ICELAND

Republic of Iceland

Lýðveldið Ísland

COUNTRY OVERVIEW

LOCATION AND SIZE.

A small volcanic island located between the Greenland Sea and the North Atlantic Ocean in the Arctic, Iceland is the westernmost European country. Found between Greenland and Europe, just northwest of the United Kingdom, Iceland has an area of 103,000 square kilometers (39,768 square miles) of which 100,250 square kilometers (38,707 square miles) is land and 2,750 square kilometers (1,062 square miles) is water. Its coastline is 4,988 kilometers (3,099 miles) long. Iceland is about the size of the state of Kentucky. Its capital, Reykjavík, is located on the country's southwestern coast. The climate is moderated by the North Atlantic current. In Iceland winters are mild and windy and the summers are cool. Approximately four-fifths of the country is unpopulated and uninhabitable. Glaciers cover more of the land in Iceland than in all of Europe. In addition to glaciers, the island has lakes, mountains, a lava desert, lush green areas, and natural hot springs, making Iceland a spectacle of nature.

POPULATION.

The population of Iceland was estimated as 276,365 in July of 2000, with a slow growth rate of 0.57 percent. Iceland is the most sparsely populated country in Europe, with an average of 3 inhabitants per square kilometer. In 2000, the birth rate stood at 14.86 births per 1,000 population and the death rate at 6.87 deaths per 1,000 population.

The majority of Icelanders live in a narrow coastal belt in the valleys and in the southwest corner of the country. The Icelandic government reports that 99 percent of the population live in urban areas and 60 percent of the people reside in the republic's capital, Reykjavík, or in suburban areas directly outside of the city.

Iceland has a relatively young and middle-aged population—65 percent are between 15 and 64 years, 23 percent less than 14 years, and 12 percent aged 65 and older. It enjoys one of the highest life expectancy rates in the world. Life expectancy at birth was estimated in 2000 at 79.39 years (male: 77.19 years, female: 81.77 years). Iceland also possesses one of the world's highest literacy rates at 99.9 percent (1997 est.). Literature and poetry are a passion of the people and its per capita publication of books and magazines is the highest in the world.

Icelanders descended from the Norwegians and the Celts (Scottish and Irish). The national language is Icelandic, which of all the Nordic languages is the closest to the Old Norse language. The Icelandic spoken in 2001 has changed little since the 12th century. About 91 percent of the people belong to the state church, the Evangelical Lutheran Church. However, Iceland has complete religious freedom, and other Protestant and Catholic churches exist. Given Iceland's remote geographic location, its long-established culture and language, and its small population, it is a tightly-knit homogenous society.

OVERVIEW OF ECONOMY

Iceland's economy is similar to that of its Scandinavian neighbors. It is mainly capitalistic, but the republic has an extensive welfare system, low to no unemployment due to labor shortages, and a wide distribution of wealth. Poverty is practically non-existent. Overall, Iceland's economy is strong and Icelanders enjoy a standard of living similar to many European countries.

Iceland's use of its natural resources has been central to its economic success. The country has achieved a high standard of living and many years of economic stability from the profits of its fish and energy resources. Given Iceland's dependence on fishing and fisheries, the economy is profoundly affected by declines in the number of fish living in its seas and in the Atlantic Ocean. The economy is also sensitive to drops in world prices for its main exports of fish and fish products, aluminum, ferrosilicon, equipment and electronic machinery for fishing and fish processing, and woolen goods.

Foreign trade also plays an important role in Iceland's economy. Exports and imports account for two-thirds of the GDP. Most of Iceland's exports go to the European Union (EU) and ETFA (European Free Trade Association) countries, the United States, and Japan.

Stability is a key aspect of the Icelandic economy, and the performance levels of the economy are not expected to change anytime soon. The policies adopted by Prime Minister Olafur Ragnar Grimsson's center-right government effectively reduced the budget and government deficits, restricted foreign borrowing, controlled rising inflation , and revised agricultural and fishing policies while diversifying the economy and selling state-owned industries. The economy should continue to prosper in the future.

