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World : Europe : Iceland

Iceland was settled in the late 9th and early 10th centuries, principally by people of Norse origin. In 930 A.D., the ruling chiefs established a republican constitution and an assembly called the Althingi--the oldest parliament in the world. Iceland remained independent until 1262, when it entered into a treaty establishing a union with the Norwegian monarchy. Iceland passed to Denmark in the late 14th century when Norway and Denmark were united under the Danish crown.

In the early 19th century, national consciousness revived in Iceland. The Althingi had been abolished in 1800 but was reestablished in 1843 as a consultative assembly. In 1874, Denmark granted Iceland home rule, which again was extended in 1904. The constitution, written in 1874, was revised in 1903, and a minister for Icelandic affairs, residing in Reykjavik, was made responsible to the Althingi. The Act of Union, a 1918 agreement with Denmark, recognized Iceland as a fully sovereign state united with Denmark under a common king. Iceland established its own flag, but Denmark continued to represent Icelandic foreign affairs and defense interests.

German occupation of Denmark in 1940 severed communications between Iceland and Denmark. Consequently, Iceland moved immediately to assume control over its own territorial waters and foreign affairs. In May 1940, British military forces occupied Iceland. In July 1941, responsibility for Iceland's defense passed to the United States. Following a plebiscite, Iceland formally became an independent republic on June 17, 1944.

In October 1946, the Icelandic and U.S. Governments agreed to terminate U.S. responsibility for the defense of Iceland, but the United States retained certain rights at Keflavik. Iceland became a charter member of the North Atlantic Treaty Organization (NATO) in 1949. After the outbreak of hostilities in Korea in 1950, and pursuant to the request of NATO military authorities, the United States and Iceland agreed that the United States should again be responsible for Iceland's defense. A bilateral defense agreement signed on May 5, 1951, is the authority for U.S. military presence in Iceland. Iceland is the only NATO country with no standing military of its own.



Marine products account for the majority of Iceland's exports of goods. Other important exports include aluminum, ferro-silicon alloys, equipment and electronic machinery for fishing and fish processing, pharmaceuticals, and woolen goods. Information technology and related services is an important growth area. Foreign trade plays an important role in the Icelandic economy. Exports account for about one-fourth of GDP and imports for one-third. Most of Iceland's exports go to the EU and EFTA countries, the United States, and Japan. The U.S. is Iceland's largest bilateral investment partner and largest partner in services trade.

Iceland's relatively liberal trading policy was strengthened by accession to the European Economic Area in 1994 and by the Uruguay Round agreement, which also brought significantly improved market access for Iceland's exports, particularly seafood products. However, the agricultural sector remains heavily subsidized and protected.

Iceland's economy is prone to inflation but remains rather broad-based and highly export-driven. The 1970s oil shocks hit Iceland hard. Inflation rose to 43% in 1974 and 59% in 1980, falling to 15% in 1987 but rising to 30% in 1988. Since 1990, due to economic reforms and deregulation, inflation has dramatically fallen, averaging only 4.85% from 1990-2000. Due to several years of strong economic growth, Iceland experienced the best economic period in its history in the 1990s. However, the economy fell into recession in late 2001 and inflation began to escalate. In March 2001, the Central Bank adopted an inflation target exchange rate policy instead of an index rate policy with the aim of managing the value of the Icelandic Krona to keep inflation below a certain level. In addition, the government urged municipalities, labor unions and private parties to unite in keeping inflation down. Unemployment more than doubled to 2.6%, and inflation that spiked above 9% threatened to give labor unions leverage to abrogate national wage agreements. The government took monetary and fiscal measures that brought inflation down close to the current target rate of 3%. Inflation is expected to remain moderate in 2002, but with slightly negative GDP growth. The government expects a return to positive growth in 2003.

Iceland has few proven mineral resources, although deposits of diatomite (skeletal algae) are mined. Abundant hydroelectric and geothermal power sources allow about 90% of the population to enjoy heating from these natural resources. The Burfell hydroelectric project is the largest single station with capacity of 240 mw. The other major hydroelectric stations are at Hrauneyjarfoss (210 mw) and Sigalda (150 mw). Iceland is exploring the feasibility of exporting hydroelectric energy via submarine cable to mainland Europe and also actively seeks to expand its power-intensive industries, including aluminum and ferro-silicon smelting plants. Nordural Aluminum is a wholly owned investment by Columbia Ventures of Washington State. The plant employs more than 150 people and recently expanded to 90,000 tons per year capacity.

