|Speaker||Einar Kristinn Guðfinnsson,Independence Party|
Since 23 May 2013
|Voting system||Party-list proportional representation|
|Last election||27 April 2013|
Throughout the 19th century, the country's climate continued to grow worse, resulting in mass emigration to the New World, particularly Manitoba in Canada. However, a new national consciousness was revived in Iceland, inspired by romantic nationalist ideas from continental Europe. This revival was spearheaded by the Fjölnismenn, a group of Danish-educated Icelandic intellectuals.
An independence movement developed under the leadership of a lawyer named Jón Sigurðsson. In 1843 a new Althing was founded as a consultative assembly. It claimed continuity with the Althing of the Icelandic Commonwealth, which had remained for centuries as a judicial body and been abolished in 1800.
Home rule and sovereignty
In 1874, a thousand years after the first acknowledged settlement, Denmark granted Iceland a constitution and home rule, which again was expanded in 1904. The constitution was revised in 1903, and a minister for Icelandic affairs, residing in Reykjavík, was made responsible to the Althing, the first of whom was Hannes Hafstein.
The Act of Union, a December 1, 1918, agreement with Denmark, recognized Iceland as a fully sovereign state — the Kingdom of Iceland - joined with Denmark in a personal union with the Danish king. Iceland established its own flag, declared its neutrality and asked Denmark to represent its foreign affairs and defense interests. The Act would be up for revision in 1940 and could be revoked three years later if agreement was not reached.
These principles of partial sovereignty were exercised in the Swedish-Icelandic Declaration regarding mutual protection of trade marks in Sweden and Iceland, exchanged at Copenhagen on March 23, 1921. Even though the declaration was signed in Copenhagen and with the approval of the Danish government, it was drawn in Swedish and Icelandic only, without the Danish language being represented.
World War II
The occupation of Denmark by Nazi Germany began on April 9, 1940, severing communications between Iceland and Denmark. As a result, on April 10, the Parliament of Iceland, Alþingi, elected to take control of foreign affairs, electing a provisional governor,Sveinn Björnsson, who later became the republic's first president.
During the first year of World War II, Iceland strictly enforced a position of neutrality, taking action against both British andGerman forces violating the laws of neutrality. On May 10, 1940, British military forces began an invasion of Iceland when they sailed into Reykjavík harbour in Operation Fork.
The government of Iceland issued a protest against what it called a "flagrant violation" of Icelandic neutrality. On the day of the invasion, Prime Minister Hermann Jónasson read a radio announcement asking Icelanders to treat the British troops with the politeness as if they were guests. TheAllied occupation of Iceland would last throughout the war.
At the peak of their occupation of Iceland, the British had around 25,000 troops stationed in Iceland, all but eliminating unemployment in the Reykjavík area and other strategically important places. In July 1941, responsibility for Iceland's defence passed to the United States under a U.S.-Icelandic defence agreement.
The British needed all the forces they could muster closer to home and, thus, coerced the Alþingi into agreeing to an American occupation force. Up to 40,000 soldiers were stationed on the island, outnumbering all grown Icelandic men. (At the time, Iceland had a population of around 120,000.)
Republic of Iceland (1944-)
Founding of the Republic
On 31 December 1943, the Act of Union agreement expired after 25 years. Beginning on 20 May 1944, Icelanders voted in a four-day plebiscite on whether to terminate the personal union with the King of Denmark 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 an independent republic on June 17, 1944, with Sveinn Björnsson as its first President. Denmark was still occupied by Germany. Despite this, the Danish king, Christian X, sent a message of congratulations to the Icelandic people.
Iceland had prospered during the course of the war, amassing considerable currency reserves in foreign banks. In addition to this, the country received the most Marshall Aid per capita of any European country in the immediate postwar years (at USD 209, with the Netherlands a distant second at USD 109).
The new republican government, led by an unlikely three-party majority cabinet made up of conservatives (theIndependence Party, Sjálfstæðisflokkurinn), social democrats (the Social Democratic Party, Alþýðuflokkurinn), and socialists (People's Unity Party – Socialist Party, Sósíalistaflokkurinn), decided to put the funds into a general renovation of the fishing fleet, the building of fish processing facilities, the construction of a cement and fertilizer factory, and a general modernization of agriculture. These actions were aimed at keeping Icelanders'standard of living as high as it had become during the prosperous war years.
The government's fiscal policy was strictly Keynesian, and their aim was to create the necessary industrial infrastructure for a prosperous developed country. It was considered essential to keep unemployment down to an absolute minimum and to protect the export fishing industry through currency manipulation and other means. Due to the country's dependence both on unreliable fish catches and foreign demand for fish products, Iceland's economy remained very unstable well into the 1990s, when the country's economy was greatly diversified.
In October 1946, the Icelandic and United States' governments agreed to terminate U.S. responsibility for the defense of Iceland, but the United States retained certain rights at Keflavík, such as the right to re-establish a military presence there, should war threaten.
