Released by the Bureau of European and Canadian Affairs, June 30, 1997.
PROFILE
Geography
Area: 102,845 sq. km. (39, 709 sq. miles); about the size of Virginia
or twice the size of Ireland.
Cities: Capital-- Reykjavik (pop. 157,957). Other towns--Kopavogur
(16,186), Hafnarfjordur (15,151) Akureyri (14,174).
Terrain: Rugged.
Climate: Maritime temperate.
Highest elevation: Vatnajokull Glacier, at 2,119 meters (6,952
feet).
People
Nationality: Noun--Icelander(s). Adjective--Icelandic.
Population: 269,735.
Annual growth rate: 1.02%.
Ethnic group: Homogenous mixture of descendants of Norwegians
and Celts.
Religion: Evangelical Lutheran, 91%.
Language: Icelandic.
Education: Compulsory education up to age 16. Attendance--99%.
Literacy--99.9%.
Health: Infant mortality rate--6/1,000. Life expectancy--men
76.3 yrs., women 80.8 yrs. Work force: (131,038): Commerce--14.9%.
Manufacturing--12.9%. Fishing/fish processing--11.8%.
Construction--10.7%. Transportation, Communications--6.8%.
Agriculture--5.1%.
Unemployment: 4.3%
Government
Type: Constitutional republic.
Independence: 1944.
Constitution: 1874.
Branches: Executive--president (chief of state), prime
minister (head of government), Cabinet (9 ministers). Legislative--63
member unicameral parliament (called Althingi). Judicial--Supreme
Court, district court, special courts.
Subdivisions: 23 Syslur (counties).
Major political parties: Independence (IP), Progressive (PP),
People's Revival (PR), Social Democrats (SDP), People's Alliance
(PA), Women's List (WL).
Suffrage: Universal over 18.
National holiday: June 17, anniversary of the establishment of
the republic.
Flag: Red cross edged in white on a blue field.
Economy
GNP: $4.2 billion.
Annual growth rate: 2.5%.
Per capita GDP: $23,285.
Avg. inflation rate: 1%.
Budget: $1.9 billion.
Annual deficit: $61.5 million.
Foreign aid as part of budget: 0.11%
Natural resources: Fish, hydroelectric- and geothermal power,
diatomite.
Agriculture: Products--potatoes, turnips, livestock
Industry: Types--aluminum smelting, fish processing, ferro-silicon
production, geothermal power.
1994 Trade: Merchandise exports $1.6 billion (exports of goods
and services $2.2 billion): marine products 75.3%, aluminum 9.6%,
ferro-silicon 2.4%, other manufactured products 6.7%. Partners--EU
60% (U.K. 20%, Germany 13%), USA 15% ($235 million), Japan 14%.
Merchandise imports--$1.4 billion: Fuels and lubricants
8%, industrial supplies 27.4%, transport equipment 12.1%, food
and beverages 10.1%, other consumer goods 21.9%. Partners--EU
48.7% (Germany 11%, U.K. 10%), USA 9% ($130.4 million).
Floating exchange rate: 66.36 kronur = $1.00.
Fiscal year: Calendar year.
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. 20% of the land is used for grazing, and 1% is cultivated. The inhabited areas are on the coast, particularly in the southwest.
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 11oC (52oF) in July and -1oC (30oF) 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, 99% of the nations inhabitants live in urban areas (localities with populations greater then 200) and 60% live in Reykjavik and the surrounding 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 belong to the state church, the Evangelical Lutheran Church, or other Lutheran Churches. However, Iceland has complete religious liberty, and other Protestant and Roman Catholic 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 1180-1300 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.
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 Asgrimur Jonsson, Jon Stefansson, and Johannes Kjarval, all of whom worked during the first half of the 20th century. The best-known modern sculptor, Asmundur Sveinsson (1893-1982), drew his inspiration from Icelandic folklore and the Sagas for many of his works.
The best known Icelandic writer in this century is the Nobel Prize winner Mr. Halldor Laxness, Literature and poetry remain a passion with the population. Literacy is 100%. Per capita publication of books and magazines is the highest in the world. In a population of 265,000 people, there are five daily newspapers, 78 other newspapers and 629 periodicals (1993 data).
