot. High winds and icy conditions can exacerbate the dangers of visiting these nature areas.

Also be aware that Iceland is occasionally subject to natural disasters in the form of earthquakes, volcanic eruptions, avalanches, and violent storms. Learn how to prepare for and react to such events by consulting the web site of Iceland's National Civil Defense Agency at http://www.avrik.is. General information about natural disaster preparedness is available via the Internet from the U.S. Federal Emergency Management Agency (FEMA) at http://www.fema.gov.

LOCAL HOLIDAYS

Jan. 1… New Year's Day

Mar/Apr.…Maundy Thursday^*

Mar/Apr.…Good Friday^*

Mar/Apr.…Easter^*

Mar/Apr.…Easter Monday^*

Apr.…First Day of Summer^*

May 1… Iceland Labor Day

May/June…Ascension Day^*

May/June…Whitsunday^*

May/June…Whitmonday^*

June 17… Icelandic National Day

Aug. 6…Bank Holiday

Dec. 24…Christmas Eve

Dec. 25…Christmas Day

Dec. 26…Boxing Day

Dec. 31…New Year's Eve

^*variable

RECOMMENDED READING

The following titles are provided as a general indication of the material published on this country:

American-Scandinavian Review. American-Scandinavian Foundation. 127 East 73d St., NY 10021. (Articles on Iceland often appear in this review.)

Auden, WH. Letters from Iceland.

Byock, Jesse L. Medieval Iceland: Society, Sagas, and Power. University of California Press: Berkeley and Los Angeles, 1988.

Byock, Jesse L. Feud in the Icelandic Saga. University of California Press: Berkeley and Los Angeles, 1982.

Byock, Jesse L. "Egilsi Bones," Scientific American. January 1995, vol. 272 (#1), pp. 63-67.

Gislason, Gylfi Th. and Almenna Bokafelagid. The Problem of Being an Icelander: Past, Present, and Future. Reykjavik, 1973. (Translated by Peter Kidson Karlsson.)

Hjalmarsson, Jon R. History of Iceland: From the Settlement to the Present Day., 1993.

Iceland (Insight Guides). ed. Tony Perrottet. Houghton Mifflin: Boston, 1995.

Iceland Review. "Iceland: Country and People."

Iceland Review. (This magazine also publishes the daily news on: www.centrum.is/icerev.is/daily1.html) Jones, Gwyn. The Vikings. Oxford University Press.

Laxness, Halldor Kiljan. Independent People (1945). Vintage Books (Random House): New York, 1997.

Linklater, Eric. The Ultimate Viking. The Macmillan Company: New York, 1950.

Magnusson, Sigurdur A. Icelandic Crucible: A Modern Artistic Renaissance. Vaka Publishers: Reykjavik, 1985.

Morris, William (introduction by Magnus Magnusson). Icelandic Journals. Mare's Nest Publishing: London, 1996.

Nordal, Johannes, and Kristinsson, Valdimar, eds. Iceland 1996. Central Bank of Iceland: Reykjavik, 1997.

Roberts, Dorothy James, ed. Fire in the Ice. Peter Davis: London, 1961.

Sutton, George M. Iceland Summer. University of Oklahoma Press: Norman, 1961.

Tomasson, Richard E. Iceland, The First New Society. University of Minnesota Press, Icelandic Review: Reykjavik, 1980.

Iceland

Compiled from the July 2007 Background Note and supplemented with additional information from the State Department and the editors of this volume. See the introduction to this set for explanatory notes.

Official Name:

Republic of Iceland

PROFILE

Geography

Area: 103,000 sq. km. (39,600 sq. mi.); about the size of Virginia or slightly larger than Ireland.

Cities: Capital—Reykjavik (pop. 117099). Other towns—Kópavogur (27,835), Hafnarfjorour (24,111), Akureyri (16,887).

Terrain: Rugged.

Climate: Maritime temperate.

Highest elevation: Hvannadalsh-njúkur at Vatnajökull Glacier, at 2,111 meters (6,925 ft.).

People

Nationality: Noun—Icelander(s). Adjective—Icelandic.

Population: (April 1, 2007) 309,699.

Annual growth rate: 2.6%.

Ethnic groups: Relatively homogenous mixture of descendants of Norwegians and Celts.

Religions: Evangelical Lutheran, 86%.

Languages: Icelandic.

Education: Compulsory up to age 16. Attendance—99%. Literacy—99.9%.

Health: Infant mortality rate—2.9/ 1,000. Life expectancy—men 79.4 years, women 83 years.

Work force: (2007, 176,300) Commerce—30.7%; manufacturing—9.5%; fishing/fish processing—5.0%; construction—8.7%; transport and communications—7.0%; agriculture—3.8%; government, education, and health—27.7%; other services—7.6%.

Unemployment: (2007) 2.0%.

Government

Type: Semi-presidential, parliamentary.

Independence: 1918 (became “sovereign state” under Danish Crown); 1944 (establishment of republic).

Constitution: 1874.

