A few Irish monks may have reached Iceland before ad 800, but it remained essentially unsettled until about 870. Norwegian Viking Ingólfr Arnarson and his wife are named in early Icelandic sources as the first permanent settlers; he established his farm at Reykjavík (now the capital) in 874. During the next 60 years, other settlers flocked to the island, mainly from Norway, but also from other Nordic countries and the British Isles. By about 930 a central organization for the whole island had been developed in the form of a general legislature called the Althing.
A Headless State
The commonwealth founded by the Icelanders was a republic without any island-wide executive authority or a head of state. Legislative and judicial powers were wielded by the Althing, but enforcement was the responsibility of the aggrieved party, sometimes assisted by one of the 40 or so godar, the powerful priest-chieftains who in practice formed the ruling class. Nevertheless, the state prospered for more than 300 years. The land had ample resources of fish, seal, and fowl, and grazing lands were extensive.
Foreign domination brought with it a long decline of Icelandic fortunes. This was especially true after the country, along with Norway, passed to the Danish Crown in 1380. Denmark, seeking to expand its shipping and commerce, did not want the lucrative Icelandic fish trade to flow to England or Germany, the two countries that had the greatest interest in the island. Gradually, the Danish Crown managed to reduce their trading activities in Iceland, and by the middle of the 16th century it had ousted almost all foreign traders.
In 1661 King Frederick III introduced an absolute monarchy in Denmark and Norway; the following year Icelandic leaders were forced, under threat of arms, to accept his absolutism. The abrogation of the Althing’s legislative powers, as well as the denial of its judicial role, quickly followed. The country now stood stripped of all political power.
During the 18th century, Iceland reached its nadir. At the end of the Age of Settlement, in 930, some 60,000 to 90,000 people are estimated to have lived in the country; in the early years of the 18th century, when the first national census was taken, the population was down to 50,000. A series of disasters, including a smallpox epidemic in 1707-1709, famines in the middle of the century, and the eruption of the volcano Laki in 1783, further reduced the nation to some 35,000 inhabitants, most of them paupers. Denmark seriously considered evacuating the remaining Icelanders to the heathlands of the Jutland Peninsula.
D Turning Point
After the mid-18th century, however, national fortunes began to turn. Shortly after the middle of the century an enterprising Icelandic official established some cottage industries in Reykjavík, then just a collection of huts. Although his efforts eventually failed, they provided inspiration for other attempts that did improve conditions in the country. The first tangible sign of this was the modification of the trade monopoly in 1787, allowing commerce with any Danish subject.
Although the 19th century began with the total suspension of the Althing, it eventually became an age of reawakening. The waves of revolution on the European continent forced political change in Denmark, and soon the Icelanders also began to clamour for their national rights. In this struggle they were led by the scholar-politician Jón Sigurdsson, now revered as a national hero. The Althing was reconvened in 1843; trade was made free to all nations in 1854; and 20 years later a new constitution was promulgated, granting the Althing partial control over domestic finances.
E Rapid Progress
Until this time, the Icelandic economy had remained essentially medieval, but with financial authority established inside the country, it began to modernize at a relatively fast pace. At the same time the struggle for independence continued; in 1904 Iceland attained home rule, and in 1918 it was finally recognized as a separate state under the Danish Crown; Denmark retained control of foreign affairs. Under this Treaty of Union, either party had the right to terminate the arrangement after 25 years. The inter-war years saw the emergence of modern party politics and significant strides were made, despite the lean years of the Great Depression.
When Denmark was occupied by Nazi Germany in April 1940, Iceland was cut off from its head of state. A month later, it, too, was occupied, but by British troops. In May 1941 the Icelandic government appointed Sveinn Björnsson, a former minister to Denmark, as Regent.
The Treaty of Union expired in 1943, and, unable to renegotiate it, Icelanders decided to act unilaterally to terminate it. In a national referendum in early 1944, with 98.6 per cent of eligible voters participating, 97.3 per cent voted to sever all ties with Denmark. The Icelandic republic was accordingly proclaimed at Thingvöllur on June 17, 1944, with Sveinn Björnsson as the first president.
F Free but Occupied
Paradoxically, Iceland celebrated its final deliverance from alien rule while still occupied by another foreign power. In 1941 the Icelandic government had been pressed by the United Kingdom and the United States to ask for US protection, primarily to free the British occupation troops for service elsewhere. Contrary to contractual obligations, however, the United States did not withdraw its forces at the end of the war. Instead the US government requested permanent military bases in the country.
G Fishing Disputes
A second, perhaps more fundamental, question of national existence since World War II has involved another Western democracy, the United Kingdom. A desire to protect fish stocks and jobs led Iceland to extend its territorial waters from 4 to 12 nautical miles (7 to 22 km) in 1964 and 50 nautical miles (93 km) in 1972. The British government responded to the extensions by sending warships to protect their trawlers in contested waters; the result was two “Cod Wars” that lasted until 1973 when the two sides reached a temporary agreement on fishing limits. A month before the agreement expired, in October 1975, Iceland extended the limit to 200 nautical miles (370 km). Failure to reach a new agreement sparked the third and most serious “Cod War” in November 1975.
H Recent Elections
In January 1994 the Social Democratic Party called for Iceland to apply for EU membership, a course favoured by the majority in opinion polls. The parties of the ruling coalition, the Independence Party, and the Social Democratic Party, both lost support in the general election in April 1995. A new coalition was formed with the Independence Party and the Progressive Party, which had improved its share of the vote in the election. Elections for president in June 1996 brought victory for Ólafur Ragnar Grímsson, who polled over 40 per cent of the vote. In the May 1999 Althing elections, the coalition of the conservative Independence Party of Prime Minister David Oddsson and the centrist Progressive Party maintained its majority. Four years later in 2003 the Independence Party again won most seats (22) but needed the help of the Progressive Party to form a working government.