Iceland aɪslənd/ (Icelandic: Ísland, : [ˈislant]) is a Nordic European island country situated at the confluence of the North Atlantic and Arctic Oceans, on the Mid-Atlantic Ridge. The country has a population of about 320,000 and a total area of 103,000 km² (40,000 sq mi), which makes it the most sparsely populated country in Europe. The capital and largest city is Reykjavík,^[7]with the surrounding areas in the southwestern region of the country being home to two-thirds of the country's population. The nation's capital is the most northern capital in the world. Iceland is volcanically and geologically active. The interior consists mainly of a plateau characterised by sand and lava fields, mountains and glaciers, while many glacial rivers flow to the sea through the lowlands. Iceland is warmed by the Gulf Stream and has a temperate climate despite a high latitude just outside the Arctic Circle.

According to Landnámabók, the settlement of Iceland began in AD 874 when the chieftain Ingólfur Arnarson became the first permanent Norse settler on the island. Others had visited the island earlier and stayed over winter. Over the following centuries,Norsemen settled Iceland, bringing with them thralls of Gaelic origin. From 1262 to 1918, Iceland was part of the Norwegian and later the Danish monarchies. The country became independent in 1918 and a republic was declared in 1944. Until the 20th century, the Icelandic population relied largely on fishing and agriculture, and the country was one of the poorest and least developed in the world. Industrialisation of the fisheries and aid from the Marshall Plan brought prosperity in the years after World War II, and by the 1990s, Iceland became one of the wealthiest and most developed nations in the world. In 1994, Iceland became party to the European Economic Area, which made it possible for the economy to diversify into economic and financial services.

Iceland has a free-market economy with relatively low corporate taxes compared to other OECD countries, while maintaining Nordic welfare system that provides universal health care and tertiary education for its citizens. In 2011, it was ranked as the 14th most developed country in the world by the United Nations' Human Development Index, and the fourth most productive country per capita. In 2008, the nation's entire banking system systemically failed, resulting in substantial political unrest. Iceland ranks high in economic and political stability, though it is still in the process of recovering from the crisis. Gender equality is highly valued in Iceland. In the Global Gender Gap Report 2012, Iceland holds the top spot, closely followed by Finland, Norway and Sweden.

Icelandic culture is founded upon the nation's Norse heritage. Most Icelanders are descendants of Norse and Gaelic settlers.Icelandic, a North Germanic language, is descended from Old Norse and is closely related to Faroese and some West Norwegian dialects. The country's cultural heritage includes traditional Icelandic cuisine, poetry, and the medieval Icelanders' sagas. Among NATO members, Iceland has the smallest population and is the only one with no standing army.

According to both Landnámabók and Íslendingabók, Celtic monks known as the Papar lived in Iceland before the Norse settlers arrived, possibly members of a Hiberno-Scottish mission. Recent archaeological excavations have revealed the ruins of a cabin in Hafniron the Reykjanes peninsula, and carbon dating indicates that it was abandoned somewhere between 770 and 880, suggesting that Iceland was populated well before 874. This archaeological find may also indicate that the monks left Iceland before the Norse arrived.

The first known permanent Norse settler was Ingólfur Arnarson, who built his homestead in present-day Reykjavík in the year 874. Ingólfr was followed by many other emigrant settlers, largely Norsemen and their thralls, many of whom were Irish or Scottish. By 930, mostarable land had been claimed and the Althing, a legislative and judiciary parliament, was initiated to regulate the Icelandic Commonwealth. Christianity was adopted around 999–1000, although Norse paganism persisted among some segments of the population for several years.

The Commonwealth lasted until the 13th century, when the political system devised by the original settlers proved unable to cope with the increasing power of Icelandic chieftains.

During these early Celtic and Viking settlements, the climate was significantly warmer and about 25% of Iceland was covered with forest compared to 1% now.

The Middle Ages

The internal struggles and civil strife of the Sturlung Era led to the signing of the Old Covenantin 1262, which ended the Commonwealth and brought Iceland under the Norwegian crown. Possession of Iceland passed to Kalmar Union in 1415, when the kingdoms of Norway, Denmark and Sweden were united. After the break-up of the union in 1523, it technically remained a Norwegian dependency, as a part of Denmark-Norway.