Government branches: Executive—president (head of state), prime minister (head of government), cabinet (12 ministers). Legislative—63-member unicameral parliament (Althingi). Judicial—Supreme Court, district courts, special courts.

Political subdivisions: 26 administrative districts and 79 municipalities.

Political parties: Independence (IP), Progressive (PP), Social Democratic Alliance (SDA), Left-Green Party (LGP), Liberal Party (LP).

Suffrage: Universal 18 years and above.

National holidays: June 17, anniversary of the establishment of the republic.

Economy

GDP: (2006) $18.4 billion.

GDP growth rate: (2005) 5.8%; (2006) 2.6%.

Per capita GDP: (2006) $53,766.

Inflation rate: (2007) 4%.

Budget: (2007) $6 billion.

Annual budget surplus: (2006) 1.4% of GDP.

Net public debt: (2007) 17% of GDP. Foreign aid: as part of 2005 Budget: 0.18% of GDP.

Natural resources: Marine products, hydroelectric and geothermal power.

Agriculture: Products—potatoes, tomatoes, cucumbers, turnips, livestock.

Industry: Types—aluminum smelting, fishing and fish processing technology, ferro-silicon alloy production, hydro and geothermal power, tourism, information technology.

Trade: Exports of goods (2006)—$3.9 billion: marine products 51.2%, industrial products 38.3%, agriculture 1.8%, and miscellaneous 8.7%. Partners—EU 74.8% (U.K. 18%, Germany 17%, Netherlands 11%, Spain 6%, Denmark 5%); U.S. 10.8% ($421 million); Japan 2.1%. Imports (2006)—$6.9 billion: industrial supplies 27%; capital goods, parts, accessories 23%; consumer goods 20%; transport equipment 21.1%; food and beverages 9%; fuels and lubricants 8%. Partners—EU 64.7% (Germany 13%, Denmark 9%, U.K. 8%, Sweden 7%, Netherlands 7%); U.S. 12.8% ($208 million); EFTA 9%; Japan 4.1%.

GEOGRAPHY

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.

PEOPLE

Most Icelanders are descendants of Norwegian settlers and Celts from the British Isles, and the population is remarkably homogeneous. According to Icelandic Government statistics, 93% of the nation's inhabitants live in urban areas (localities with populations greater than 200) and about 60% 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. About 91% of the population belongs to the state church, the Evangelical Lutheran Church, or other Lutheran Churches. However, Iceland has complete religious liberty, and about 20 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, 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.

Cultural Achievements

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 is the 1955 Nobel Prize winner Halldor Kiljan Laxness. The literacy rate is 99.9%, and literature and poetry are a legendary passion 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. Iceland's most famous painters are Ásgrímur Jónsson, Jón Stefánsson, and Jóhannes Kjarval, all of whom worked during the first half of the 20th century. The best-known modern sculptor, Ásmun-dur Sveinsson (1893-1982), drew his inspiration from Icelandic folklore and the Sagas for many of his works. Today, Kristján Jóhannsson is Iceland's most famous opera singer, while pop singer Björk and progressive rock band Sigur Rós are well known internationally.

HISTORY

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 (Alpingi) 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 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 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, and a minister for Icelandic affairs, residing in Reykjavik, was made responsible to the Althingi. 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. In July 1941, responsibility for Iceland's defense passed to the United States. 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. Iceland is the only NATO country with no standing military of its own.

GOVERNMENT

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 (he can force a public referendum on a proposed law by refusing to sign it—a power that has only once been exercised), the expectation is that the president should play the same limited role as a monarch in a traditional parliamentary system.

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.

Principal Government Officials

Last Updated: 2/1/2008

President: Olafur GRIMSSON

Prime Minister: Geir H. HAARDE

Min. of Commerce: Bjorgvin SIGURDSSON

Min. of Communication & Transport: Kristjan MOLLER

Min. of Education, Culture, Research & Development: Thorgedur Katrin GUNNARSDOTTIR

Min. of Environment: Thorunn SVEINBJARNADOTTIR

Min. of Finance: Arni M. MATHIESEN

Min. of Fisheries & Agriculture: Einar K. GUDFINNSSON

Min. of Foreign Affairs & External Trade: Ingibjorg Solrun GISLADOTTIR

Min. of Health & Social Security: Gudlaugur Thor THORDARSON

Min. of Industry: Ossur SKARPHEDINSSON

Min. of Justice & Church Affairs: Bjorn BJARNASON

Min. of Social Affairs: Johanna SIGURDARDOTTIR

Dir., Central Bank of Iceland: David ODDSSON

Ambassador to the US: Albert JONSSON

Permanent Representative to the UN, New York: Hjalmar HANNESSON

Iceland maintains an embassy in the United States at 1156 - 15th Street, NW, Suite 1200, Washington, DC 20005 [tel. (202) 265-6653], and a consulate general at 800 Third Ave, 36th floor, New York, NY 10022 [tel. (212) 593-2700]. Iceland also has 25 honorary consulates in major U.S. cities.