The most famous Icelandic opera singer is Mr. Kristjan Johannsson, while the best known Icelandic artist in this century probably is the pop singer Bjork.
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--the oldest parliament in the world. Iceland remained independent until 1262, when Iceland entered into a treaty which established a union with the Norwegian monarchy. It 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 home rule in 1874, which again was extended 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 and asked that Denmark represent its foreign affairs and defense interests.
German occupation of Denmark in 1940 severed communications between Iceland and Denmark. In May 1940, Iceland was occupied by British military forces. In July 1941, responsibility for Iceland's defense passed to the United States under a U.S. - Icelandic defense agreement. 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 be responsible for Iceland's defense. This agreement, signed on May 5, 1951, is the authority for U.S. military presence in Iceland. Iceland is the only NATO country with no military forces.
GOVERNMENT
The president, elected to a 4-year term, has limited powers. The prime minister and cabinet exercise most executive functions. The Althingi is composed of 63 members, elected every four years unless it is dissolved sooner. Suffrage for presidential and parliamentary elections is universal, and members of the Althingi are elected on the basis of proportional representation from eight 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
President--Olafur Ragnar Grimsson
Prime Minister--David Oddsson (IP)
Cabinet Ministers
Foreign Affairs--Halldor Asgrimsson (PP)
Finance--Fridrik Sophusson (IP)
Commerce, Power, & Industry--Finnur Ingolfsson (PP)
Fisheries, Justice, Religious Affairs--Thorsteinn Palsson (IP)
Agriculture & Environment--Gudmundur Bjarnason (PP)
Transportation & Communications--Halldor Blondal (IP)
Education & Culture--Bjorn Bjarnason (IP)
Social Affairs--Pall Peturson (PP)
Health & Social Security--Ingibjorg Palmadottir (PP)
Ambassador to the U.S--Einar Benediktsson
Ambassador to the UN--Gunnar Palsson
Iceland maintains an embassy in the United States at 1156 15th Street, N.W., Suite 1200, Washington, D.C. 20005 [tel. (202)265-6653], and a consulate general at 800 Third Ave, 36th floor, New York, N.Y. 10022 [tel. (212)593-2700]. In addition, Iceland has twenty honorary consulates in major U.S. cities.
POLITICAL CONDITIONS
In nationwide town council elections in 1994, the Government coalition partners, the conservative Independence Party (IP) and the Social Democrat Party (SDP) lost support throughout the country, including the capital Reykjavik, which the IP had controlled for more than half a century. In losing 4 seats in the April 1995 parliamentary elections, the IP and SDP mustered a simple majority in the 63-seat Althingi, or parliament. However, Prime Minister (and IP leader) Oddsson chose the resurgent Progressive Party as a more conservative partner to form a stronger and more stable majority with 40 seats. Splintered by factionalism over the economy and Iceland's role in the European Union (EU), the SDP also suffered from being the only party to support Iceland's EU membership application. Nonetheless, Icelandic policy towards the U.S. has remained unchanged.
In the worst land disaster in living Icelandic memory, a large avalanche killed 20 people in the fishing village of Flateyri in Northwest Iceland in October 1995. This tragedy came just nine months after an avalanche killed 14 people in the nearby town of Sudavik. For a country that averages about 1,000 Americans for every Icelander, these events represented relatively major tragedies.
Most private sector workers still belong to trade unions that are members of an umbrella organization, and virtually all employers belong to a similar confederation. At intervals, the two groups negotiate a "general" wage agreement, which sets a minimum wage. However, in recent years public sector employees and breakaway private trade unions have negotiated substantially larger raises in proportion to the broadly-based private sector agreements. Coupled with parliament's attempt in 1995 to give large, tax free increases in salaries and benefits to itself and other high-ranking public sector officials, this situation had destabilized the entire system of labor agreements. Following the largest protest in Icelandic history, when a work stoppage shut down cities, schools and businesses nationwide between several hours to one day in September 1995, the Government has sought to reach a series of patchwork accommodations, most notably in December 1995 with Iceland's air traffic controllers.