Iceland has no railroads. Organized road building began about 1900 and has greatly expanded in the past decade. The current national road system connecting most of the population centers is largely in the coastal areas and consists of about 13,000 kilometers (8,125 mi.) of roads with about 3,955 kilometers (2,472 mi.) were paved. Regular air and sea service connects Reykjavik with the other main urban centers. The national airline, Icelandair, flies from Iceland to Europe and North America, and is one of the country's largest employers. Iceland became a full European Free Trade Association member in 1970 and entered into a free trade agreement with the European Community in 1973. Under the agreement on a European Economic Area, effective January 1, 1994, there is basically free cross-border movement of capital, labor, goods, and services between Iceland, Norway, and the EU countries.



The Constitution provides for freedom of religion, and the Government generally respects this right in practice; however, the State financially supports and promotes an official religion, Lutheranism. 

The salaries of the 146 ministers in the Lutheran state church are paid directly by the state, and these ministers are considered to be public servants under the Ministry of Justice and Ecclesiastical Affairs.  The Government does not pay Lutheran ministers in the non-state churches.

All citizens 16 years of age and above must pay a church tax of approximately $5.50 (554.24 krona) per month.  Individuals may direct their tax payments to any of the two dozen religious denominations and organizations officially recognized by the Government, including the State Lutheran Church.  For individuals who are not registered as belonging to a religious organization, or who belong to one that is not registered and recognized officially by the Government, the tax payment goes to the University of Iceland, a secular institution.

Children at birth are presumed to have the same religious affiliation as their mother and are registered as such.  Parents control the religious affiliation of their children until they reach the age of 16, but parents must "consult" their children about any changes in the children's affiliation after the age of 12.

By law religious instruction in Christianity is required in the public schools; however, students may be exempted.

By law religious organizations must follow specific conditions and procedures in order to be recognized officially and registered by the Government.  Such recognition is necessary for religious organizations other than the state church to receive a per capita share of church tax funds from the Government.  The law applies only to religious organizations that are seeking to be, or are already, officially recognized and registered.  No restrictions or requirements are placed on unregistered religious organizations, which have the same rights as other groups in society.



The crime rate in Iceland is moderate compared to other industrialized countries. An analysis was done using INTERPOL data for Iceland. For purpose of comparison, data were drawn for the seven offenses used to compute the United States FBI's index of crime. Index offenses include murder, forcible rape, robbery, aggravated assault, burglary, larceny, and motor vehicle theft. The combined total of these offenses constitutes the Index used for trend calculation purposes. Iceland will be compared with Japan (country with a low crime rate) and USA (country with a high crime rate). According to the INTERPOL data, for murder, the rate in 1998 was 0.00 per 100,000 population for Iceland, 1.10 for Japan, and 6.3 for USA. For rape, the rate in 1998 was 14.53 for Iceland, compared with 1.48 for Japan and 34.4 for USA. For robbery, the rate in 1998 was 19.62 for Iceland, 2.71 for Japan, and 165.2 for USA. For aggravated assault, the rate in 1998 was 18.16 for Iceland, 15.40 for Japan, and 360.5 for USA. For burglary, the rate in 1998 was 761.09 for Iceland, 187.93 for Japan, and 862.0 for USA. The rate of larceny for 1998 was 1951.58 for Iceland, 1198.13 for Japan, and 2728.1 for USA. The rate for all index offenses combined was 2764.98 for Iceland, compared with 1709.88 for Japan and 4615.5 for USA. (Note: data were not reported to INTERPOL by the USA for 1998, but were derived from the Uniform Crime Report for 1998) Also, data were not reported for motor vehicle theft for Iceland in 1998.



Between 1997 and 1998, according to INTERPOL data, the rate of murder decreased from 0.73 to 0.00 per 100,000 population, a decrease of 100%. The rate for rape decreased from 16.35 to 14.53 a decrease of 11.1%. The rate of robbery increased from 9.81 to 19.62 an increase of 100%. The rate for aggravated assault increased from 13.80 to 18.16 an increase of 31.6%. The rate for burglary decreased from 903.09 to 761.09 a decrease of 15.7%. The rate of larceny increased from 4.36 to 1951.58 an increase of 44661%. The rate of total index offenses increased from 948.14 to 2764.98 an increase of 191.6%. (Note that data for motor vehicle theft were not reported to INTERPOL by Iceland for years 1997 and 1998.)