Iceland became a charter member of NATO on March 30, 1949, with the reservation that it would never take part in offensive action against another nation. The membership came amid an anti-NATO riot in Iceland. After the outbreak of the Korean War in 1950, and pursuant to the request of NATO military authorities, the United States and Alþingi agreed that the United States should again take responsibility for Iceland's defence.
This agreement, signed on May 5, 1951, was the authority for the controversial U.S. military presence in Iceland, which remained until 2006. Although U.S. forces no longer maintain a military presence in Iceland, the US still assumes responsibility over the country's defense through NATO. Iceland has retained strong ties to the otherNordic countries. As a consequence Norway, Denmark, Germany and other European nations have increased their defense and rescue cooperation with Iceland since the withdrawal of U.S. forces.
The Cod Wars were a series of conflicts between Iceland and theUnited Kingdom from the late 1950s to the mid-1970s. The first Cod War took place in 1958 when Britain was unable to prevent Iceland from extending its fishing limits from 4 to 12 miles (7 to 22 km) off the coast of Iceland. The second Cod War lasted from 1972 to 1973, when Iceland extended the limit to 50 miles (93 km).
The third Cod War began in November 1975, when Iceland extended its zone of control over fishing from 50 miles (93 km) to 200 miles (370 km). The UK did not recognize Iceland's authority in the matter and continued to fish inside the disputed area, making this the third time that Iceland and the UK clashed over fishing rights. Iceland deployed a total of eight ships: six Coast Guard vessels and two Polish-built stern trawlers, to enforce her control over fishing rights.
In response, the UK deployed a total of twenty-two frigates, seven supply ships, nine tug-boats and threeauxiliary ships to protect its 40 fishing trawlers. While few shots were fired during the seven-month conflict, several ships were rammed on both sides, causing damage to the vessels and a few injuries and deaths to the crews.
Events took a more serious turn when Iceland threatened closure of the U.S.-manned NATO base at Keflavík, which, in the military perception of the time, would have severely impaired NATO's ability to defend the Atlantic Ocean from the Soviet Union. As a result, the British government agreed to have its fishermen stay outside of Iceland's 200 mile (370 km) exclusion zone without a specific agreement.
EEA membership and economic reform
In 1991, the Independence Party, led by Davíð Oddsson, formed a coalition government with the Social Democrats. This government set in motion market liberalisation policies, privatising a number of state-owned companies. Iceland then became a member of theEuropean Economic Area in 1994. Economic stability increased and previously chronic inflation was drastically reduced.
In 1995, the Independence Party formed a coalition government with the Progressive Party. This government continued with the free market policies, privatising two commercial banks and the state-owned telecom Landssíminn ("Country telephone", now "Telephone").
Corporate incomes tax was reduced to 18% (from around 50% at the beginning of the decade), inheritance tax was greatly reduced and the net wealth tax abolished. A system of individual transferable quotas in the Icelandic fisheries, first introduced in the late 1970s, was further developed.
The coalition government remained in power through elections in 1999 and 2003. In 2004, Davíð Oddsson stepped down as Prime Minister after 13 years in office. Halldór Ásgrímsson, leader of the Progressive Party, took over as Prime Minister from 2004 to 2006, followed by Geir H. Haarde, Davíð Oddsson’s successor as leader of the Independence Party.
After a temporary recession in the early 1990s, economic growth was considerable, about 4% per year on average from 1994. The governments of the 1990s and 2000s (decade) adhered to a staunch but domestically controversial pro-U.S. foreign policy, lending nominal support to the NATO action in theKosovo War and signing up as a member of the Coalition of the willing during the 2003 invasion of Iraq.
In March 2006, the United States announced that it intended to withdraw the greater part of the Icelandic Defence Force. On 12 August 2006, the last four F-15s left Icelandic airspace. The United States closed the Keflavík Air Base in September 2006.
Following elections in May 2007, the Independence Party headed by Geir H. Haarde remained in government, albeit in a new coalition with the Social Democratic Alliance.
In October 2008, the Icelandic banking system collapsed, prompting Iceland to seek large loans from the International Monetary Fund and friendly countries. Widespread protests in late 2008 and early 2009 resulted in the resignation of the government of Geir Haarde, which was replaced on 1 February 2009 by a coalition government led by the Social Democratic Alliance and the Left-Green Movement. Social Democrat minister Jóhanna Sigurðardóttir was appointed Prime Minister, becoming the world's firstopenly homosexual head of government of the modern era. Elections took place in April 2009 and a continuing coalition government consisting of the Social Democrats and the Left-Green Movement was established in early May 2009.
The crisis resulted in the greatest migration from Iceland since 1887, with a net emigration of 5,000 people in 2009. Iceland's economy stabilized under the government of Jóhanna Sigurðardóttir, and grew by 1.6% in 2012 but many Icelanders remained unhappy with the state of the economy and government austerity policies; the centre-right Independence Party was returned to power, in coalition with the Progressive Party, in the 2013 elections..