Settled by Norwegian and Celtic (Scottish and Irish) immigrants during the late 9th and 10th centuries A.D., Iceland boasts the world's oldest functioning legislative assembly, the Althing, established in 930. Independent for over 300 years, Iceland was subsequently ruled by Norway and Denmark. Fallout from the Askja volcano of 1875 devastated the Icelandic economy and caused widespread famine. Over the next quarter century, 20% of the island's population emigrated, mostly to Canada and the US. Limited home rule from Denmark was granted in 1874 and complete independence attained in 1944. Literacy, longevity, income, and social cohesion are first-rate by world standards.

GEOGRAPHY
Iceland is a volcanic island in the North Atlantic Ocean east of Greenland and immediately south of the Arctic Circle. It lies about 4,200 kilometers (2,600 mi.) from New York and 830 kilometers (520 mi.) from Scotland.

About 79% of Iceland's land area, which is of recent volcanic origin, consists of glaciers, lakes, a mountainous lava desert (highest elevation 2,000 meters--6,590 ft. --above sea level), and other wasteland. About 28% of the land is used for grazing, and 1% is cultivated. The inhabited areas are on the coast, particularly in the southwest where about 60% of the population lives.

Because of the Gulf Stream's moderating influence, the climate is characterized by damp, cool summers and relatively mild but windy winters. In Reykjavik, the average temperature is 11°C (52°F) in July and -1°C (30°F) in January.

PEOPLE
Most Icelanders are descendants of Norwegian settlers and Celts from the British Isles, and the population is remarkably homogeneous. According to Icelandic Government statistics, 93% of the nation's inhabitants live in urban areas (localities with populations greater then 200) and about 60% live in Reykjavik metropolitan area. Of the Nordic languages, the Icelandic language is closest to the Old Norse language and has remained relatively unchanged since the 12th century.

About 91% of the population belongs to the state church, the Evangelical Lutheran Church, or other Lutheran Churches. However, Iceland has complete religious liberty, and about 20 other religious congregations are present.

ECONOMY
Marine products account for the majority of Iceland's exports of goods. Other important exports include aluminum, ferro-silicon alloys, equipment and electronic machinery for fishing and fish processing, pharmaceuticals, and woolen goods. Information technology and related services is an important growth area. Foreign trade plays an important role in the Icelandic economy. Exports account for about one-fourth of GDP and imports for one-third. Most of Iceland's exports go to the EU and EFTA countries, the United States, and Japan. The U.S. is Iceland's largest bilateral investment partner and largest partner in services trade.

Iceland's relatively liberal trading policy was strengthened by accession to the European Economic Area in 1994 and by the Uruguay Round agreement, which also brought significantly improved market access for Iceland's exports, particularly seafood products. However, the agricultural sector remains heavily subsidized and protected.

U.S.-ICELANDIC RELATIONS
U.S. policy aims to maintain close, cooperative relations with Iceland, both as a NATO ally and as a friend interested in the shared objectives of enhancing world peace; respect for human rights; economic development; arms control; and law enforcement cooperation, including the fight against terrorism, narcotics, and human trafficking. Moreover, the United States endeavors to strengthen bilateral economic and trade relations. A consistently reliable ally, Iceland vote with the United States on most major UN, NATO, and environmental issues.

In celebration of the 1,000th anniversary in the Year 2000 of Leif Eriksson's voyage to North America, the United States established a volunteer binational working-group to coordinate a number of millennium activities with the Government of Iceland and interested parties. These activities highlighted, among other areas, shared culture, scholarship and research, scientific discovery and exploration, pioneer legacy, and the strong defense relationship between the countries.

Full country name: Republic of Iceland
Area: 103,000 sq km (39,768 sq mi)
Population: 279,000
Capital city: Reykjavík (pop 171,500)
People: 97% Icelanders
Language: Icelandic
Religion: 95% Evangelical Lutheran, 3% other Protestant denominations, 1% Roman Catholic, & some followers of Ásatrú, an ancient Norse religion
Government: Constitutional republic
President: Ólafur Ragnar Grímsson
GDP: US$6.4 billion
GDP per head: US$23,700
Annual growth: 1.7%
Inflation: 1.9%
Major industries: Fishing, aquaculture, aluminium smelting & geothermal power
Major trading partners: EU (esp. Germany, Norway, UK, Denmark, Sweden), USA
Member of EU: no