Elected officials control the police force, which is responsible for internal security and observes and enforces the laws that ensure the protection of human rights.

In year 2001, there were no reports of the arbitrary or unlawful deprivation of life committed by the Government or its agents. There were no reports of politically motivated disappearances.



The Constitution prohibits arbitrary arrest and detention, and the Government generally observes these prohibitions.  There was a report that police detained an asylum seeker at the airport during the year contrary to established procedures for asylum processing.

The law prohibits forced exile, and the Government does not employ it.



The Constitution and the law provide for an independent judiciary, and the Government generally respects this provision in practice. 
There are two levels of courts.  A five-member Judicial Council appointed by the Minister of Justice administers the eight district courts, and the Supreme Court administers itself.  All judges, at all levels, serve for life.

The law provides for the right to a fair trial, and an independent judiciary generally enforces this right.  Juries are not used, but multijudge panels are common, especially in the Supreme Court, which hears all appeals.  Depending on the seriousness of the case, a Supreme Court panel can include from three to seven judges.  Defendants are presumed innocent and generally are tried without delay.  They are provided access to legal counsel of their own choosing with sufficient time in general to prepare their defense.  For defendants unable to pay attorneys' fees, the state covers the cost, as set by the court; however, defendants are required to reimburse the state.  Defendants have the right to be present at their trial, to confront witnesses, and to participate in the proceedings.  No groups are barred from testifying, and all testimony is treated alike.  The courts have the discretion to allow the introduction of evidence obtained illegally by the police.  With limited exceptions, trials are public and conducted fairly, with no official intimidation.  Defendants have the right to appeal, and appeals are handled expeditiously.

In year 2001, there were no reports of political prisoners.



In year 2001, prison conditions generally meet international standards.  Most of the country's prison population of less than 100 inmates are held at Litla Hraun Prison, which includes a state-of-the-art detention facility.  However, the prison system still uses a substandard jail (Hegningarhusid, built in 1874), where the 16 individual cells lack toilets and sinks.  In most cases, prisoners are kept in Hegningarhusid Prison only a short time for evaluation and processing before being transferred to another facility, and some prisoners with short sentences (less than 30 days) elect to serve their time there to be closer to friends and family.

Human rights monitors have expressed concern about the use of illegal drugs by some inmates at Litla Hraun Prison and about the lack of social services to help inmates overcome drug addiction and prepare them for eventual release.  Despite the small inmate population at Litla Hraun, the authorities have not been able to stop narcotics from being smuggled into the prison.

In a 1999 report, the Council of Europe's Committee for the Prevention of Torture (CPT) expressed concern that nearly all detainees at Litla Hraun continued to be placed in solitary confinement while their cases were under investigation.  While the average duration of solitary confinement was between 2 and 3 weeks, the CPT noted that in some cases, solitary confinement lasted up to 3 months.  Under the strictest form of solitary confinement, prisoners cannot leave their cells, except briefly to exercise alone or to use the showers, and are not allowed to listen to the radio, watch television, or receive visitors other than their lawyers, the prison doctor, and a chaplain.  In 1999 the supervising doctor at Litla Hraun wrote to prison authorities, warning that the mental health of several prisoners awaiting trial on drug trafficking charges could be in danger due to the extended time that they spent in solitary confinement.  During the year, the ombudsman of the Parliament investigated the use of solitary confinement as a punishment for violations of prison regulations.  He concluded that the Ministry of Justice needed to adopt clearer guidelines to prevent the arbitrary use of solitary confinement by prison authorities.

Despite the Government's admission that "in the vast majority of cases" incarceration alone was sufficient to protect the integrity of the investigative process, witnesses, and evidence,  the Prison and Probation Administration's statistics show that solitary confinement was the rule rather than the exception, and that most of those arrested were placed into solitary confinement, at least initially.  During the first 11 months of the year, 78 of the 86 persons arrested and held on remand were put into solitary confinement, each for an average of 4 weeks.  The police decide whether persons should be put in solitary confinement, but the accused may appeal this decision to the courts, which have the final say.  Inmates occasionally have appealed solitary confinement, but the courts in general have allowed the police considerable leeway during the first 2 to 3 weeks of incarceration.  The courts have been less willing to allow continued solitary confinement after that time.