However, one factor that remains the subject of great debate is whether Iceland should join the European Union (EU). The main reservation against EU membership is the fear of losing direct control of Iceland's fishing resources. History plays an important role in this debate, as Iceland was under Danish control for 5 centuries and only became an independent republic in 1944. Therefore it is understandable that freedom and control over their country's own natural resources is an important issue to Icelanders, and does not make EU membership very alluring.

The Icelandic economy has several strong, growing sectors outside of its economic mainstay of fishing. Since the 1990s, the economy has been branching out into the manufacturing and service industries. The financial services, biotechnology, and computer software industries are especially strong and growing. Tourism is another important industry that is increasing. The number of international visitors has risen greatly in 2000, as people are intrigued by the natural wonders of Iceland. Whale watching, visiting hot springs, and horseback riding are popular tourist activities.

Since 2000 one of the government's top priorities has been to manage and control Iceland's booming economy. To ensure stability, the government has adopted conservative fiscal policies and reduced its public debt. Privatization is another policy adopted by the government to better manage Iceland's economy. In the early 1990s, the government launched its privatization policy by selling off many state-owned industries to private buyers. In 2001, Iceland's privatization program continued with the sale of state banks and a state telecommunications company. Monetary policy will continue to focus on price stability and increases are expected in interest rates in order to contain accelerating inflation.

POLITICS, GOVERNMENT, AND TAXATION

Iceland is a constitutional republic that boasts the world's oldest parliament, the Althingi, which was established in 930 A.D. An independent country for over 300 years, Iceland was conquered by Norway in 1262. In the late 14th century, Iceland fell under the rule of Denmark when Norway and Denmark united under the Danish crown.

Abolished in 1800, the Althingi was reestablished in 1843 as a consultative assembly. The Act of Union, a 1918 agreement with Denmark, recognized Iceland as a fully sovereign state united with Denmark under the Danish crown. The British military briefly occupied Iceland in 1940 after Germany invaded Denmark, and then the United States became responsible for Iceland's defense in July 1942 under a U.S.-Icelandic defense agreement. In 1944, Iceland regained its independence and became a republic.

The Icelandic government consists of 3 branches. The executive branch is composed of the president who is chief of state, the prime minister who heads the government, and a cabinet of 9 ministers. The legislative branch consists of 63 members of the Althingi. Finally, the judicial branch has a supreme court and several district and special courts. There are 23 counties ( Syslur ) in Iceland, and there are currently 5 major active political parties: Independence (IP), Progressive (PP), Alliance (A), Left-Green Movement (LGM), and Liberal Party (LP). There is universal suffrage in Iceland and all women and men are eligible to vote once they turn 18 years old.

Iceland has a written constitution and a parliamentary form of government. The president, who is elected by direct popular vote for a 4-year term with no term limit, has limited powers and acts as a spokesperson and head of state. The prime minister and cabinet are responsible for policy-making. There are many women in the Icelandic government; 3 are heads of ministries, and 22 women have seats in the 63-member Althingi .

Members of the Althingi are elected to 4-year terms by popular vote, unless the Althingi is dissolved sooner. Anyone who is eligible to vote, with the exception of the president and the judges of the Icelandic Supreme Court, can run for election in parliament. Members are elected on the basis of proportional representation from 8 constituencies. After every election, the president gives one of the parliamentary leaders of the political parties the authority to form a cabinet, usually beginning with the leader of the largest party.

The present cabinet is a coalition government of the Independence Party (IP) and the Progressive Party (PP), which was formed in May 1999. The conservative Independence Party (IP) has dominated politics in Iceland since the 1990s. After the IP lost its majority in the Althingi with its former coalition partner, the liberal Social Democrat Party (SDP), the IP leader Prime Minister David Oddsson made an alliance with the more conservative Progressive Party (PP). The strategic move was a success and the IP regained its parliamentary majority with 40 Althingi seats. Since the 1990s, the SDP has not had much popular support because of its support of full EU membership for Iceland. The SDP are the only party to fully espouse the benefits of Iceland joining the EU, though in 2001 the PP and the Alliance party began to explore membership.