POLITICAL CONDITIONS

Iceland's current government coalition was formed after the May 2007 parliamentary elections by the conservative Independence Party (IP) and the center-left Social Democratic Alliance. The two parties hold a large majority in parliament, with 43 out of 63 seats.

The current government replaced a coalition of the Independence Party and the Progressive Party (PP) that had been in power since 1995. Longtime IP leader Davio Oddsson was Prime Minister 1991-2004, making him the longest-serving prime minister in Europe (from 1991 to 1995, the IP was in coalition with the Social Democratic Party). PP chairman and former Foreign Minister Halldor Asgrimsson took over as Prime Minister on September 15, 2004, as part of a post-election deal with the Independence Party, and Oddsson became Foreign Minister. Oddsson retired from his ministerial position September 27, 2005, with former Finance

Minister Geir Haarde becoming Foreign Minister. Oddsson also announced his intention shortly to step down as IP chairman, with Haarde elected to the post at a party national conference in October. In early June 2006 Asgrímsson announced his withdrawal from politics as Prime Minister, parliamentarian, and chairman of the Progressive Party. Haarde became the third Prime Minister during the current electoral term on June 15, 2006, and Valgerour Sverrisdóttir (Progressive Party) took over as Foreign Minister. In May 2007 the Independence Party and the Social Democratic Alliance formed a new government after an abysmal showing by the Progressive Party. Geir Haarde continued as Prime Minister, and the chairman of the Social Democratic Alliance, Ingibjörg Sólrún Gísladóttir, took over the reins at the Ministry for Foreign Affairs.

The centrist agrarian Progressive Party has been a party to government for over 30 years in the past 4 decades. Its support dropped from 23% in the 1995 parliamentary election to 12% in 2007. The party has dealt with internal instability in the past few years, and power struggles have lead to frequent change in the party's leadership. Chairman Jon Sigurosson stepped down after the 2007 elections and was replaced by the deputy chairman, Guoni Agustsson.

Three left-wing parties—the Social Democratic Party, the People's Alliance, and the Women's List—formed an electoral coalition prior to the 1999 parliamentary election in the hope of mounting a credible challenge to the long-dominant Independence Party. But the dream of creating a united left coalition failed when disaffected leftists formed a new splinter party called the Left Green Movement, led by former deputy People's Alliance leader Steingrimur Sigfus-son. With this defection, the left coalition won a disappointing 27% of the vote (17 seats) in the 1999 election, four percentage points below what the three parties had won running separately in 1995. Their 31% (20 seats) showing in 2003 recaptured this ground but did not suffice to topple the government. The Left Greens won a respectable 9% of the vote (5 seats) in 2003, but in the 2007 election they improved significantly, with 14% of the total vote (9 seats). Another new faction, the Liberal Party, won just over 7% (4 seats) in 2003 based on its strong opposition to the current fishing management system, and clung to roughly 6% in 2007.

Despite the poor electoral showing in 1999, the three left-wing parties decided to merge formally in 2000, creating a new party, the Social Democratic Alliance, led by Ingibjörg Sól-run Gisladottir. The party has found it difficult to reconcile the widely varying foreign policy views of its members, which range from strong support for NATO membership to pacifism and a desire for neutrality.

Iceland's current President is Ólafur Ragnar Grímsson, a former political science professor who led the far-left People's Alliance in 1987-95 and served as Finance Minister in 1988-91. Although Grímsson won office with only a 41% plurality in 1996, he was not challenged for re-election in 2000. This follows a well-established tradition of giving deference to sitting presidents. He was re-elected again on June 26, 2004. Once in office, a president can generally count on serving as many terms as he or she likes, assuming good behavior. Reflecting the belief that the president is “above politics,” presidential candidates run for election as individuals—since 1952, political parties have played no role in nominating or endorsing candidates. President Grímsson has occasionally drawn criticism that he breaches the bounds of presidential etiquette by being too outspoken on sensitive political issues.

ECONOMY

Marine products account for the majority of Iceland's exports of goods. Other important exports include aluminum, ferro-silicon alloys, equipment and electronic machinery for fishing and fish processing, and pharmaceuticals. Information technology and life sciences and related services are important growth areas. 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, and the country's largest supplier of imported services (e.g., financial and franchise services, movies/TV programs/music, tourism). Iceland's relatively liberal trading policy was strengthened by accession to the European Economic Area in 1994 and by the Uruguay Round agreement, which also brought significantly improved market access for Iceland's exports, particularly seafood products. However, the agricultural sector remains heavily subsidized and protected.