A 1998 law allows pretrial detainees to be incarcerated with the general prison population; some human rights monitors have criticized this law.  During the year, the Government budgeted planning funds for a new remand prison just outside of Reykjavik; however, construction had not begun by year's end.

Juveniles who are 15 years of age or older may be sentenced to prison terms, but the vast majority of juvenile offenders are given probation, suspended sentences, or attend a treatment program instead of going to jail.  In the rare instances when juvenile offenders are incarcerated, they are confined with the adult prison population since there is no separate detention facility for juveniles.  The Government has argued that such separation is not practical since the need to incarcerate a juvenile occurs so infrequently.
There is a separate minimum-security prison for women inmates.  But because so few women are incarcerated, some men who have been convicted of nonviolent crimes are held there as well (with the approval of the women inmates).

The Government permits prison visits by independent human rights monitors, including by the International Committee of the Red Cross (ICRC).



Violence against women continued to be a matter of concern.  Police statistics show that the incidence of violence against women--including rape and sexual assault--is low; however, the number of women seeking assistance at the public women's shelter, the counseling center, and the emergency ward of the National Hospital indicates that many incidents go unreported.  Each year approximately 100 women ask for temporary lodging at the women's shelter, while 300 to 400 women and children seek assistance at the counseling center.  The hospital emergency ward, which has a special staff to care for rape victims, reports that during the year, 134 women sought care associated with sexual assault or abuse.  The law prohibits domestic violence and rape, including spousal rape.

The Government takes violence against women seriously; it helps finance various facilities and organizations that provide assistance to victims.  The City of Reykjavik, in addition to partially funding such services, provides special help to immigrant women who find themselves in abusive relationships, offering emergency accommodation, counseling, and information on legal rights.  In 2000 Parliament passed legislation that gives the courts the power to issue restraining orders, which has been a useful legal tool in protecting women from abusive husbands and boyfriends.  In 1999 the Government amended the Criminal Code to provide victims of sexual crimes with lawyers to advise them of their legal rights and help them pursue cases against the alleged assailants.

Nonetheless a large majority of victims decline to press charges or choose to forgo trial, in part to avoid unwanted publicity in a small, tightly knit society.  Some local human rights monitors also attribute underreporting to the fact that convictions traditionally yield light sentences:  The maximum penalty for rape is 16 years, but the actual sentences imposed typically are much closer to the minimum sentence of 1 year.

The sale of sex for money is not illegal per se, but it is against the law for someone to engage in prostitution as his or her main source of income.  It is also illegal to act as an intermediary in the sale or procurement of sex.  There were indications that some foreign women were trafficked to work as striptease dancers or prostitutes (see Sections 6.c. and 6.f.).

The rate of participation by women in the labor market is high.  In part this reflects the country's comprehensive system of subsidized day care, which makes it affordable and convenient for women to work outside the home.  The law requires that preference be given to hiring and promoting women in areas where they are underrepresented, as long as they are equal in all other respects to male job seekers.  Despite laws that require equal pay for equal work, a sizeable pay gap continues to exist between men and women:  A 2000 survey by a union in Reykjavik showed that women, on average, earned 30 percent less than men.  A 12 percent difference in pay may be attributable to the fact that men work on average 4.2 more hours per week than women, but the rest of the gap is unexplained.

In 2000 Parliament passed legislation that gives fathers the same right as mothers to paid leave upon the birth of a child.  Under the law, which is expected to be fully implemented in 2003, both mothers and fathers will be allowed to take 3 months of paid leave (at 80 percent of the normal salary), with an additional 3 months that can be taken by either parent or shared between them.  Previously a mother was given 6 months of paid maternity leave and the father just 2 weeks.  The new leave requirements apply equally to the public and private sectors.



