ICELAND
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 GDPand 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.
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 Internetsubscribers 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.
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