In recent decades, Iceland's economy has been prone to inflation due to periods of rapid growth and its dependence on just a few key export sectors (i.e., fish, and increasingly tourism and aluminum production), which can fluctuate significantly from one year to the next. The 1970s oil shocks hit Iceland hard. Inflation rose to 43% in 1974 and 59% in 1980, falling to 15% in 1987 but rising to 30% in 1988. Since 1990, due to economic reforms and deregulation, inflation has dramatically fallen, averaging around 4% in the 1990s. Due to several years of strong economic growth, Iceland experienced the most positive economic period in its history during that decade. However, as with many advanced countries, Iceland's economy experienced a mild recession during 2002 due to global conditions. That recession was short-lived, and healthy growth of 3% was registered during 2003. In 2005 the economy boomed, growing 5.8%, and inflation was close to the Central bank's upper limit (4%) at 3.95%, while unemployment decreased to about 3.2%. The economy suffered a setback in spring 2006 when credit rating agencies and other international financial firms released a number of reports raising questions about the state of the Icelandic economy and the activities and stability of Iceland's major banks. These reports were widely covered in the international financial press, causing a marked drop in the value of the Icelandic krona and of shares listed on the Icelandic stock exchange. Since then the situation has calmed down, but there is no question that certain imbalances have emerged in the Icelandic economy, including a high current account deficit, high inflation and high private sector debt levels. It remains an open question whether these imbalances render Iceland particularly vulnerable to an economic crisis. Foreign confidence in the Icelandic economy is important to maintain the country's skillful use of foreign capital. Icelandic businessmen have become well known for risk taking, decisiveness, and swiftness in their investments. Wealthy Icelanders have successfully invested overseas, especially in the retail and real estate markets in Denmark and U.K. and telecom, pharmaceutical, banking, and financial sectors in Eastern Europe. This recent success has for the first time created a “super-rich” elite in Icelandic society.

Iceland has few proven mineral resources. Abundant hydroelectric and geothermal power sources allow over 90% of the population to enjoy electricity and heating from these natural resources. The Kárahnjúkar hydroelectric project is the largest single station, with capacity of 690 megawatts (mw). The other major hydroelectric stations are at Búrfell (270 mw), Hrauneyjarfoss (210 mw), Sigalda (150 mw) and Blanda (150 mw). Iceland is exploring the feasibility of exporting hydroelectric energy via submarine cable to mainland Europe and also actively seeks to expand its power-intensive industries, particularly aluminum smelting plants.

Iceland-based Nordural Aluminum is a wholly owned investment by Century Aluminum of Monterey, California. The plant employs more than 450 people and recently expanded to a production capacity of 220,000 tons per year. A new smelter owned by Alcoa, another U.S.-owned aluminum company, began operations in June 2007. The smelter will have a production capacity of 346,000 tons per year when fully operational. The Karah-njukar hydroelectric power plant, completed in early 2007, was built in connection with Alcoa's smelter. A total of over $2 billion has been invested in the power plant and smelter, the largest economic project in Icelandic history.

Iceland has no railroads. Organized road building began about 1900 and has greatly expanded in the past decade. The current national road system connecting most of the population centers is largely in the coastal areas and consists of about 13,000 kilometers (8,125 mi.) of roads with about 4,330 kilometers (2,706 mi.) paved. Regular air and sea service connects Reykjavik with the other main population centers. The national airline, Icelandair, flies from Iceland to Europe and North America, and is one of the country's largest employers. 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, Norway, and the EU countries.

DEFENSE

The U.S. and Iceland signed a bilateral agreement in 1951 stipulating that the U.S. would make arrangements for Iceland's defense on behalf of NATO and providing for basing rights for U.S. forces 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 55 years. The Government of Iceland expressed disappointment, and even opposition politicians opposed to the U.S. military presence criticized the manner of the closing, but bilateral discussions ensued to explore new ways of ensuring the country's security, with an emphasis on a “visible defense.” Negotiations concluded with a Technical Agreement on base closure issues (e.g., facilities return, environmental cleanup, residual value) signed on September 29, 2006, and a “Joint Understanding” on future bilateral security cooperation (focusing on defending Iceland and the North Atlantic region against emerging threats such as terrorism and trafficking) signed by the Secretary of State, Prime Minister Haarde and Foreign Minister Sverrisdóttir in Washington on October 11, 2006. The U.S. also cooperated with local officials to mitigate the impact of job losses at the Air Station, notably by encouraging U.S. investment in industry and tourism development in the Keflavik area. The Government of Iceland announced in spring 2007 that a large portion of the former base site would be converted into the university-level “Atlantic Center of Excellence” with operations scheduled to begin in fall 2007.

Cooperative activities in the context of the new agreements began almost immediately, with the arrival of the amphibious ship USS Wasp in Reykjavik on October 12, 2006 (the first U.S. Navy port visit since 2002) to demonstrate the Navy's rapid reaction capability and to support counterterrorism training by units of Iceland's Coast Guard and police. In November 2006 a U.S. Navy P-3 patrol aircraft arrived at Keflavik for joint search and rescue, disaster surveillance, and maritime interdiction training. Further joint endeavors, including a U.S.-led air defense exercise, are slated for the summer of 2007.

The Government of Iceland contributes financially to NATO's international overhead costs and recently has taken a more active role in NATO deliberations, planning, and peacekeeping. Iceland hosted the NATO Foreign Ministers’ Meeting in Reykjavik in June 1987 and again in May 2002. Iceland hosted the NATO Military Committee in April 2007 and will host the NATO Parliamentary Assembly in October 2007.

