HISTORY
The island was settled by the Norse seafarers in the ninth century; they established the world’s first known republic and parliament in about AD 930. The original seat of this democratic system may be found at Þingvellir, about an hour’s drive from Reykjavík, where the original Viking settlers used a natural amphitheater, formed by a cliff wall, as an assembly. In the mid-13th century the islanders submitted to the authority of the King of Norway, and when Norway came under the control of Denmark in 1380, Iceland did too. In 1814, Norway became independent, but Iceland remained a Danish territory. In 1840 it was granted its own constitution – effectively allowing internal self-government.
Full independence was granted in 1918, although Iceland continued to recognize the Danish monarch as head of state. It was not until 1944 that Iceland became a fully independent nation with its own head of state. Contemporary Icelandic politics display the customary Western European spectrum of political parties, although a notable feature has been the influence of women within the main parties (Independents, Progressives and Social Democrats). Iceland’s most famous political figure of recent times is also a woman, Vigdis Finnbogadottir, who served four consecutive terms as President between 1980 and her resignation in 1996. She was replaced by Olafur Grimsson, who began a second term as President in 2001. The Parliament (Alþing) has generally been dominated by coalition governments. These were of a broadly center-right persuasion until the mid-1970s, since when the left has dominated.
At the general election in April 1991, the Independence Party (IP) emerged as the largest grouping in the Alþing and formed a coalition administration with the smaller SDP. The ex-mayor of Reykjavík, David Oddsson, who had successfully taken over the leadership of the IP, was made Prime Minister. Oddsson was re-elected at the 1995 general election, but a decline in support for the IP later forced him to form a coalition administration with the Progressive Party (PP). At the most recent poll in May 1999, the same coalition – still under Oddsson – retained overall control of the Alþing.
Icelandic foreign policy is dominated by two factors: fishing and relations with Atlantic powers. Iceland is a member of NATO, the Nordic Council and of the Council of Europe. Ties with NATO have been loosening since before the end of the Cold War – in May 1985, the Alþing declared Iceland a ‘nuclear-free zone’ – and this process has accelerated since the reduction of the large NATO base at Keflavik. Iceland has historically eschewed membership of the European Union but, since Sweden, Finland and Denmark have joined up, it is Iceland’s opposition to the EU’s fisheries policy of stock management by quotas that is now the decisive influence. Both main parties strongly oppose the Common Fisheries Policy, so it seems unlikely that Iceland will apply for EU membership in the foreseeable future.
On the issue of whaling, Iceland has been among the few objecting to the International Whaling Commission’s (IWC) ban: in 1992, the Government withdrew from the IWC. In 2001, it applied to rejoin but, having declared its intention to resume commercial whaling, was only granted observer status.
Government
Executive power is vested in the President and Government, while legislative authority rests jointly with the President and the 63-member Alþing (Parliament). Both are elected for 4-year terms. The Alþing has recently been reduced from two houses to one.
Economy
Iceland is short of indigenous raw materials and thus relies heavily on foreign trade to keep its relatively successful economy ticking over. Exports of goods and services account for more than one-third of GNP. The largest proportion of these derives from fisheries and related products such as fishmeal and oil. The economy is thus particularly susceptible to fluctuating world prices in this commodity and maintains a broad fisheries exclusion zone (320km/200 miles) to protect its earnings. As several European governments (including the British) have discovered to their cost, the Icelanders are fiercely determined and quite capable of defending their perceived territorial rights. Other sources of revenue come from the sale of minerals such as aluminum, ferro-silicon, cement and nitrates used in fertilizers, although these have lately been affected by low demand. Light industry produces knitwear, blankets, textiles and paint. There is a burgeoning advanced technology sector involved in software and biotechnology, and an embryonic financial services industry.
Accession to the European Economic Area (an amalgam of the EU and the European Free Trade Association; Iceland belongs to the latter) effected a wholesale liberalization of trade among the member states and caused some disruption to the Icelandic economy. This highlighted the fact that Iceland’s economy is too dependent on its fishing industry and needs to diversify in areas that will allow it to compete in international markets. Iceland’s principal import suppliers are, in order of importance, Norway, Germany and the UK. The UK, the USA and Germany are the country’s main trading partners. |