In 1996, Vigdis Finnbogadottir chose not to run for reelection as president of Iceland after serving 4 popular terms. She was the first woman elected president in the world. With a strong voter turnout, leftist party chairman Olafur Ragnar Grimsson became president by winning with a good margin against 3 other candidates.

In 2001, the center-right coalition government of the IP and PP continues to enjoy solid majority support and is expected to remain in office. However, harsh budgetary austerity measures introduced in the 2001 budget to control the rising economy could conceivably cause a decline in their popularity. The coalition partners remain in agreement on the importance of Iceland's current economic policy and have managed to avoid becoming embroiled in controversial issues, such as membership in the European Union. The largest opposition party, the left-of-center Alliance, has been preoccupied with reorganizing its infrastructure and is not a threat to the IP-PP coalition. The next round of parliamentary elections is scheduled for May 2003.

About 90 percent of the government revenue in 1998 came from income and wealth taxes, as well as indirect taxes such as those placed on corporations, payroll taxes, and value-added taxes on goods and services. The wealthy pay a high income tax , while the country's poorer citizens are exempt from taxation and receive a credit.

INFRASTRUCTURE, POWER, AND COMMUNICATIONS

Iceland enjoys an extensive infrastructure. Roads started to be built in 1900 and construction increased during the 1980s. However, there are still a number of gravel roads in Iceland. The current national road system connects most of the cities and is largely in the coastal areas. It consists of about 12,691 kilometers (7,868 miles) of roads, with 3,262 kilometers (2,022 miles) paved. There are no railroads in Iceland.

Airplanes and ships conduct travel between Reykjavík and Iceland's smaller cities. Additionally, there are daily international flights from Iceland to Europe and North America. There are 12 airports with paved run-ways and 74 with unpaved runways. Because of Iceland's dependence on fishing revenues, there are 9 ports and harbors. The Icelandic merchant marine has a total of 3 ships: a chemical tanker, a container ship, and a petroleum tanker.

Telecommunications are completely modern, and a high percentage of the population use cellular phones (6,746 in 1997). Icelanders enjoy adequate domestic telephone service, and international telephone systems are run by 3 satellite earth stations, one of which is shared with the other Scandinavian countries.

As of 1998, Iceland had 3 AM radio stations and about 70 FM stations. There were 14 television broadcast stations (plus 16 low-power repeaters) in 1997. In 2001, there were 2 national state radio channels and many private stations that broadcast around the clock. The first privately owned station went on the air in 1986 and others soon followed.

In the 1960s the state television station was on the air for only 2 nights a week. Later, television programming was broadcast on the other nights of the week but for years there was no television on Thursdays. Icelanders did not watch television programs in their own language until 1966. Since the 1990s less than half of television programming is in Icelandic and most programs are from the United States and Great Britain and are subtitled.

Computer use is widespread in Iceland and about 82 percent of Icelanders have Internet access at home, at school, or at work. This is reflected in the republic's ever-growing information-technology industry, with the export of software rapidly increasing.

ECONOMIC SECTORS

Iceland's economic sectors reflect the small size of the country. Natural resources are important, especially the fishing industry. For this reason, fisheries dominate Iceland's trade policies and coincide with Iceland's overriding foreign trade interests, especially free trade of fish. All told, the fishing industry contributes 13 percent of GDP. However, other sectors such as biotechnology and tourism are growing.

AGRICULTURE

Agricultural production is a vital part of the Icelandic economy, accounting for 1 percent of its GDP (1998 est.) and employing over 16 percent of Iceland's workforce . Fish is the republic's main agricultural export but Iceland also produces potatoes, turnips, cattle, and sheep.

FISHING.

The fishing industry has grown to symbolize Iceland's economic independence from its Scandinavian neighbors. The Icelandic Ministry of Fisheries reported that in 1999 the total catch of fish by the Icelandic fleet was 1.7 million tons. In 2000, marine products accounted for more than 70 percent of Iceland's total export earnings, making Iceland's economy vulnerable to changing world fish prices. Cod and capelin are the most abundant fish in the catch. Full free trade in fisheries products has been established not only within the European Free Trade Association (EFTA) but also in a series of free-trade agreements with countries in Central and Eastern Europe and in the Mediterranean.