After 16 years (four terms) as the world's first and only elected woman president, the widely popular Vigdis Finnbogadottir decided not to run for re-election in 1996. Although support for the current conservative coalition government has continued to grow, more than 86% of all voters turned out in the June 29 presidential elections to give former leftist party chairman Olafur Ragnar Grimsson a 41% plurality and relatively comfortable 12% margin of victory over the closest of three other candidates. Traditionally limited to six to twelve weeks, Iceland's campaign season was marked by several intensely personal attacks on Grimsson, a former finance minister who tried to erase memories of his controversial support of inflationary policies and opposition to the U.S. military presence at the NATO base in Keflavik. Grimsson has pledged to use his largely ceremonial office to promote Icelandic trade abroad and family values at home.
Parties in Government
Independence Party (IP)--25
Progressive Party (PP)--15
Parties in opposition
People's Alliance (PA)--09
Social Democratic Party (SDP)--07
People's Movement (PM--04
Women's Alliance (WL)-03
Total: 63
ECONOMY
Marine products accounted for 54% of Iceland's total exports in 1994. Other important exports include aluminium, ferro-silicon, equipment and electronic machinery for fishing and fish processing, and woolen goods. Foreign trade plays an important role in the Icelandic economy. In 1994, exports and imports accounted for 36% and 31% of GDP, respectively. Most of Iceland's exports go to the EU countries, the United States, and Japan.
Iceland's relatively liberal trading policy has been strengthened by accession to the European Economic Area in 1993 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, with some tariffs ranging as high as 700%.
Iceland's economy is prone to inflation but remains rather broad-based and highly export-driven. During the 1970's the 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 then, inflation has dramatically fallen, and the current Government is committed to tight fiscal measures. While low by world standards, the current unemployment rate near 5% remains unacceptably high to most Icelanders. Iceland's economy experienced moderate GDP growth in 1995 (2.6%). Inflation averaged merely 1.5% from 1993-94, and only 1.7% from 1994-95. With increasing economic activity predicted in 1996, inflation should not increase dramatically.
Iceland has few proven mineral resources, although deposits of diatomite (skeletal algae) are being developed. Abundant hydroelectric and geothermal power sources are gradually being harnessed, and in 1991 80% of the population enjoyed geothermal heating. The Burfell hydroelectric project is the largest single station with capacity of 240mw. The other major hydroelectric stations are at Hrauneyjarfoss (210mw) and Sigalda (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, including aluminum and ferro-silicon smelting plants. In late 1995, Alusuisse-Lonza of Switzerland decided to expand its aluminum smelter in Straumsvik in southwestern Iceland from a 100,000 ton annual capacity to 160 tons per year.
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 12,177 kilometers (7,565 mi.) of dirt and gravel roads and about 1,150 kilometers (714 mi.) of hard-surfaced roads. Regular air and sea service connects Reykjavik with the other main urban centers. In addition, airlines schedule flights from Iceland to Europe and North America. The national airlines, Icelandair, is one of the country's largest employers. Iceland became a full European Free Trade Association member in 1970 and entered into a free-trade agreement with the European Community in 1973.
Under the agreement on a European Economic Area, effective January 1, 1994, there is basically free cross border movement of capital, labor, goods, and services between Iceland, Norway, and the EU countries.
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 nations are particularly close. Icelanders remains especially proud of the role Iceland played in hosting the historic 1986 Reagan-Gorbachev Summit in Reykjavik which set the stage for the end of the Cold War.
Iceland's principal international dispute involves disagreements with Norway and Russia over fishing rights in the Barents Sea, which the parties are attempting to resolve through negotiation. Certain environmentalists are concerned that Iceland left the International Whaling Commission (IWC) in June 1992 in protest of an IWC decision to refuse to lift the ban on whaling, after the IWC Scientific Committee had determined that the taking of certain species could safely be resumed. That year, Iceland established its own commission (which the U.S. does not recognize) along with Norway, Greenland and the Faroes for the conservation, management and study of marine mammals. Since then, however, Iceland has not resumed whaling but has asserted the right to do so.
U.S. - ICELANDIC RELATIONS
U.S. policy aims at maintaining 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, arms control, and economic development. Moreover, the United States endeavors to strengthen bilateral economic and trade relations.
