part of the Norwegian and later the Danish monarchies. Until the 20th century, the Icelandic population relied largely on fisheries 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 it was one of the world's wealthiest countries. 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 taxes compared to other OECD countries,[9] while maintaining a Nordic welfare system that provides universal health care and tertiary education for its citizens.[10] In recent years, Iceland has been one of the wealthiest and most developed nations in the world. In 2011, it was ranked as the 14th most developed country in the world by the United Nations' Human Development Index,[3] and the fourth most productive country per capita.[11] In 2008, the nation's entire banking system systemically failed, resulting in substantial political unrest. Though it remains economically and politically stable, Iceland has yet to fully recover from the crisis. 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 closely related to Faroese and some West Norwegian dialects. The country's cultural heritage includes traditional Icelandic cuisine, poetry, and the medieval Icelanders' sagas. Currently, Iceland has the smallest population among NATO members and is the only one with no standing army. Contents 1 History 1.1 Settlement and Commonwealth 874 – 1262 1.2 Middle Ages to the Early Modern Era 1262–1814 1.3 Independence movement 1814–1918 1.4 Kingdom of Iceland 1918–1944 1.5 Independent republic 1945–2003 1.6 Rise and fall of Iceland as a financial centre 2003–2012 2 Geography 2.1 Geology 2.2 Climate 2.3 Biodiversity 3 Politics 3.1 Government 3.2 Administrative divisions 3.3 Foreign relations 3.4 Military 4 Economy 4.1 Economic contraction 4.2 Transport 4.3 Energy 4.4 Education and science 5 Demographics 5.1 Urbanisation 5.2 Language 5.3 Health 5.4 Religion 6 Culture 6.1 Literature 6.2 Art 6.3 Music 6.4 Media 6.5 Cuisine 6.6 Sports 7 See also 8 Notes 9 References 10 External links History Main articles: History of Iceland, History of Scandinavia, and Timeline of Icelandic history Settlement and Commonwealth 874 – 1262 See also: Settlement of Iceland, Icelandic Commonwealth, and Christianisation of Iceland Ingólfr Arnarson (modern Icelandic: Ingólfur Arnarson), the first permanent Norse settler in Iceland According to both Landnámabók and Íslendingabók, Irish monks known as the Papar had lived Iceland before the Norse settlers arrived, possibly members of a Hiberno-Scottish mission. Recent archaeological excavations have revealed the ruins of a cabin in Hafnir on the Reykjanes peninsula (close to Keflavík Airport). Carbon dating reveals that the cabin 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.[12] The first known permanent Norse settler was Ingólfr Arnarson, who built his homestead in Reykjavík in the year 874. Ingólfr was followed by many other emigrant settlers, largely Norsemen and their Irish slaves. By 930, most arable 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 after. The Commonwealth lasted until 1262, when the political system devised by the original settlers proved unable to cope with the increasing power of Icelandic chieftains.[13] Ósvör, a replica of an old fishing outpost outside of Bolungarvík Middle Ages to the Early Modern Era 1262–1814 A 19th-century depiction of Alţingi in session at Ţingvellir See also: Age of the Sturlungs The internal struggles and civil strife of the Sturlung Era led to the signing of the Old Covenant in 1262, which brought Iceland under the Norwegian crown. Possession of Iceland passed to Denmark-Norway around 1380, when the kingdoms of Norway, Denmark and Sweden were united in the Kalmar Union. In the ensuing centuries, Iceland became one of the poorest countries settled by Europeans. Infertile soil, volcanic eruptions, and an unforgiving climate made for harsh life in a society where subsistence depended almost entirely on agriculture. The Black Death swept Iceland in 1402–04 and 1494–95,[14] the first time killing as much as 50% to 60% of the population, and 30% to 50% in the second.[15] 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.[16][17] A great smallpox epidemic in the 18th century killed around a third of the population.[18][19] In 1783 the Laki volcano erupted, with devastating effects.[20] The years following the eruption, known as the Mist Hardships (Icelandic: Móđuharđindin), saw the death of over half of all livestock in the country, with ensuing famine in which around a quarter of the population died.[21] Independence movement 1814–1918 Jón Sigurđsson, leader of the Icelandic independence movement See also: Icelandic independence movement and Fjölnismenn 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 grow worse, 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.[22] However, a new national consciousness had arisen, inspired by romantic and nationalist ideas from mainland Europe. An Icelandic independence movement arose in the 1850s under the leadership of Jón Sigurđsson, riding on the burgeoning domestic 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. Kingdom of Iceland 1918–1944 See also: Kingdom of Iceland and Iceland during World War II HMS Berwick led the British invasion of Iceland. 