Icelandic History

The first people thought to have inhabited Iceland were Irish monks or hermits who came in the eighth century, but left with the arrival of Norsemen, who systematically settled Iceland in the period 870 - 930 A.D. However, there is still no tangible evidence beyond the written word to support the theory of monk inhabitation yet, as well, any writings supporting the theory are conflicted.

The first known permanent Norse settler was Ingólfur Arnarson, who built his homestead in Reykjavík in 874. Ingólfur 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 founded as the political hub of the Icelandic Free State. Christianity was peacefully adopted in 1000.

The Free State lasted until 1262, at which point the political system devised by the original settlers proved unable to cope with the increasing power of Icelandic chieftains.

In the Middle ages the internal struggles and civil strife of the Sturlung Era led to the signing of the Old Covenant, which brought Iceland under the Norwegian crown. Possession of Iceland passed to Denmark-Norway in the late 14th century when the kingdoms of Norway and Denmark were united in the Kalmar Union.

In the ensuing centuries, Iceland became one of the poorest countries in Europe. Infertile soil, volcanic eruptions and an unforgiving climate made for harsh life in a society whose subsistence depended almost entirely on agriculture. In 1402–1404 and 1494–1495, the Black Death swept Iceland, each epidemic killing approximately half the population.

Around the middle of the 16th century, King Christian III of Denmark began to impose Lutheranism on all his subjects. The last Catholic bishop in Iceland was beheaded in 1550, after which the country became fully Lutheran. Lutheranism has remained the dominant religion ever since.

In the 1600s and 1700s, Denmark imposed harsh trade restrictions on Iceland, while pirates from England, Spain and Algeria raided Iceland's coasts.

Meanwhile, a new independence movement arose under the leadership of Jón Sigurđsson, inspired by the romantic and nationalist ideologies of mainland Europe. In 1874, Denmark granted Iceland home rule, which was expanded in 1904.

The Act of Union, an agreement with Denmark signed on December 1, 1918, recognized Iceland as a fully sovereign state under the Danish king.

During World War II, the German occupation of Denmark on April 9, 1940 severed communications between Iceland and Denmark. A month later, British military forces sailed into Reykjavík harbour, violating Icelandic neutrality.

Allied occupation of Iceland lasted throughout the war. In 1941, responsibility for the occupation was taken over by the United States Army. Following a plebiscite, Iceland formally became an independent republic on June 17, 1944. The occupation force left in 1946.

Iceland became a member of NATO on March 30, 1949, amid domestic controversy and riots and on May 5, 1951, a defence agreement was signed with the United States -- American troops returned and stayed as part of the defence agreement throughout the Cold War and until the autumn of 2006.

The immediate post-war period was followed by substantial economic growth, driven by industrialization of the fishing industry and by the rebuilding, Marshall aid and Keynesian government management of the economies of Europe, all of which promoted trade.

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 following Iceland's joining of the European Economic Area in 1992.