The Government is strongly committed to children's rights and welfare; it amply funds a system of public education and health care.  School attendance is compulsory through the age of 15 and free through public university level.  Approximately 85 percent of students continue to upper secondary education, which is financed completely by the Government.  The Government provides free prenatal and infant medical care, as well as heavily subsidized childcare.  The Office of the Children's Ombudsman in the Prime Minister's Office has a mandate to protect children's rights, interests, and welfare by, among other things, exerting influence on legislation, government decisions, and public attitudes and has done so.
The government-funded Agency for Child Protection coordinates the work of 56 committees around the country that are responsible for managing child protection issues (for example, adoption and foster care) in their local areas.  The agency also investigates reports of child abuse through a specially designed "Children's House" (Barnahusid) and operates treatment centers for abused and troubled minors.

There is no societal pattern of abuse directed against children.

In an effort to improve the rate of prosecution of child sexual abuse and lessen the trauma to the child, the Government established the Children's Assessment Center in 1998.  The objective of the center is to create a safe and secure environment where child victims feel more comfortable talking about what happened to them and are not subjected to multiple interviews.  The center brings together police, prosecutors, judges, doctors, and officials from child protection services.  However, a 1999 change in the Criminal Code made judges (instead of the police) responsible for the investigatory interview of abused children and allowed these interviews to be conducted in specially designed rooms at district courthouses.  In 2000 the Supreme Court upheld the right of a Reykjavik district court judge to hold an investigatory interview in the courthouse rather than at the center, which has led to a significant decrease in the child sexual abuse cases being handled through the center.  Human rights monitors criticized this as a step backward in the protection of children's rights.



The law does not prohibit specifically trafficking in persons, although a number of legal provisions may be used to prosecute such cases; trafficking was suspected in connection with the hundreds of foreign women who entered the country to work in striptease clubs.  The main concern was that some of the women, especially those from Eastern and Central Europe, were being brought to Iceland under false pretenses and then coerced to work as striptease dancers or prostitutes.  While most attention has been focused on Iceland as a possible destination point for trafficked women, there were some cases during the year that indicated that the country was also being used as a transit point for the movement of trafficked women between mainland Europe and North America.  There were no reliable estimates on how many women this may involve.

In May, for the first time, formal charges of coercion were filed against a club.  Four striptease dancers from Estonia told police that a club owner had pressured them into prostitution.  Two Danish dancers lodged a similar complaint against the same employer.  As of year's end, the cases remained under investigation, and no arrests had been made.

Parliament passed legislation in 2000 that closed a loophole that allowed striptease dancers to enter the country and perform without a work permit for up to 4 weeks under an exemption given for "artists."  Any foreigner (except those from the European Economic Area) seeking to come to the country to work as a striptease dancer must first obtain a work permit, which is typically valid for 3 months.  However, the Government has not yet put any numerical limits or other controls on the issuance of work permits for foreign striptease dancers.  The clubs are allowed to bring in as many dancers as they want.

For the first several months that the new system was in place, the IFL vetted the work permit applications of foreign striptease dancers and ensured that their contracts afforded the minimal labor protections.  However, the IFL announced in March that it would no longer take part in this process.  Citing the suspicious circumstances under which these dancers come and work in Iceland, the IFL said it did not want to assist unwittingly in human trafficking.  However, the Directorate of Labor decided that under the existing law, it had no choice but to continue issuing the work permits, even without the review of the IFL.

Human right monitors were critical of the fact that the striptease clubs continued to operate with few, if any, restrictions on their operations.  There are no regulations, for example, mandating a minimal distance between dancers and patrons.  A study on prostitution, commissioned by the Ministry of Justice and released in March, concluded that organized prostitution existed at some, if not all, of the striptease clubs.  In the absence of national legislation, some municipalities have taken action on their own to prohibit the opening of striptease clubs within their jurisdictions.  The City of Reykjavik was moving to restrict the location of new clubs to designated areas only.  However, the changes were not expected to be retroactive and would not affect the existing clubs, most of which were located downtown.



The drug problem in Iceland is relatively small compared to other countries yet there has been growing concern that the country could become a target for those traffickers looking for a new transit route. Local production of illegal drugs is virtually non-existent, which means drugs for domestic use originate from abroad, entering by air or sea. There has been a worrisome trend in the 1990s of increased narcotics use, particularly amphetamines and ecstasy. Some Icelandic officials are particularly concerned that by becoming a part of Schengen, all the currently closely monitored traffic from Europe will be unchecked and allow for an easier entry of drugs. The Icelandic police have been intensifying their domestic counter-narcotics efforts and are working hand-in-hand with local communities to raise awareness and promote prevention. These efforts have been advanced through high-publicity governmental campaign for a "drug-free Iceland in 2002." Law enforcement authorities are hopeful that new tougher legislation and stricter sentencing will serve to combat drug trafficking.