Iceland recognized in the 1970s that it was in danger of depleting its fisheries, and initiated a plan involving Individual Transferable Quotas (ITQs) and Individual Vessel Quotas (IVQs). While complex, the aim of the plan is to fairly allocate fishing rights to those in the fishing industry. Some argue that the plan, because it encourages efficiency and speed, has rewarded larger vessel owners at the expense of smaller operators, thus it is still a matter of some disagreement in Iceland. But overall, most observers feel that the plan has succeeded in managing Iceland's fisheries.

Friction exists between Iceland and its European neighbors over fishing rights. Norway and Russia have complained about Iceland's herring fishing in the Barents Sea between Iceland and Norway. Canada has objected to Iceland's shrimp fishing off the coast of Newfoundland.

The European market is the most important outlet for Icelandic agricultural products. Iceland is a member of the European Economic Area (EEA), which gives it full access to the EU without requiring membership in the body. But progress in fish-processing technology and transport has opened up new trade possibilities with other countries. Exports to Japan are increasing and emerging markets , like China and Korea, hold promise for the future. Attempts to further open markets in the fisheries sector have given Iceland virtually tariff -free access for most of its exports to Europe. While EEA membership has reduced pressure for Iceland to join the EU, it risks being left on the sidelines as the European Union expands.

INDUSTRY

While a small country, Iceland has a strong industrial sector that accounts for 21 percent of its GDP. Like its 2 other main economic sectors, industry in Iceland is centered on its natural resources. Fish processing, aluminum smelting, ferrosilicon production, and geothermal power are its main industries.

ENERGY

. Mineral resources are scarce in Iceland, though efforts are being made to develop deposits of diatomite (skeletal algae). Iceland has vast geothermal power sources (which develop power from the internal heat of the earth) and about 96 percent of the population enjoys geothermal heating in their homes. Geothermal energy plays an important role in Iceland's health-care system, which has shown interest in its medicinal possibilities. The Blue Lagoon, one of Iceland's most popular tourist attractions, is a good example of a combination of the traditional utilization of geothermal energy for economic reasons and its non-traditional utilization for healing. Geothermal energy is also used to generate electricity, and the effluents from power plants (extra thermal energy) can be used for many purposes in connection with spas and the tourist industry.

Iceland's abundant hydroelectric power sources are controlled by the government. The largest power station in Iceland has a capacity of 240 megawatts (mw). Other major hydroelectric stations are at Hrauneyjarfoss (210 mw) and Sigala (10 mw). Efforts are underway by the government to export hydroelectric energy to Europe by transporting it via submarine cables. The government is also investigating ways to expand its aluminum and ferro-silicon melting plants. One such venture is the Nordural aluminum plant, which accounted for a 1 percent growth rate in Iceland's 1998 GDP. Nordural is a wholly-owned $180 million investment by Columbia Ventures of the United States. As of 2001, plans were underway to build a new aluminum plant in the east of Iceland or expand existing ones. A new or expanded plant would increase investment and GDP growth.

SERVICES

Iceland's service sector accounts for approximately two-thirds of GDP, and has been rapidly increasing since the 1990s, particularly in the areas of financial services, tourism, software production, and biotechnology.

TOURISM.

Tourism is a growing and important industry in Iceland. In fact, the national airline, Icelandair, is one of the country's largest employers. According to Statistics Iceland, by 1999 tourism accounted for 4.4 percent of GDP on net receipts of Ikr282 million, up from 3 percent just 10 years earlier. The industry is expanding with the government's promotion of the country's magnificent natural attractions such as whale-watching, hot volcanic springs, glaciers, and horseback riding throughout the country. By 1999 the country boasted 24 hotels and guest-houses. It is a promising economic growth area and its numbers increased by 16 percent in 2000.

BIOTECHNOLOGY.