FOREIGN RELATIONS

Iceland maintains diplomatic and commercial relations with practically all nations, but its ties with other Nordic states, with the U.S., and with the other NATO member states are particularly close. Icelanders remain especially proud of the role Iceland played in hosting the historic 1986 summit in Reykjavik between President Reagan and Soviet leader Gorbachev, which set the stage for the end of the Cold War.

Iceland has greatly increased its international profile since the early 1990s. Since the mid-1990s, Iceland has opened a number of missions overseas for a total of 22, including an embassy in Beijing, giving Iceland a diplomatic presence in all five permanent member countries of the UN Security Council. Not coincidentally, it has announced its candidacy to serve on the UN Security Council in 2009-2010. In the past few years, Iceland has also established missions to the Council of Europe in Strasbourg and to the Organization for Security and Cooperation in Vienna. In 1998, it bolstered its delegation to NATO, assigning a permanent representative to the military committee for the first time ever.

Notwithstanding its status as an unarmed nation, Iceland has been eager to do its part to contribute to the maintenance of international peace and security. One of the niches it is helping to fill is in civilian peacekeeping and crisis management. It took a significant step forward in this area in 2001 by launching its Icelandic Crisis Response Unit (ICRU). In setting up the ICRU, the Ministry for Foreign Affairs established a roster of over 100 experts in various occupations (police officers, nurses, doctors, lawyers, engineers, journalists, etc.) who will be specially trained and prepared to deploy to trouble spots abroad on short notice.

Peacekeeping has been a permanent item in the Icelandic state budget since 1994, and Iceland has been an active member of the UN Peacekeeping Committee since 1997. With the formal establishment of the ICRU, the government decided to increase the number of deployed peacekeepers to 50 by 2006. The key emerging niche capability of the ICRU is airport administration following the successful management of the airport in Pristina, Kosovo, in 2003 and of the airport in Kabul, Afghanistan, in 2004-2005.

Icelanders 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.

Membership in International Organizations

Iceland is a member of the following organizations: Arctic Council, Barents Euro-Arctic Council; Council of Baltic Sea States; Council of Europe; European Economic Area; European Free Trade Organization; EFTA Court; EFTA Surveillance Authority; North Atlantic Treaty Organization; Organization for Security and Cooperation in Europe; Organization for Economic Cooperation and Development; International Criminal Police Organization; International Council for the Exploration of the Sea; International Hydrographic Organization; International Maritime Satellite Organization; International Union for the Publication of Custom Tariffs; Nordic Council; North-East Atlantic Fisheries Commission; North Atlantic Salmon Conservation Organization; the International Whaling Commission; and the North Atlantic Marine Mammal Commission.

It also is a member of the United Nations and most of its related organizations, specialized agencies, and commissions, including the International Monetary Fund, World Trade Organization, World Tourism Organization, Food and Agricultural Organization, International Atomic Energy Agency, International Civil Aviation Organization, International Fund for Agricultural Development; Industrial Development Organization; International Labor Organization, International Maritime Organization, International Telecommunications Union, UN Educational, Scientific, and Cultural Organization, Universal Postal Union, World Health Organization, and World Meteorological Organization; World Intellectual Property Organization; International Bank for Reconstruction and Development; International Development Association; International Finance Corporation Multilateral Investment Guarantee Agency and International Center for Settlement of Investment Disputes; UN Conference on Disarmament; Economic Commission for Europe; UN High Commissioner for Refugees; Office for the High Commissioner for Human Rights; Commission of Human Rights; UN Conference on Trade and Development.

U.S.-ICELANDIC RELATIONS

U.S. policy aims to maintain close, cooperative relations with Iceland, both as a NATO ally and as a friend interested in the shared objectives of enhancing world peace; respect for human rights; economic development; arms control; and law enforcement cooperation, including the fight against terrorism, narcotics, and human trafficking. Moreover, the United States endeavors to strengthen bilateral economic and trade relations.

Principal U.S. Embassy Officials

Last Updated: 2/19/2008

REYKJAVIK (E) Laufasvegur 21, IS-101 Reykjavik, Iceland, APO/FPO 5640 Reykjavik Place, Washington DC 20521-5640, (354) 562-9100, Fax (354) 562-9118, Workweek: Monday to Friday/0800-1700, Website: http://iceland.usembassy.gov.

TRAVEL

Consular Information Sheet

October 11, 2007

Country Description: Iceland is a highly developed, stable democracy with a modern economy. The national language is Icelandic, but English is widely spoken, especially in the capital city of Reykjavik.

Entry Requirements: A valid passport is required. U.S. citizens do not need visas for tourist or business stays of up to 90 days. That period begins when entering any of the following countries which are parties to the Schengen agreement: Austria, Belgium, Denmark, Finland, France, Germany, Greece, Iceland, Italy, Luxembourg, the Netherlands, Norway, Portugal, Spain, and Sweden. For further information in English concerning entry requirements for Iceland, please contact the Icelandic Directorate of Immigration via their web site at http://www.utl.is.

