This volcanic island was first settled by Irish monks in the early 9th century. The Vikings, whose descendants still live there, arrived in 874. The Icelandic Parliament, the Althing, first met in 930, thus the land was a kind of republic. Settlers from Iceland went to Greenland and North America (Vinland=?Labrador, New England, it is not known for sure).

It was regarded as under Norwegian sovereignty from 1262 and then when Norway was ruled by Denmark Iceland went too. During the Little Ice Age which lasted from the 15th to the mid 18th centuries Iceland went into decline as life became much harder.

Independence movements began during the 19th century as the climate improved. Iceland received a constitution in 1874 and achieved internal self-government in 1903. From 1918 it was independent except for sharing a king with Denmark (in British terms, it had Dominion status). During the second world war it was occupied by the British to keep it out of the hands of the Germans and to be used as a base to keep the German navy out of the Atlantic.

Since 1944 Iceland has been a republic. In the 1960s there were a number of disputes with Britain over ownership of the fish stocks around the island, with naval action in 1973. Iceland was one of the first to declare a 200 mile fishing zone to protect the stocks from overfishing. Iceland is a member of NATO and has a large American air base at Keflavik.

Until October 2008 Iceland had no plans to join the European Union, though as a former member of EFTA is a member of the European Economic Area, with Norway and Switzerland. The main objection to the EU is the Common Fisheries Policy which would require Iceland to open up its fishing areas to other countries. After seeing what happened in the North Sea, where overfishing has seriously reduced the fish stocks, Icelanders did not want that to happen.

Icelandic, the most conservative of the Scandinavian and Germanic languages, showing many features of the earliest known Germanic languages.

Multi-party democracy with ceremonial president and executive prime minister. The recent government was of the Center Right. The Independence Party controlled the government for 12 years until the financial crash.

Some commentators say that this dominance had some of the characteristics of a one party state, because in a small population the ruling elite know each other, both in business and politics. Thus Iceland may share the problem of other small island states where democracy stagnates (such as Antigua).

The elections of April 2009 resulted in a defeat for the rightwing coalition that has controlled the government for 50 years. The new government has a policy of joining the EU.

A constitutional assembly has been elected to discuss revising the constitution. It is not yet clear what might be decided.

The economy was based on fish and tourism. Policy is to prevent over-fishing by controlling domestic waters. There was a short war with Britain in the 1960s to make sure the stocks were not over fished by British trawlers.

Also great quantities of hydro and geothermal power. They can't export it yet but there has been a plan for an undersea power line to Scotland. If hydrogen catches on to replace oil, Iceland could be a prime supplier. Technology now exists to allow undersea power lines of considerable length.

It is possible that a European plan for a transmission network of solar and other non-carbon energy could include Iceland as a major supplier: geothermal and hydro with some wind as well. This would be linked to the north of Scotland.

See this article:European energy grid which could allow Iceland to export its hydro and geothermal power.

Quote:
New supergrid, transmitting electricity along high voltage direct current cables would allow countries such as the UK and Denmark ultimately to export wind energy at times of surplus supply, as well as import from other green sources such as geothermal power in Iceland.

The geothermal power is used to heat greenhouses which grow many kinds of crops including tropical products.

In the past whaling was an important industry, and the Icelandic government proposes to resume whaling, despite international agreements.

Financial economy
In more recent times Icelandic banks and investors have spread their business to other countries, especially to Britain where Icelandic funds owned several large retail businesses. But were the banks sound?

In October 2008 the banks went bust, the overseas holdings were revealed as based on the same dodgy banking deals that brought down Wall Street, and the economy was revealed as like a large Hedge Fund. One remedy might be an application to join the EU and the euro. Could this be achieved without the usual two year waiting period? Possibly, because a currency used by only 330,000 people could be quickly exchanged for euros.

Russia apparently offered a large loan of euros (7/10/08). What did they want in return?.

The government has requested and received a large IMF loan.

After the collapse of the financial economy, perhaps Iceland can get back to the interesting development of its post-carbon energy industry where, surely, its real future lies.

Watch this space.

October 2011 - informal talks have begun between the prime minister and German leaders about joining the EU.

March 2012 - might the Icelanders adopt the Canadian dollar (the loonie)?

July 2012 - Probably not Huffington.

Gwyn Jones - History of the Vikings (1984)

Meltdown Iceland: How the Global Financial Crisis Bankupted an Entire Country

Iceland has been vulnerable to climate changes in the past. At the time of Norse settlement it was warmer than it is now. Then, during the Little Ice Age, the difficulty of life almost extinguished the nation. Now, with a probable warming trend life is improving but trees are still extremely rare.

Hydrogen
The Icelandic government has adopted a plan of converting all its hydrocarbon fuel uses to hydrogen derived from cheap hydroelectricity and geothermal energy. It has entered into contracts with energy companies to build the infrastructure and vehicle manufacturers to supply the necessary engines. The plan is to convert buses first (from 2002) then freight vehicles and fishing boats. The first ship has already been commissioned (2008). As there is no international road transport all vehicles could be powered on hydrogen. Iceland may prove to be the testbed for a world hydrogen economy to replace oil and coal.

Ultimately the plan would be to export hydrogen, making Iceland the world's first supplier - a Kuwait of the hydrogen age.

Incidentally, this would give Iceland a real economy to replace the fantasy financial economy that exploded in October 2008.

Problems
This plan includes the flooding of many valleys which is opposed by environmentalists. In a country with numerous earthquakes and volcanism the dams may not be secure, and a great deal of natural landscape will be lost.

Google list of articles about the Hydrogen plan.

If Iceland does join the EU will the fishing grounds have to join the EU system? The Common Fishery Policy is the main reason Iceland and Norway have stayed out in the past. The EU-controlled fishing grounds are suffering from over-fishing and depletion, whereas Iceland manages its fishery much better.

Volcanism
Iceland's volcanoes can affect other parts of the world. The largest, Hekla, may even have affected ancient Egypt when an eruption over 3000 years ago may have caused famine (this idea is disputed). Sutherland in Scotland shows signs of having been affected by volcanic ash at about that time

An eruption of a smaller volcano on 15 April 2010 caused the closure of aviation all over northern Europe when dust was injected into the upper atmosphere at the level where jet aeroplanes fly.

Some reporters suggest that a small elite controls the country and that freedom of expression is under threat.

The trend is towards warmer winters and possibly a longer growing season.