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 the King of 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 declared that the Icelandic Government should assume the Danish king's duties, taking control of foreign affairs and other matters previously handled by Denmark. A month later, British Armed Forces occupied Iceland in order to stop the nation siding with the now occupied Denmark. In 1941, the occupation of Iceland was taken over by the United States so that Britain could use its troops elsewhere. 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.[23] Iceland formally became a republic on 17 June 1944, with Sveinn Björnsson as the first President. Independent republic 1945–2003 See also: Cod Wars British and Icelandic vessels collide in the Atlantic Ocean during the Cod Wars 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 defence agreement was signed with the United States. American troops returned to Iceland, as the Iceland Defence Force, and remained throughout the Cold War; the US withdrew the last of its forces on 30 September 2006. The immediate post-war period was followed by substantial economic growth, driven by industrialisation of the fishing industry and the Marshall Plan programme, through which Icelanders received the most aid per capita of any European country (at USD 209, with the Netherlands a distant second at USD 109).[24][25] 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.[26] Rise and fall of Iceland as a financial centre 2003–2012 See also: 2008–2012 Icelandic financial crisis and 2009 Icelandic financial crisis protests In the years 2003–2007, Iceland transformed from a nation best known for its fishing industry toward having an economy based on financial services and investment banking.[27] It was quickly becoming one of the most prosperous countries in the world before getting hit hard by a major financial crisis.[27] The crisis resulted in the greatest migration from Iceland since 1887, with a net emigration of 5,000 people in 2009.[28] Iceland remains economically stable, although recovery remains a perennial and long-term concern. Geography General topographic map Main article: Geography of Iceland Iceland is located in the North Atlantic Ocean. 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. South of Grímsey the midnight sun is thus not totally showing during the hours around midnight in the summer. The country lies between latitudes 63° and 67° N, and longitudes 25° and 13° W. Though Iceland is nearer to Greenland (North America) than Europe, the island is generally included in Europe for historical, political, cultural, and practical reasons. Geologically the island is part of both continental plates. The closest bodies of land are Greenland (287 km (178 mi)) and the Faroe Islands (420 km (261 mi)). The closest European country is the UK (Scotland) 900 km (559 mi) away (not including the Faroe Islands (Denmark) or the Orkney Islands (Scotland)). Norway is about 970 km (603 mi) away. Iceland is the world's 18th largest island, and Europe's second largest island following 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 island of Grímsey and the Vestmannaeyjar archipelago. Lakes and glaciers cover 14.3%; only 23% is vegetated.[29] The largest lakes are Ţórisvatn (Reservoir): 83–88 km2 (32.0–34.0 sq mi) and Ţingvallavatn: 82 km2 (31.7 sq mi); other important lakes include Lagarfljót and Mývatn. Jökulsárlón is the deepest lake, at 248 m (814 ft).[30] Geologically, Iceland is a part of the Mid-Atlantic Ridge, the ridge along which the oceanic crust spreads and forms new oceanic crust. In addition, this part of the mid-ocean ridge is located atop a mantle plume causing Iceland to be subaerial (above the surface of the sea). Iceland marks the boundary between both the Eurasian Plate and the North American Plate as it was created by rifting and accretion through volcanism along the Mid-Atlantic Ridge where the two plates meet.[31] Many fjords punctuate its 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 and mountains. The major towns are the capital of Reykjavík, along with its outlying towns of Kópavogur, Hafnarfjörđur and Garđabćr, Reykjanesbćr, where the international airport is located, and Akureyri, in northern Iceland. The island of Grímsey on the Arctic Circle contains the northernmost habitation of Iceland.[5] Iceland has three national parks: Vatnajökull National Park, Snćfellsjökull National Park, and Ţingvellir National Park.[32] The country is considered a "strong performer" in environmental protection, having been ranked 13th in Yale University's Environmental Performance Index of 2012.[33] Iceland, as seen from space on 29 January 2004 Suđureyri Norđfjörđur Viđey with Esjan in the background The eruption of Eyjafjallajökull Geology The erupting Geysir in Haukadalur valley, the oldest known geyser in the world Dettifoss, located in northeast Iceland. It is the largest waterfall in Europe in terms of volume discharge, with an average water flow of 200 m3/second. Eyjafjallajökull major eruption, photo taken May 10, 2010 Main article: Geology of Iceland See also: Iceland plume A geologically young land, Iceland is located on both the Iceland hotspot and the Mid-Atlantic Ridge, which runs right through it. This location means that the island is highly geologically active with many volcanoes, notably Hekla, Eldgjá, Herđubreiđ and Eldfell.