The sector that is showing the most rapid development is biotechnology. Iceland has unique natural resources and its position on the mid-Atlantic ridge is the source of its many hotsprings and the high-temperature areas where thermophilic bacteria (which thrive on heat) live, which can be utilized in various industries, especially pharmaceuticals. Scientists believe that thermophillic bacteria could lead to the development of better drugs and to more environmentally friendly forms of industry.

Iceland's rather limited human gene pool—due to its homogenous and cohesive population—makes it an invaluable laboratory for the study of the role of genes in the transmission of diseases. However, a fierce debate over genetics and individual rights erupted in Iceland in 1998. An Icelandic biotechnology company, deCode Genetics, wanted to include Icelanders' medical records, family trees (which are meticulously documented in Iceland; some can be traced as far back as over a thousand years ago), and genetic information into a single database. The company claimed the database would be beneficial to the health of Icelandic citizens, while critics argued such a project would simply serve the financial interests of deCode Genetics. The Althingi passed a bill in 1998 which allowed the Ministry of Health and Social Security to grant a license to create and operate an Icelandic Health Sector Database (IHD). In 2000, the Ministry awarded a 12-year license to Islensk erfdagreining, a subsidiary of deCode, to build and run the IHD, which has been operational since 2001.

FINANCE.

Three commercial banks, with branches and savings banks, operate in Iceland. Investment credit funds, insurance companies, private pension funds, and securities firms are among Iceland's financial institutions. During the 1980s, the financial sector was deregulated and reformed to help bring inflation under control.

INTERNATIONAL TRADE

Historically, Iceland has been late in joining major trade agreements. It joined the General Agreement on Tariffs and Trade (GATT) in 1968 and the European Free Trade Association (EFTA) in 1970. It entered into a free trade agreement covering all industrial products with the European Economic Community (now called the EU) in 1972. In the 1990s, Iceland was the last of the EFTA countries to ratify the European Economic Area Agreement (EEA) and did so only after the longest debate in the history of the Althingi. It comes then as no surprise that Iceland has decided at the moment not to become a full member of the EU. Self-protection and self-preservation have characterized Iceland's foreign trade policy since its independence from Denmark.

Iceland's international treaties have strengthened foreign trade. Membership in the EEA in 1994 and the Uruguay Round agreement brought greater market access for Iceland's exports, capital, labor, and goods and services, especially seafood products. Agriculture is heavily subsidized and protected by the government, with some tariffs ranging as high as 700 percent.

The question of Iceland's relationship with the EU and its possibility of becoming a member depend heavily on protection and control of its fishing industry and natural resources. The Icelandic government and the people pay close attention to the EU's resource policy, especially the Common Fisheries Policy, which is based on the premise that fisheries resources are in principle the common property of the member EU states. While this policy may not be a major obstacle to Iceland joining the EU, it could prove to be a stumbling block, calling for a creative solution in order for Icelanders to be comfortable with EU membership.

In 1999, Iceland had total exports of US$2.0 billion and imports of US$2.489 billion. Iceland's trade deficit widened in 2000 due to rapid import growth coinciding with a slow rise in exports. Exports did increase by 3 percent despite a slight contraction in the export of marine products. In 2000, marine exports accounted for 6 percent of total exports as compared with 68 percent in 1999. The drop in marine exports was attributed to a 31 percent growth in the value of aluminum exports—the result of increased production and favorable world prices.

In 1999, 69 percent of Iceland's exports and 66 percent of its imports came from trade with EEA countries. Germany and the United Kingdom are Iceland's most important trading partners in the EEA, with Germany accounting for 13.1 percent of Iceland's exports and 11.8 percent of its imports, and the U.K. accounting for 19.7 percent of exports and 9.2 percent of imports. The United States is the single largest trading partner outside the EEA, with 14.7 percent of exports and 10.9 percent of imports.

MONEY

In light of the recent depreciation of the króna and the threat of high inflation for 2001, the Central Bank of Iceland will likely continue its conservative fiscal policy in 2001-02 to tighten the money supply and lower domestic demand for goods and services. Inflation has eased slightly as a result, although it was recorded at a high 4.6 percent in November 2000 as Iceland's economy over-heated.