In the ensuing centuries, Iceland became one of the poorest countries in Europe. Infertile soil, volcanic eruptions, deforestation and an unforgiving climate made for harsh life in a society where subsistence depended almost entirely on agriculture. The Black Death swept Iceland twice, first in 1402–04 and again in 1494–95. The former outbreak killed 50% to 60% of the population, and the latter 30% to 50%.

Around the middle of the 16th century, King Christian III of Denmark began to impose Lutheranism on all his subjects. Jón Arason, the last Catholic bishop of Hólar, was beheaded in 1550 along with two of his sons. The country subsequently became fully Lutheran. Lutheranism has since remained the dominant religion. In the 17th and 18th centuries, Denmark imposed harsh trade restrictions on Iceland, while pirates from several countries raided its coasts. A great smallpox epidemic in the 18th century killed around a third of the population. In 1783 the Laki volcano erupted, with devastating effects. The years following the eruption, known as the Mist Hardships (Icelandic: Móðuharðindin), saw the death of over half of all livestock in the country, with ensuing famine in which around a quarter of the population died.

In 1814, following the Napoleonic Wars, Denmark-Norway was broken up into two separate kingdoms via the Treaty of Kiel. Iceland, however, remained a Danish dependency. Throughout the 19th century, the country's climate continued to worsen, resulting in mass emigration to the New World, particularly Manitoba in Canada. About 15,000 people out of a total population of 70,000 left.

However, a new national consciousness had arisen, inspired by romantic and nationalist ideas from mainland Europe. An Icelandic independence movement took shape in the 1850s under the leadership of Jón Sigurðsson, riding on the burgeoning Icelandic nationalism inspired by the Fjölnismenn and other Danish-educated Icelandic intellectuals. In 1874, Denmark granted Iceland a constitution and limited home rule, which was expanded in 1904, with Hannes Hafstein serving as the first Minister for Iceland in the Danish cabinet.

(THIS PHOTO HERE IS TAKEN FROM MY BALCONY IN THE TOWN WE LIVE IN CALLED FÁSKRUDSFJÖRÐUR)

The Danish-Icelandic Act of Union, an agreement with Denmark signed on 1 December 1918 and valid for 25 years, recognized Iceland as a fully sovereign state in a personal union with Denmark. The Government of Iceland established an embassy in Copenhagen and requested that Denmark should handle Icelandic foreign policy; Danish embassies around the world would display two coats of arms and two flags: those of the Kingdom of Denmark and those of the Kingdom of Iceland.

During World War II, Iceland joined Denmark in asserting neutrality. After the German occupation of Denmark on 9 April 1940, the Althing replaced the King with a regent and declared that the Icelandic government should assume the control of foreign affairs and other matters previously handled by Denmark. A month later, British armed forces invaded and occupied the country, violating Icelandic neutrality. In 1941, the occupation of Iceland was taken over by the United States so that Britain could use its troops elsewhere, an arrangement reluctantly agreed to by the Icelandic authorities.

On 31 December 1943, the Danish-Icelandic Act of Union expired after 25 years. Beginning on 20 May 1944, Icelanders voted in a four-day plebiscite on whether to terminate the personal union with Denmark, abolish the monarchy, and establish a republic. The vote was 97% in favour of ending the union and 95% in favour of the new republican constitution. Iceland formally became a republic on 17 June 1944, with Sveinn Björnsson as its first president.

In 1946, the Allied occupation force left Iceland, which formally became a member of NATO on 30 March 1949, amid domestic controversy and riots. On 5 May 1951, a defense agreement was signed with the United States. American troops returned to Iceland, as the Iceland Defense Force, and remained throughout the Cold War; the US withdrew the last of its forces on 30 September 2006.