Iceland is neither a significant producer of drugs/precursor chemicals nor have there been any known cases of money laundering. Iceland's remote geographical location and difficult access account for this. Trafficking occurs on a relatively small scale compared to most other countries. Nonetheless, there is concern among government officials and law enforcement authorities that Iceland might become a target for those looking for a new transit point between Europe and North America. This potential problem could be exacerbated as Iceland seeks to be a part of Schengen, and would subsequently drop its screening of Europe-originating passengers.

While Iceland has a small drug problem on a per capita basis, domestic narcotics use has been on the rise over the past few years, specifically the use of amphetamines, ecstasy and cocaine use.

Iceland reorganized its law enforcement system in July 1997 in an effort to more effectively combat crime. A "new" national police commissioner was established with coordination and oversight responsibility for over 26 police districts. One of the main tasks has been gathering statistics on illicit narcotics seized and entering this information in a central computerized database. The aim is to facilitate access to information and better enable police to identify trends and focus on areas that appear to be entry points for drugs. The 1997 reorganization led to the establishment of a special national drug intelligence unit, which has a national mandate and is better able to investigate drug cases. The national police commissioner also has sought to improve customs surveillance in an effort to interdict drugs before they enter the country.

Icelandic police seizures in 1998 are similar to 1997 and are markedly less than in 1996. The authorities are hopeful that the decreased seizures reflect a more effective prevention effort since the 1997 reorganization of the law enforcement agencies combined with stiffer sentencing and the passage of tougher laws against drug offenders. Despite the downward trend in seizures, there were notable increases in ecstasy pills seized, where the total went from 1,375 pills in 1997 to 2,110 pills in 1998 and in cocaine where the total went from 126g in 1997 to 457g in 1998. There has been no confiscation of heroin or opium in the past three years.

Icelandic law enforcement efforts have improved since July 1997 but lack of staff and funding resources still make it a challenge for the government to combat drugs.

Corruption is not a problem in Iceland. The government neither facilitates nor encourages the production and/or distribution of illicit drugs.

Iceland is a party to the 1998 UN drug convention, as well as the 1990 European Union Convention on Money Laundering, Search, Seizure and Confiscation of Criminal Proceeds.

There is negligible cultivation and production of illegal drug in Iceland. Police occasionally discover marijuana plants that are intended for personal use, but no significant plots have ever been found. In 1998, police found 248 cannabis plants up from 161 in 1997.

The police have not established any clear trends showing transit of drugs through Iceland but remain concerned that it only is a matter of time before traffickers explore Iceland as a potential transit point. Customs officials are particularly concerned that if Iceland becomes a member of Schengen, which the government is actively working to do, there will be no checks of passengers originating from Europe. This could make drug smuggling into Iceland and onward easier.

Iceland has some producers of pharmaceuticals, mostly for domestic consumption, which are carefully regulated.

The government, in cooperation with the Reykjavik city council, launched a campaign last year "drug free Iceland by year 2002" to increase drug awareness and education. The program's overall goal is, "to coordinate the nation's forces in the struggle against illegal drugs, to increase preventive work and to organize tasks and activities towards these goals." As part of this national effort, local communities and private parties also have become more active and are instituting drug prevention programs.

Bilateral cooperation with Iceland officials continues to be excellent. In 1998, the USIA-sponsored an international visitor from the Icelandic Ministry of Justice to the U.S. Upon his return this visitor introduced several U.S. policing methods aimed at more effectively combating crime and drugs. Other USG action in Iceland has focused on sharing information through a joint information coordination center (JICC) which is tasked with monitoring aircraft transiting Iceland. The local JICC informs the El Paso Intelligence Center (EPIC) of aircraft coming through Iceland and EPIC in turn provides information available on that particular aircraft for potential action by Icelandic authorities.

The USG will continue to foster close cooperation and sharing of information with Icelandic counterparts and will seek to increase controls over potential trafficking through Iceland.


Internet research by Josh Burke and Terry Wesley

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