The Central Bank announced in March of 2001 that its desired inflation target was under 3 percent, and that it would take action when inflation deviated substantially from that figure.

Public finances are in good shape due to the government's conservative fiscal policies and debt consolidation, which it started in 2000. The government has implemented its program in response to the recent signals of economic troubles, which were caused by high inflation and a growing budgetary deficit.

Privatization and mergers between large private companies continued in 2001. In October of 2000, the government permitted the merger of 2 of the biggest Icelandic banks: the National Bank of Iceland and Agricultural Bank of Iceland. In May of 2000 the country's largest investment and corporate bank, Icelandic Investment Bank (FBA), merged with a leader in retail banking, Islandsbanki, creating IslandsbankiFBA.

POVERTY AND WEALTH

Icelanders enjoy a high quality of life, and poverty is practically nonexistent. Keeping in line with the reserved character of Icelanders, there is not much conspicuous consumption of wealth, despite the high standard of living. This contrasts to life in 18th century Iceland, which was marked by economic troubles and a drop in the population. Economic conditions improved and population numbers grew throughout the 19th and

early 20th centuries. Following World War II, Iceland experienced an economic boom with a marked rise in its standard of living.

Icelanders, regardless of their economic circumstances, have access to the excellent health services. The social security system provides for pension insurance, occupational injury insurance, health insurance, and maternity leave. The government finances health care through taxation, and hospitalization is free. All hospital inpatient services are free and other medical services cost little. Icelanders have one of the longest life expectancies in the world.

The Icelandic government provides a number of welfare services for its citizens, including unemployment insurance, allowances for families who have children, and pensions for the elderly and disabled. Nearly all schools and universities in Iceland are free for its citizens. All students are required by law to attend school until the age of 16. Most students attend a 4-year academic college when they turn 16 and then continue their studies at the University of Iceland. A number of technical and vocational schools exist as well. Access to higher education is quite good for the young men and women of Iceland.

WORKING CONDITIONS

In the 20th century, 2 societal trends affected the Icelandic labor market: higher participation of women and changes in education. More women of all ages—many highly educated—entered the labor market. On the average, though, women still earn less money than men do.

Unemployment is extremely low in Iceland, a trend that does not seem to be changing. One of the downsides of Iceland's low unemployment is that it has created an extremely tight labor market and most Icelanders have very long workdays, some of the longest in Europe. In 2000, the unemployment rate registered at 1 percent, and in October 2000 it reached its lowest level since 1988 at 0.6 percent. Accordingly, there is a high demand for labor, especially in Reykjavík, though less so in the rest of the country. To meet labor demands, the government allowed for an increase in the number of work permits issued to foreigners. Despite the demand for labor, wage increases have been slow to rise.

About 8 percent of Icelandic workers belong to unions. The Industrial Relations Act of 1938 gives workers the right to form unions open to all persons working in a particular trade within a district. For example, carpenters are allowed to form unions in their own home-town or city to ensure their employment rights are being met and protected.

COUNTRY HISTORY AND ECONOMIC DEVELOPMENT

874. Iceland is settled by Norsemen. Ingólfur Arnarson is said to be the first settler, arriving with his family in present-day Reykjavík.

930. The ruling chiefs of Iceland establish a republican constitution and an assembly, the Althingi, the oldest parliament in the world.

1000. Christianity adopted in Iceland; Greenland discovered and colonized by Icelanders.

1262. Iceland enters into a treaty establishing a union with the Norwegian monarchy.

1397. Norway, Sweden, and Denmark form the Kalmar Union. Iceland falls under the sovereignty of the Danish crown but retains constitutional status.

1800. Althingi abolished. Iceland fully under the Danish crown.

1843. Althingi reestablished as a consultative assembly.

1874. Denmark grants Iceland home rule. Icelandic constitution written (revised in 1903).

1918. An agreement between Iceland and Denmark, the Act of Union, recognizes Iceland as a fully sovereign state under the Danish crown.