Iceland had prospered during the war, and the immediate post-war period was followed by substantial economic growth, driven by industrialization of the fishing industry and the Marshall Plan programme, through which Icelanders received by far the most aid per capita of any European country (at USD 209, with the war-ravaged Netherlands a distant second at USD 109). The 1970s were marked by the Cod Wars — several disputes with the United Kingdom over Iceland's extension of its fishing limits. The economy was greatly diversified and liberalised when Iceland joined the European Economic Area in 1994.

Iceland hosted a summit in Reykjavik in 1986 between United States President Ronald Reagan and Soviet Premier Mikhail Gorbachev, during which they took significant steps toward nuclear disarmament. Only a few years later, Iceland would become the first country to recognize the independence of Estonia, Latvia, and Lithuania as they broke away from the USSR. Throughout the 1990s, the country expanded its international role and developed a foreign policy that was oriented toward humanitarian and peacekeeping causes. To that end, Iceland provided aid and expertise to various NATO-led interventions in Bosnia, Kosovo, and Iraq.

Rise and fall of Iceland as a financial centre

In the years 2003–2007, following the privatization of the banking sector under the government of Davíð Oddsson, Iceland moved from being a nation best known for its fishing industry toward having an economy based on financial services and investment banking. It was quickly becoming one of the most prosperous countries in the world before getting hit hard by a major financial crisis. The crisis resulted in the greatest migration from Iceland since 1887, with a net emigration of 5,000 people in 2009. Iceland's economy has since stabilized under the government of Jóhanna Sigurðardóttir, and is expected to grow by 2.8% in 2012.

GEOGRAPHY

Iceland is located at the juncture of the North Atlantic and Arctic Oceans. The main island is entirely south of the Arctic Circle, which passes through the small Icelandic island of Grímsey off the main island's northern coast. The country lies between latitudes 63° and 67° N, and longitudes 25° and 13° W.

Although Iceland is closest to Greenland (North America), it is closer to continental Europe than to mainland North America; thus, the island is generally included in Europe for historical, political, cultural, and practical reasons. Geologically the island includes parts of both continental plates. The closest body of land is Greenland (290 km (180 mi)). The closest bodies of land in Europe are the Faroe Islands (420 km (260 mi)); Jan Mayen Island (570 km (350 mi));Shetland and the Outer Hebrides, both about 740 km (460 mi); and the Scottish mainland and Orkney, both about 750 km (470 mi). The mainland of Norway is about 970 km (600 mi) away.

Iceland is the world's 18th largest island, and Europe's second largest island after Great Britain. The main island is 101,826 km² (39,315 sq mi), but the entire country is 103,000 km² (39,768.5 sq mi) in size, of which 62.7% is tundra. There are thirty minor islands in Iceland, including the lightly populated Grímsey and the Vestmannaeyjar archipelago. Lakes and glaciers cover 14.3% of its surface; only 23% is vegetated. The largest lakes are Þórisvatn (Reservoir): 83–88 km²(32.0–34.0 sq mi) and Þingvallavatn: 82 km² (31.7 sq mi); other important lakes include Lagarfljót and Mývatn. Jökulsárlónis the deepest lake, at 248 m (814 ft).

Geologically, Iceland is part of the Mid-Atlantic Ridge, a ridge along which the oceanic crust spreads and forms new oceanic crust. This part of the mid-ocean ridge is located above a mantle plume, causing Iceland to be subaerial (above the surface of the sea). The ridge marks the boundary between the Eurasian and North American Plates, and Iceland was created by rifting and accretion through volcanism along the ridge.

Many fjords punctuate Iceland's 4,970 km long coastline, which is also where most settlements are situated. The island's interior, the Highlands of Iceland, is a cold and uninhabitable combination of sand, mountains and lava fields. The major towns are the capital city of Reykjavík, along with its outlying towns of Kópavogur, Hafnarfjörður andGarðabær, nearby Reykjanesbær where the international airport is located, and the town of Akureyri in northern Iceland. The island of Grímsey on the Arctic Circle contains the northernmost habitation of Iceland. Iceland has three national parks: Vatnajökull National Park, Snæfellsjökull National Park, and Þingvellir National Park. The country is considered a "strong performer" in environmental protection, having been ranked 13th in Yale University's Environmental Performance Index of 2012.