Political Rights: 1
Civil Liberties: 1
Status: Free
Population: 300,000
GNI/Capita: $38,620
Life Expectancy: 81
Religious Groups: Lutheran Church of Iceland (85.5 percent), other (14.5 percent)
Ethnic Groups: Homogeneous mixture of descendants of Norse and Celts (94 percent), population of foreign origin (6 percent)
Capital: Reykjavik


The approval rating for Prime Minister Halldor Asgrimsson dropped steadily since he took over the post in late 2004 from David Oddsson, the Independence Party leader. An Icelandic court dismissed fraud charges against Jon Asgeir Johannesson, the head of the retail investment company Baugur, which has become a leading investor in the UK's retail market. Iceland granted citizenship to former world chess champion Bobby Fischer, who arrived in the country in March 2005.

After being dominated for centuries by Denmark and Norway, Iceland gained independence from Denmark in 1944. It became a founding member of NATO in 1949 and, two years later, entered into a defense agreement with the United States that has allowed it to keep no military forces of its own. In 1985, Iceland declared itself a nuclear-free zone. Although the United States had proposed a withdrawal from Iceland, in 2003 the two countries decided that the U.S. Air Force base will remain, at least in the short term.

In general elections held on May 10, 2003, David Oddsson's right-of-center Independence Party won 34 percent of the votes, gaining only two seats more than the left-leaning Social Democratic Alliance. As a result, the Independence Party formed a ruling coalition with the Progressive Party, acceding to the condition that Oddsson would hand over the post of prime minister to Progressive Party leader Halldor Asgrimsson the following year. This condition was fulfilled on September 15, 2004, with Oddsson taking Asgrimsson's previous post as foreign minister.

Iceland began whale hunting in 2003 after not having done so since 1989. Although the program was apparently set up for "scientific" purposes, it has been severely criticized by environmentalists and Iceland's own tourism sector, which fears that the hunting could damage the country's booming whale-watching industry. In response, the Fisheries Ministry announced in June 2004 that it would cull only 25 minke whales that year, a substantial decrease from the ministry's previous projections. Countries such as the United States and the United Kingdom have formally condemned the practice, which a majority of Iceland's population supports.

In May 2004, the president, Olafur Ragnar Grimsson, refused to sign a law passed by parliament placing limits on media ownership – the first time an Icelandic president had vetoed a law in the republic's 60-year history. The veto catalyzed a constitutional controversy, as many felt that the president had overstepped the office's traditionally apolitical bounds. The controversy was exacerbated by the fact that the legislation was sponsored by then-Prime Minister Oddson. The proposed law would have, in part, withheld broadcasting licenses from companies whose main businesses are not in the field of media or from companies that own shares in other businesses outside the field of media. The veto would have forced Icelanders to vote on the issue in a referendum. However, because the government eventually withdrew the law, a national referendum was not held.

The approval rating for Prime Minister Halldor Asgrimsson, who presided over a number of controversial issues, dropped steadily in 2005 since he took over the post in late 2004. The decline also affected support for the prime minister's party, the Progressive Party.

Iceland granted citizenship to former world chess champion Bobby Fischer, who arrived in the country in March 2005. Fischer, who is wanted in the United States for breaking international sanctions by playing a match in Yugoslavia in 1992, spent eight months in detention in Japan, where he had previously lived undetected for many years.

An Icelandic court dismissed fraud charges against Jon Asgeir Johannesson, the head of the retail investment company Baugur, which has become a leading retail investor at home and abroad. According to Baugur, the charges, which were based on alleged breaches of accountancy rules, were politically motivated. The offices of Frettabladid, the largest daily newspaper in Iceland, were raided by police in October 2005 after an injunction was issued banning the newspaper from publishing e-mail messages and documents related to the Baugur case. Baugur owns a controlling share of Nordurljos (Northern Lights), which owns Frettabladid. The International Federation of Journalists warned the Icelandic government that the raid endangered press freedom in the country.

While Iceland has strong historical, cultural, and economic ties with Europe, Icelanders are hesitant to join the European Union (EU), primarily because of the EU's Common Fisheries Policy, which Icelanders believe would threaten their own fishing industry, upon which Iceland's economy is largely dependent. While Oddsson ruled out joining the EU, Asgrimsson is more EU-friendly and has expressed willingness to compromise on fisheries issues. The largest opposition party, the Social Democrats, favors EU membership for Iceland. In the meantime, the country has access to European markets as a member of the European Economic Area.