1940. When the German army occupies Denmark at the start of World War II, British military forces arrive to defend Iceland.

1941. The British pass responsibility for Iceland's defense to the United States under a U.S.-Icelandic defense agreement.

1944. Iceland formally becomes an independent republic.

1949. Iceland becomes a member of the North Atlantic Treaty Organization (NATO).

1968. Iceland joins the General Agreement on Tariffs and Trade (GATT).

1970. Iceland joins the European Free Trade Association (EFTA).

1972. Iceland enters a free trade agreement with the European Economic Community.

1980. Icelanders elect the world's first woman president, Vigdis Finnbogadottir; she goes on to serve 4 4-year terms.

1992. Iceland joins the Western European Union (WEU).

1994. Iceland becomes a member of the European Economic Area (EEA).

FUTURE TRENDS

Iceland has entered the 21st century on an economic high note. A tight fiscal policy, lowered inflation, exceptional social services, access to education, high literacy rates, and extremely low unemployment levels have all contributed to the good quality of life enjoyed by Icelanders.

Foreign trade and policy remain controversial areas, especially membership into the European Union, and the protection of fishing resources will remain high on Iceland's political and economic agenda. Debates over the pros and cons of EU membership will continue both inside and outside of the government, especially since the opposition leftist Alliance party is expected to adopt a pro-EU stance.

In 2001, the government looked to continue its policy of tight fiscal and budgetary restraint and the reduction of public debt. Privatization will likely continue, particularly with banks and financial companies. Interest rate increases are expected to lower any rising inflation. Economic growth is expected to slow somewhat in 2001. Overall, Iceland's economic policy and its political life appear to continue on a stable and carefully charted course.

DEPENDENCIES

Iceland has no territories or colonies.

BIBLIOGRAPHY

Central Bank of Iceland. The Economy of Iceland (Autumn 2000). Reykjavík, Iceland: Central Bank of Iceland, 2000.

Central Bank of Iceland: Welcome to the Central Bank of Iceland. <http://www.sedlabanki.is/interpro/sedlabanki/sedlabanki.nsf/pages/english-front>. Accessed June 2000.

Economist Intelligence Unit. Country Report: Denmark and Iceland, January 2001. London: Economist Intelligence Unit, 2001.

"Happy Family?" from "Survey: The Nordic Countries." The Economist. 21 January 1999.

Iceland. <http://www.iceland.org>. Accessed December 2000.

Information Centre of The Icelandic Ministry of Fisheries. Marine Stocks: Fish, Shellfish and Crustaceans. <http://www.fisheries.is/stocks/index.htm>. Accessed April 2001.

"Norse Code." The Economist. December 1998.

Statistics Iceland. Statistics Iceland, 2000. <http://www.statice.is>. Accessed April 2001.

U.S. Central Intelligence Agency. World Factbook 2000. <http://www.odci.gov/cia/publications/factbook/index.html>. Accessed July 2001.

U.S. Department of State. Background Notes: Iceland. <http://www.state.gov/www/background_notes/iceland_9910_bgn.html>. Accessed July 2001.

World Trade Organization. "Trade Policy Reviews: Iceland: January 2000." World Trade Organization. <http://www.wto.org/english/tratop_e/tpr_e/tp12_e.htm>. Accessed February 2001.

—Lynn Mahoney

CAPITAL:

Reykjavík.

MONETARY UNIT:

Icelandic króna (Ikr). 1 króna (Ikr1) equals 100 aurar. There are coins of 5, 10, and 50 aurar, and 1, 10, and 50 krónur. Paper notes come in denominations of 10, 50, 100, 500, 1,000, and 5,000 krónur.

CHIEF EXPORTS:

Fish and fish products, animal products, aluminum, diatomite, ferrosilicon.

CHIEF IMPORTS:

Machinery and equipment, petroleum products, foodstuffs, textiles.

GROSS DOMESTIC PRODUCT:

US$6.42 billion (purchasing power parity, 1999 est.).

BALANCE OF TRADE:

Exports: US$2.0 billion (1998). Imports: US$2.489 billion (1998).