[34] The volcanic eruption of Laki in 1783–1784 caused a famine that killed nearly a quarter of the island's population;[35] the eruption caused dust clouds and haze to appear over most of Europe and parts of Asia and Africa for several months afterward.[36] Iceland has many geysers, including Geysir, from which the English word is derived, and the famous Strokkur, which erupts every 5–10 minutes. After a phase of inactivity, Geysir started erupting again after a series of earthquakes in 2000. Geysir has since then grown more quiet and does not erupt often. With the widespread availability of geothermal power, and the harnessing of many rivers and waterfalls for hydroelectricity, most residents have inexpensive hot water and home heat. The island itself is composed primarily of basalt, a low-silica lava associated with effusive volcanism as has occurred also in Hawaii. Iceland, however, has a variety of volcanic types (composite and fissure), many producing more evolved lavas such as rhyolite and andesite. Iceland has hundreds of volcanoes within approx. 30 volcanic systems active.[37] Surtsey, one of the youngest islands in the world, is part of Iceland. Named after Surtr, it rose above the ocean in a series of volcanic eruptions between 8 November 1963 and 5 June 1968.[5] Only scientists researching the growth of new life are allowed to visit the island.[38] On 21 March 2010, a volcano in Eyjafjallajökull in the south of Iceland erupted for the first time since 1821, forcing 600 people to flee their homes.[39] Further eruptions on 14 April forced hundreds of people to abandon their homes.[40] The resultant cloud of volcanic ash brought major disruption to air travel across Europe.[41] An iceberg near Jökulsárlón with Vatnajökull in the background. Another large eruption occurred on 21 May 2011. This time it was the Grímsvötn volcano, located under the thick ice of one of Europe's largest glaciers, the Vatnajökull. Grímsvötn is one of Iceland's most active volcanoes and this eruption was much more powerful than the 2010 Eyjafjallajökull activity. Debris was thrown 20 km (12.43 mi) up in the atmosphere, creating a large ash cloud that, for a while, was thought to pose a danger to jet aircraft over a wide area of northern Europe. Climate Eyjafjallajökull glacier, one of the smallest glaciers of Iceland Main article: Climate of Iceland The climate of Iceland's coast is subpolar oceanic. The warm North Atlantic Current ensures generally higher annual temperatures than in most places of similar latitude in the world. Regions in the world with similar climate include the Aleutian Islands, the Alaska Peninsula, and Tierra del Fuego, although these regions are closer to the equator. Despite its proximity to the Arctic, the island's coasts remain ice-free through the winter. Ice incursions are rare, the last having occurred on the north coast in 1969.[42] There are some variations in the climate between different parts of the island. Generally speaking, the south coast is warmer, wetter and windier than the north. The Central Highlands are the coldest part of the country. Low-lying inland areas in the north are the most arid. Snowfall in winter is more common in the north than the south. The highest air temperature recorded was 30.5 °C (86.9 °F) on 22 June 1939 at Teigarhorn on the southeastern coast. The lowest was -38 °C (-36.4 °F) on 22 January 1918 at Grímsstađir and Möđrudalur in the northeastern hinterland. The temperature records for Reykjavík are 26.2 °C (79.2 °F) on 30 July 2008, and -24.5 °C (-12.1 °F) on 21 January 1918. Climate data for Reykjavík, Iceland (1961–1990) Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Average high °C (°F) 1.9 (35.4) 2.8 (37.0) 3.2 (37.8) 5.7 (42.3) 9.4 (48.9) 11.7 (53.1) 13.3 (55.9) 13.0 (55.4) 10.1 (50.2) 6.8 (44.2) 3.4 (38.1) 2.2 (36.0) 7.0 (44.6) Average low °C (°F) -3 (26.6) -2.1 (28.2) -2 (28.4) 0.4 (32.7) 3.6 (38.5) 6.7 (44.1) 8.3 (46.9) 7.9 (46.2) 5.0 (41.0) 2.2 (36.0) -1.3 (29.7) -2.8 (27.0) 1.9 (35.4) Source no. 1: Icelandic Meteorological Office[43] Source no. 2: Reykjavík weather station (#1) climatic means chart[44] Climate data for Akureyri, Iceland (1961–1990) Month Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Year Average high °C (°F) 0.9 (33.6) 1.7 (35.1) 2.1 (35.8) 5.4 (41.7) 9.5 (49.1) 13.2 (55.8) 14.5 (58.1) 13.9 (57.0) 9.9 (49.8) 5.9 (42.6) 2.6 (36.7) 1.3 (34.3) 6.7 (44.1) Average low °C (°F) -5.5 (22.1) -4.7 (23.5) -4.2 (24.4) -1.5 (29.3) 2.3 (36.1) 6.0 (42.8) 7.5 (45.5) 7.1 (44.8) 3.5 (38.3) 0.4 (32.7) -3.5 (25.7) -5.1 (22.8) 0.2 (32.4) Source no. 1: Icelandic Meteorological Office[43] Source no. 2: Reykjavík weather station (#1) climatic means chart[44] Biodiversity See also: Whaling in Iceland and The Botany of Iceland An Icelandic horse There are around 1,300 known species of insects in Iceland, which is a rather low number compared with other countries (over one million species have been described worldwide). The only native land mammal when humans arrived was the Arctic Fox,[45] which came to the island at the end of the ice age, walking over the frozen sea. On rare occasions, bats which have been carried to the island with the winds can be seen, but they are not able to breed there. Polar bears have also shown up through