In September 2005, the World Economic Forum ranked the Icelandic economy seventh out of 117 in the world in terms of competitiveness. The country moved up three positions from the previous year.

Political Rights and Civil Liberties

Citizens of Iceland can change their government democratically. Foreigners can also vote in municipal elections if they have been residents in the country for at least five years (three years for Scandinavian citizens). The constitution, adopted in 1944, vests power in a president, whose functions are mainly ceremonial; a prime minister; a 63seat, unicameral legislature (the Althingi); and a judiciary. The president is directly elected for a four-year term. The legislature is also elected for four years (subject to dissolution). The prime minister, who performs most executive functions, is appointed by the president but is responsible to the legislature. Elections are free and fair.

Five political movements are represented in the Althingi. The largest is the Independence Party, whose leader, David Oddsson, was Europe's longest-serving prime minister until he handed over power to Progressive Party leader Halldor Asgrimsson in September 2004. Although the Independence Party has dominated Icelandic politics since the country's independence, elections are competitive.

Corruption is not a problem in Iceland. Transparency International ranked Iceland the least corrupt country of the 159 countries surveyed in its 2005 Corruption Perceptions Index.

The constitution provides for freedom of speech and of the press. A wide range of publications includes both independent and party-affiliated newspapers. An autonomous board of directors oversees the Icelandic National Broadcasting Service, which operates a number of transmitting and relay stations. There are both private and public television stations. However, media ownership is concentrated, with the Nordurljos (Northern Lights) Corporation controlling much of the private television networks, most radio stations, and two out of three of the country's national newspapers. A proposed law to restrict media ownership was the cause of one of the country's most severe political crises in 2004.

The constitution provides for the right to form religious associations and to practice any religion freely, although nearly 90 percent of Icelanders belong to the Evangelical Lutheran Church. The state financially supports and promotes the church, through a church tax and religious instruction in schools. However, citizens who do not belong to a recognized religious organization may choose to give the tax to the University of Iceland and have their children exempted from religious instruction.

Academic freedom is widely respected and enjoyed, and the education system is free of excessive political involvement.

Rights to freedom of association and peaceful assembly are respected. Many domestic and international nongovernmental organizations (NGOs) operate freely in Iceland and enjoy extensive government cooperation. In late 2004, the government cut all direct funding to the Icelandic Human Rights Center, an organization started by NGOs to collect information on human rights issues in Iceland and abroad. According to the Council of Europe, authorities felt that structural funding of independent human rights organizations from government sources was highly problematic. As a result, funding for the Center has been cut drastically. About 85 percent of all eligible workers belong to labor unions, and all enjoy the right to strike.

The judiciary is independent. The law does not provide for trial by jury, but many trials and appeals use panels consisting of several judges. All judges, at all levels, serve for life. Since amendments made in 1996, the constitution states that all people shall be treated equally before the law, regardless of sex, religion, opinion, ethnic origin, race, property, or other status. However, there is no constitutional provision specifically prohibiting racial discrimination. The U.S. State Department reports that in 2003 the UN Committee against Torture (CAT) issued a report that was critical of the country's legal provisions against torture. CAT's report states that the laws do not clearly define and prohibit torture, nor, the report argues, do the laws prohibit the court's use of evidence obtained through torture. The government disagreed with the report's findings. Prison conditions generally meet international standards.

In May 2004, the Act on Foreigners, which specifies the government's powers with regard to foreigners, including refugees and asylum seekers, was amended to close perceived loopholes in the legislation. Foreign spouses must now be at least 24 years of age. In addition, authorities can now search houses without a prior court order in some cases of suspected immigration fraud. These new provisions led to criticism by human rights organizations, which claimed the law was discriminatory and violated privacy rights.

1998, Iceland agreed to give its citizens' genetic data to a private medical research company to create a national medical record database, an action that has raised fears over privacy issues. Objections from patients and doctors, as well as security considerations, have stymied the completion of the database.

Women enjoy equal rights in Iceland, and more than 80 percent participate in the workforce. Of the 63 members of the Althingi, about 30 percent are women, although there is no quota for the representation of women in parliament. There has been some concern about women of immigrant origin, who may not have the opportunity to learn the Icelandic language and customs and may be unaware of their rights and status under the law. The European Commission against Racism and Intolerance has also criticized Iceland concerning immigrant women who become sex-trade workers in the country. The government participates in the Nordic-Baltic Action Group against Human Trafficking.

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