Note: Although European Union regulations require that non-EU visitors obtain a stamp in their passports upon initial entry to a Schengen country, many borders are not staffed with officers carrying out this function. If an American citizen wishes to ensure that his or her entry is properly documented, it may be necessary to request a stamp at an official point of entry. Under local law, travelers without a stamp in their passports may be questioned and asked to document the length of their stay in Schengen countries at the time of departure or at any other point during their visit, and could face possible fines or other repercussions if unable to do so.

Safety and Security: There have been no terrorist attacks and very few criminal attacks affecting Americans in Iceland. However, like other countries in the Schengen area, Ice-land's open borders with its Western European neighbors allow the possibility of terrorists or other criminals entering/exiting the country with anonymity. Americans are reminded to remain vigilant with regard to their personal security and to exercise caution.

For the latest security information, Americans traveling abroad should regularly monitor the Department of State Bureau of Consular Affair's Internet site, where the current Worldwide Caution Travel Alert, Travel Warnings and Travel Alerts can be found. Up-to-date information on safety and security can also be obtained by calling 1-888-407-4747 toll-free in the United States, or, for callers outside the United States and Canada, a regular toll line at 1-202-501-4444.

Crime: Iceland has a relatively low crime rate, but minor assaults, automobile break-ins and other street crimes do occur, especially in the capital city of Reykjavik. Tourists should be aware that downtown Reykjavik can become especially disorderly in the early morning hours on week-ends. Violent crime is rare, but it does occasionally occur.

Information for Victims of Crime: The loss or theft of a U.S. passport abroad should be reported immediately to the local police and the nearest U.S. Embassy or Consulate. If you are the victim of a crime while overseas, in addition to reporting to local police, please contact the nearest U.S. Embassy or Consulate for assistance. The Embassy/Consulate staff can, for example, assist you to find appropriate medical care, contact family members or friends and explain how funds could be transferred. Although the investigation and prosecution of the crime is solely the responsibility of local authorities, consular officers can help you to understand the local criminal justice process and to find an attorney if needed. Iceland maintains a limited crime victim's assistance program through the Ministry of Justice. Please contact the U.S. Embassy in Reykjavik for further details. Those suffering psychological trauma or victims of rape may receive psychological assistance by contacting the University of Iceland's Hospital Psychological Trauma Center at 354-543-2000.

Medical Facilities and Health Information: Excellent medical facilities are available in Iceland. To obtain emergency medical assistance anywhere in the country, dial 112. To obtain non-emergency medical assistance in the Reykjavik metropolitan area dial 544-4114 during business hours and outside of normal business hours, dial 1770. The nurse who answers will offer advice on how to handle the problem, suggest that the patient come to an after-hours clinic, or send a physician to make a house call. For information on after-hours dental care, call 575-0505.

Information on vaccinations and other health precautions, such as safe food and water precautions and insect bite protection, may be obtained from the Centers for Disease Control and Prevention's hotline for international travelers at 1-877-FYI-TRIP (1-877-394-8747) or via the CDC's web site at http://wwwn.cdc.gov/travel. For information about out-breaks of infectious diseases abroad, consult the World Health Organization's web site at http://www.who.int/en. Further health information for travelers is available at http://www.who.int/ith.

Medical Insurance: Most medical services in Iceland, including emergency care, require full payment at the time of service. Payment to the medical facility must be paid in full before an individual will be able to leave the country. The Department of State strongly urges Americans to consult with their medical insurance company prior to traveling abroad to confirm whether their policy applies overseas and whether it will cover emergency expenses such as a medical evacuation. Additional travel insurance to cover the price of medical evacuations is also strongly recommended.

Traffic Safety and Road Conditions: While in a foreign country, U.S. citizens may encounter road conditions that differ significantly from those in the United States. The information below concerning Iceland is provided for general reference only, and may not be completely accurate in a particular location or circumstance.

Less than a third of Iceland's total road network is paved (2,262 miles of paved road vs. 5,774 miles of gravel or dirt road). Most of the 900-mile ring road (Highway 1) that encircles the country is paved, but many other roads outside the capital, especially those that run through the center of the country, are dirt or gravel tracks. Even those roads that are paved tend to be narrow and lack a shoulder or margin. Most bridges are only one lane wide, requiring drivers to be cognizant of oncoming traffic.

Extreme care should be taken when driving in rural areas during the winter (October through March), when daylight hours are limited and the weather and road conditions can change rapidly. Many routes in the interior of the country are impassable until July, due to muddy conditions caused by snowmelt. When driving in the interior, consider traveling with a second vehicle and always inform someone of your travel plans. For information on current road conditions throughout the country, please call the Public Roads Administration (Vegagerdin) at 1777 or consult its web site at http://www.vegagerdin.is/english.

For recorded weather information in English, call the Icelandic Weather Office ( Vedurstofa Islands) at 902-0600, press 1 for English.