DEFENSE
When Iceland became a founding member of NATO in 1949, it did so on the explicit understanding that Iceland, which has never had a military, would not be expected to establish an indigenous force. Iceland's main contribution to the common defense effort has been the rent-free provision of the "agreed areas,"--sites for military facilities. By far the largest and most important of these is the NATO Naval Air Station at Keflavik. Although this base is manned primarily by U.S. forces, it also has a permanently stationed Dutch P-3 aircraft and crew, as well as officers from Canada, Denmark, Norway, and the United Kingdom. Units from these and other NATO countries also are deployed temporarily to Keflavik, and they stage practice operations, mainly antisubmarine warfare patrols.
Iceland and the United States regard the ongoing 55-year U.S. military presence as a cornerstone to bilateral foreign/security policy. Bilateral negotiations regarding implementation of a new "Agreed Minute" governing force structure and deployment for the defense of Iceland currently are underway in Reykjavik.
In addition to providing the "agreed areas," the Government of Iceland contributes financially to NATO's international overhead costs and recently has taken a more active role in NATO deliberations and planning. Iceland hosted the NATO Foreign Minister' Meeting in Reykjavik in June 1987 and participates in biennial NATO exercises entitled "Northern Viking" in Iceland; the next exercises will be held in 1997. Iceland also intends to host a Partnership for Peace multinational disaster relief exercise in 1997 entitled, "Cooperative Safeguard."
Principal U.S. Officials
Ambassador--Day O. Mount
Deputy Chief of Mission--Mark Tokola
Political/Consular Officer--Mike Hammer
Economic/Commercial Officer--Bo Otto
Administrative Officer--Sarah A. Solberg
Communications Officer--Leonard M. Kreske
Public Affairs Officer--Richard Lundberg
The U.S. Embassy in Iceland is located at Laufasvegur 21, Reykjavik [tel. (354)562-9100].
TRAVEL NOTES
Entry requirements: Visas are not required for American citizens traveling to Iceland for tourism purposes for up to three months. However, prohibitions against working there without a work permit are strictly enforced. Travelers entering Iceland must present a valid passport (unless they are exempted by international agreements. Citizens of 14 European countries are exempted from this requirement). Admission of pets is prohibited without a long quarantine period and is strictly enforced.
Travel: The flight time between Iceland and New York City/Washington DC is about 5 1/2 hours, or about the same distance to Seattle. There are direct daily flights year round.
Climate and clothing: The climate in Iceland is similar to but cooler than that in the U.S. Northwest. Woolen or other warm clothing is worn all year.
Health: Iceland has no endemic health problems. The major cities have adequate medical facilities.
Telecommunications: Telephone and telegraph service is state owned and is available throughout all of Iceland. Iceland has a single time zone and is on Greenwich Mean Time year round. It is five hours ahead of Eastern Standard Time in winter and four hours ahead in summer.
Transportation: Iceland has no railroads or streetcars. Local taxi and bus services are safe and efficient, but taxi fares are higher than on the U.S. east coast. There has been a rapid expansion of the paved road system in Iceland in recent years. Most of the "Ringroad" circling the island has been paved. Many roads outside the immediate vicinity of Reykjavik are gravel roads, some of which can be of poor quality, especially in spring. Cars or four-wheel-drive vehicles may be rented, but are expensive. A number of airlines serve most of the larger towns throughout the country.
Tourist attractions: Iceland's main attraction is its scenery, particularly during late spring and summer. The rugged landscape includes geysers and hot springs in various parts of the country and numerous waterfalls streaming from the glaciers and volcanic fields. The major historic site, now a national park, is Thingvellir, where the world's first parliament convened. Outdoor activities, including camping, hiking, skiing, and horseback riding, are popular. Although Icelandic horses are smaller than others, they are held in high esteem because of their unique abilities in performing different types of trots and are exported worldwide. Golf courses are available throughout the country and international tournaments are held. River-rafting also is commercially available in a few places. Fly fishing for Atlantic salmon and various types of trout has been an important part of the tourism industry for decades, but licenses cost $3,000/person per day. Hunting is increasingly popular, mostly for geese, ptarmigan, reindeer, fox, and ducks.
Most shops are closed on Sundays, legal holidays, and after 6:00 p.m. on weekdays. Shops are open on Saturday, usually from 9:00 am to 12:00 p.m. (supermarkets 9:00am - 4:00 p.m.), from September 1 until June 1; during the summer, most shops do not open on Saturdays.
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