History

Recent History

In recent years, Iceland's economy has been looking shaky: fishing quotas have been cut back, the krónur has devalued, and inflation rates are the second-highest in Europe. The American military base, a large employer in the southwest, closed down in September 2006. In an attempt to generate some hard cash, the Icelandic government has recently sanctioned several major industrial schemes, driven by hydroelectricity from the country's many glacial rivers. The largest and most controversial is the Kárahnjúkar project, which will power an aluminium smelter owned by the US company Alcoa. A large area of Iceland's eastern wilderness is currently being flooded to create a reservoir for the project, and the smelter will be operational in 2007.

Another recent environmental upset may affect the all-important tourism industry. In October 2006, despite international pressure, the Icelandic government voted to resume commercial whaling. The hunt began with all speed, and to date several endangered fin whales have been killed. It's an absolutely bewildering decision - only around 1% of Icelanders eat whalemeat; the export market is tiny; and commercial whaling is likely to generate just a fifth of the income from Iceland's highly popular whale-watching tours.

Modern Day History

Denmark's grip on Iceland was broken in 1874 when Iceland drafted a constitution and was permitted to handle its own domestic matters. Iceland was released from Danish rule in 1918, making it an independent state within the Kingdom of Denmark, with Copenhagen retaining responsibility for defence and foreign affairs. However, in 1940, Denmark was occupied by Germany. Iceland realised that the Kingdom was in no position to continue overseeing its affairs and, a year later, requested independence. It was granted on 17 June 1944.

After the occupation of Denmark and Iceland's declaration of sovereignty, the island's vulnerability became a matter of concern for the Allied powers. In response, British and US troops moved in; the last US troops left in September 2006. The Brits incurred Icelandic wrath when they refused to recognise Iceland's expanded territorial fishing rights in the 1970s. For a few years, stoushes between Icelandic gunships and British warships during the so-called Cod Wars became a regular feature of the fishing season.

Pre 20th Century History

Iceland's first inhabitants were Irish monks, who regarded the island as a sort of hermitage until the early 9th century. They were followed by Iceland's first permanent settlers, who came from Norway. This was the Age of Settlement, traditionally defined as the period between 870 and 930, when political strife on the Scandinavian mainland caused many to flee.

After their run-ins with royalty in Scandinavia, Iceland's settlers were in no mood for a monarchy and opted instead for a parliamentary system of government. A district assembly and Alþing (National Assembly) were founded, and a code of law prepared. Iceland became a Christian country in 999, which engendered some semblance of national unity at a time when squabbles were arising among its leaders and allegiances were being questioned. The country flourished during the next century, and established a thriving agrarian economy with little unrest.

Iceland then became a launching pad for explorations of the North Atlantic: Eric the Red, who grew up in Iceland as the son of a Norwegian exile, colonised Greenland in 982, and Eric's Icelandic son, Leif Eriksson, is popularly held to be the first European to explore the coast of North America - which he named Vinland the Good. One of the more reliable Icelandic sagas, however, suggests that Leif Eriksson learned of Vinland from another Icelander, Bjarni Herjolfsson, who had sighted it some 14 years earlier. Whatever the truth is, these voyages of exploration became the source material of one of Europe's great literary flowerings.

The first literary tradition to emerge was poetry, which tended to be heroic in theme. Poetry was displaced during the Saga Age of the late 12th to late 13th centuries, when epic and dramatic tales of early settlement, romance, dispute and the development of Iceland were recorded. These provided both a sense of cultural heritage for Icelandic commoners and entertaining yarns on bitterly cold winter nights.

By the early 13th century, the enlightened period of peace that had lasted 200 years came to an end. The country entered the infamous Sturlung Age, a turbulent era of political treachery and violence. The opportunistic Norwegian King Hákon Hákonarson promptly stepped in, and Iceland became a Norwegian province, plundered mercilessly. To add insult to injury, the volcano Mt Hekla erupted in 1300, 1341 and 1389, causing widespread death and destruction. Recurring epidemics also plagued the country, and the Black Death struck Norway in 1349, effectively cutting off trade and supplies.

At the end of the 14th century, Iceland was brought under Danish rule. Disputes between church and state resulted in the Reformation of 1550, and the imposing of Lutheranism as the country's religious doctrine. Throughout the next two centuries, Iceland was crippled by rampant Danish profiteering, beset by international pirates and subject to an increasing number of natural disasters.