Icelandic law requires drivers to keep headlights on at all times. Talking on cell phones while driving is prohibited except when using a hands-free system, and is subject to a 5000 Icelandic Kronur fine. Unless otherwise posted, the speed limit is 50 km/h in urban areas and 30 km/h in residential areas. In rural areas, the speed limit depends on the type of road. On dirt and gravel roads, the speed limit is 80 km/h. On paved highways, the speed limit is 90 km/h. It is illegal to turn right on a red light. At four-way intersections, the right of way goes to the driver on the right; in traffic circles, to drivers in the inside lane. Many intersections in the capital have automatic cameras to catch traffic violators.

The use of seatbelts is mandatory in both the front and rear seats, and children under the age of six must be secured in a special car seat designed for their size and weight. Drivers are held responsible for any passenger under the age of 15 who is not wearing a seatbelt. No one who is less than 140 centimeters tall, weighs less than 40 kilograms, or is under the age of 12 is allowed to ride in a front seat equipped with an airbag.

Driving under the influence of alcohol is considered a serious offense in Iceland. The threshold blood alcohol test (BAT) level is very low. Drivers can be charged with DWI with a BAT as low as.05%. Drivers stopped under suspicion for DWI are usually given a “balloon” or Breathalyzer test. If the test is positive, a blood test is routinely administered. Under Icelandic law, a blood test cannot be refused and will be administered by force if necessary. The minimum punishment for a first offense is a fine of 50,000 Icelandic Kronur and the loss of driving privileges for two months.

U.S. citizens spending less than 90 days in Iceland may drive using their U.S. licenses.

Aviation Safety Oversight: The U.S. Federal Aviation Administration (FAA) has assessed the Government of Iceland's Civil Aviation Authority as being in compliance with International Civil Aviation Organization (ICAO) aviation safety standards for oversight of Iceland's air carrier operations. For more information, travelers may visit the FAA's web site at http://www.faa.gov.

Special Circumstances: Extreme care should be exercised when touring Iceland's numerous nature attractions, which include glaciers, volcanic craters, lava fields, ice caves, hot springs, boiling mud pots, geysers, waterfalls, and glacial rivers. There are few warning signs or barriers to alert travelers to potential hazards. Several tourists are scalded each year because they get too close to an erupting geyser, or because they fall or step into a hot spring or boiling mud pot. High winds and icy conditions can exacerbate the dangers of visiting these nature areas. Hikers and backpackers are well advised to stay on marked trails, travel with someone, notify a third party about their travel plans and check weather reports, as there are often no means of communication from remote locations. This is especially important as weather conditions in Iceland are subject to frequent and unexpected changes. Those planning visits to dangerous or remote locations in Iceland are strongly encouraged to register with the U.S. Embassy before beginning their journey and to leave a travel itinerary with local guides/ officials if planning to trek through remote parts of the country.

Criminal Penalties: While in a foreign country, a U.S. citizen is subject to that country's laws and regulations, which sometimes differ significantly from those in the United States and may not afford the protections available to the individual under U.S. law. Penalties for breaking the law can be more severe than in the United States for similar offenses.

Persons violating Icelandic laws, even unknowingly, may be expelled, arrested or imprisoned. Penalties for possession, use or trafficking in illegal drugs in Iceland are strict, and convicted offenders can expect long jail sentences and heavy fines. Engaging in sexual conduct with children or using or disseminating child pornography in a foreign country is a crime, prosecutable in the United States.

Disaster Preparedness: Iceland is subject to natural disasters in the form of earthquakes, volcanic eruptions, avalanches and violent storms. Travelers should learn how to prepare for and react to such events by consulting the web site of Iceland's National Civil Defense Agency at http://www.almannavarnir.is. General information about natural disaster preparedness is available via the Internet from the U.S. Federal Emergency Management Agency (FEMA) at http://www.fema.gov.

Children's Issues: For information on international adoption of children and international parental child abduction, see the Office of Children's Issues website at http://travel.state.gov/family.

Registration and Embassy Locations: Americans living in or visiting Iceland are encouraged to register with the nearest U.S. Embassy or Consulate through the State Department's travel registration web site, and to obtain updated information on travel and security within Iceland. Americans without Internet access may register directly with the nearest U.S. Embassy or Consulate. By registering, American citizens make it easier for the Embassy or Consulate to contact them in case of emergency. The U.S. Embassy is located at Laufasvegur 21, tel. +354-562-9100; fax +354-562-9110. Information about consular services can be found in the Consular section of the Embassy home page at http://iceland.usembassy.gov.

International Adoption

June 2006

The information in this section has been edited from a report of the State Department Bureau of Consular Affairs, Office of Overseas Citizens Services. For more information, please read the International Adoption section of this book and review current reports online at http://travel.state.gov/family.

Disclaimer: The information in this flyer relating to the legal requirements of specific foreign countries is based on public sources and current understanding. Questions involving foreign and U.S. immigration laws and legal interpretation should be addressed respectively to qualified foreign or U.S. legal counsel.

Please Note: Prospective adoptive parents must be resident in Iceland to adopt. This flyer describes how to get pre-approved in Iceland to adopt in a third country.

Patterns of Immigration: Recent U.S. immigrant visa statistics indicate that only one immigrant visa was issued to an Icelandic orphan in the last five years.

Adoption Authority:

The Ministry of Judicial and Ecclesiastical Affairs
Arnarhvall on Lindargata
150 Reykjavik, Iceland
Tel: 011-354-560-9010
Fax: 011-354-552-7340
E-mail: postur@dkm.stjr.is
Homepage: www.stjr.is.

Eligibility Requirements for Adoptive Parents:

• Applicants must be at least 25 years old, but not more than 45 years old;
• Good mental and physical state;
• Do not have a criminal record;
• Can financially support a family;
• Married couples or a male and a female that have lived together in a proxy marriage (cohabitation registered with the National Registry) for at least 5 years can adopt together;
• One of the married individuals or a male/female in a proxy marriage can adopt the partner's child or foster child with the partner's permission;
• One of the married individuals or a male/female in a proxy marriage can adopt a child without the partner's permission if the partner has vanished or his/her mental state would impede the adoption process;
• Individuals can adopt children in special circumstances and if the adoption benefits the welfare of the child.

Residency Requirements: Under the 1999 Adoption Act (Law no. 130), only foreigners who are resident in Iceland or “have a special connection to the country” are allowed to adopt children in Iceland.

Time Frame: The pre-approval pro-cesss, described below, will take three to six months. The length of time to adopt in a third country will depend on the child's country of origin.

Adoption Agencies and Attorneys: Íslensk ZEttleioing (Icelandic Adoption Society) is the only adoption agency in Iceland. Please see their website (only in Icelandic): http://www.isadopt.is.

Adoption Fees: The pre-approval certificate that is issued to prospective adoptive parents costs IKR. 2.250.00. Prospective adoptive parents can expect to pay for services pertaining to adoption in a third country.

Adoption Procedures: The first step to adopt a child is to apply for a pre-approval from the Ministry of Judicial and Ecclesiastical Affairs. Applicants can get the application forms on their website. Then they return the forms to Íslenslensk Ættleiðing (Icelandic Adoption Society -IAS) and the agency will send the forms to the Ministry and attach necessary documents.

The application with attached documents is sent to the Ministry of Judicial and Ecclesiastical Affairs which then asks the social services and the child protection agency in the applicants’ home town to give a report about the applicant's home and family environment. An employee from social services will contact the applicant and do a home study. This report is sent to the ministry which will take the decision based on this report. If the pre-approval is granted, then it is sent in English to IAS and the applicant gets a copy. The approval notice, which is valid for two years, will state that the applicant is permitted to adopt a child from a specific third country.

Required Documents:

• Application for pre-approval, Ministry of Judicial and Ecclesiastical Affairs, Skuggasundi, 150 Reykjavík. Telephone: 354-545-9000. Opening hours: Mon-Fri. 8:30—16.00;
• Birth certificate from applicant;
• Information about applicant on this form. (Re Application For Permission to Adopt. Re Application for Pre-Approval);
• Marriage certificate or certificate that proves proxy marriage of applicant;
• Certificate from the National Registry to show how long applicants have been living together. Marriage must have lasted at least one year and Proxy Marriage at least five years. The certificate can be sought at the National Registry in Iceland, Borgartúni 21a, 104 Reykjavík. Telephone: 354-569-2900;
• Police certificates from countries prospective adoptive parents resided for 3 months after the age of 16;
• Information about the applicant's health on the Information on Health Re application for Pre-Approval to Adopt a Child form;
• Doctors certificate for the adopting parent. Here you can get the
• Medical Certificate for Prospective Adoption Parent form, needs to be filled out by a doctor and the applicant;
• Certified copy of tax returns for the last two years;

The documents referenced above can be sought in Icelandic at:

Embassy of Iceland
1156 15th Street N.W., Suite 1200
Washington, D.C. 20005-1704
Tel.: (202) 265 6653
E-mail: icemb.wash@mfa.is
http://www.iceland.org/us

Iceland also has a Consulate General in New York and honorary consulates around the United States.

U.S. Immigration Requirements: Prospective adopting parents are strongly encouraged to consult USCIS publication M-249, The Immigration of Adopted and Prospective Adoptive Children, as well as the Department of State publication, International Adoptions. Please see the International Adoption section of this book for more details and review current reports online at http://travel.state.gov/family.

U.S. Embassy
Laufasvegur 21,
101 Reykjavik, Iceland
Tel: (354) 562-9100
E-mail: reykjavikconsular@state.gov

Additional Information: Specific questions about adoption in Iceland may be addressed to the U.S. Embassy in Reykjavik. General questions regarding intercountry adoption may be addressed to the Office of Children's Issues, U.S. Department of State, CA/OCS/CI, SA-29, 4th Floor, 2201 C Street, NW, Washington, D.C. 20520-4818, toll-free Tel: 1-888-407-4747.