How is the country's politics organized?
Iceland, a democratic republic. Iceland's declaration of independence in 1944 ushered in a new political era as a democratic republic. The country's constitution is both pluralist and semi-presidential, and closely resembles that of Denmark, apart from the republican status conferred on the state. The three powers - executive, legislative and judicial - are separate.
The executive is vested in the government and the prime minister, with the president having a mainly symbolic role, and the legislative in the Alþing (or Althing). The Alþing is made up of 63 deputies elected in six constituencies for a four-year term, while the judiciary is made up of the courts of first instance and the Supreme Court.
The Assembly. The main political parties are the Independence Party, the Ecological Party, the Alliance, the Center Party, the Progress Party and the Pirate Party. Since 1991, the Alþing has been a single legislative chamber. For legislation to take effect, it must be signed, after three readings, by the President of the Republic and the minister(s) concerned. The most recent early elections were held in October 2017, when the Independence Party won without an absolute majority. Following tripartite negotiations, a coalition government led by Katrín Jakobsdóttir (Ecological Party) was established.
The President has no links with any of these groups, and remains the sole figure uniting the nation. The current President of the Republic has been Guðni Thorlacius Jóhannesson since August 2016, and was re-elected in 2020. Iceland was also notable for having the first female president of the Republic in 1980, Vigdís Finnbogadóttir, who was re-elected in 1984, 1988 and 1992.
How does the country's economy work?
Water in all its forms. The country has a vast quantity of water, and many brands of bottled water are appearing on the market. Some Icelanders say that, despite this quality, the water is difficult to export, as it lacks certain components required by foreign countries. With no aftertaste, Iceland Spring Water remains one of the country's most famous bottles. And when the water has the ability to soothe many skin problems, it becomes a business in the form of lagoons, including the famous Blue Lagoon. Some visitors have reportedly seen all traces of psoriasis, eczema and other ailments disappear.
Sheep is good for everything. Thanks to the lambs and sheep raised in the summer pastures, Iceland has some of the best sheep meat in the world. In fact, the economy is based on these delicacies, which characterize some of the typical dishes of Icelandic cuisine. Sheep are also shorn in autumn, providing wool that the local population sells or uses to make certain types of clothing.
Tourism, a booming industry. The country welcomed over 2.4 million tourists in 2019, compared with 143,000 in 1991! Tourism provides almost half of the country's current income, a figure that is constantly rising.
In the wake of the 2008 crisis, advertising campaigns have intensified abroad, notably via Icelandair. The numerous advertisements in magazines and on billboards are having the desired effect. In early 2002, for example, the number of French visitors to Iceland was 41.4% up on the previous year. The figure is old, but shows just how popular or neglected a country can become "overnight".
Iceland is very popular: people appreciate its unspoilt nature and safety. Most tourists prefer summer, when the country can be fully explored. But to ensure that there's no off-season, the authorities also promote the country's snow-covered wonders, or Reykjavík as the ideal city for a long weekend, or even a stop-over on a flight to America. Every year, more and more tourists take off for this unusual destination, which is gradually becoming fashionable.
In the face of the stressful lives of city-dwellers, the island offers restful and varied panoramas, no less than eight hundred hot springs, hundreds of active volcanoes, and is also a fabulous place to hike and observe flora and fauna. However, mass tourism is still prohibited due to the fragility of the environment. Reykjavík alone accounts for no less than 80% of all foreign tourists. Icelanders are well aware of the benefits of tourism, even if many claim they do it for pleasure and not for profit. Nevertheless, over the years, tiny B&Bs have become veritable tourism industries. The sector is becoming a veritable goldmine, especially since the island is now one of the best whale-watching spots in the world. Nevertheless, this growing success is being felt, and the face of tourism in Iceland is gradually changing. Prices are sometimes becoming prohibitive in certain saturated sectors, and the coronavirus has wiped out many budget accommodations and even bus routes that used to enable travellers to get around the country more cheaply.
What are the current economic issues?
The country's stability was severely undermined by the global financial crisis of 2008. As a direct result of the banks' indebtedness policy, Iceland was in debt to the tune of 11 times its GDP. The salvific decision was for the State to protect taxpayers' capital, while leaving foreign shareholders destitute (the Icesave affair with the UK and the Netherlands). As a direct consequence, Iceland nationalized its banks and sought help from the IMF and Scandinavian countries. Within a few months, the currency lost 50% of its value against the euro, enabling the country to maintain a trade surplus and economic growth.
A few years later, the results were impressive: the country was able to withstand international pressure and market fluctuations. The country refused to repay its "Icesave debts" following the rejection of the bill by the population in the 2 referendums of 2010 and 2011. In 2014, the country returned to growth, unemployment fell again and those responsible for the crisis were brought to justice. At the same time, faced with Icelanders' wish not to join the E.U., the government, after having submitted an application in 2009, finally withdrew its candidacy in 2015.
Despite a fierce desire for self-sufficiency, the country is still forced to import large quantities of food. The economy, highly dependent on fishing, remains very fragile in the face of fluctuating fish populations, particularly cod, which alone accounts for a third of the country's exports. Economic redeployment has led to the introduction of a comprehensive social security system, as well as a high-performance education system. It should also be noted that the State, which does not hesitate to intervene in the economy, has indexed wages to the real cost of living. This economic and social success has given Iceland some of the highest purchasing power and living standards in Europe. On the negative side, inflation is fairly high. The salaries of civil servants, especially teachers, are very low compared to the rest of the population, which explains why they often take on a second job in the summer. Young people, too, almost all work in the summer, and the state withholds part of their salary until they come of age or marry. Women have easy access to jobs considered "physical", and they do very well.
The development of the economy is based above all on diversification. In addition to geothermal energy, hydroelectricity and the development of aluminum and ferrosilicon plants, in recent years it has developed new software, embarked on biotechnology and offered a wide range of financial services.
Since 2022, although growth has been healthy despite the coronavirus crisis, the country has also been affected by inflation, which reached 10% in early 2023. Initially limited to real estate, inflation is now affecting a number of sectors, with the result that Icelanders' cost of living is rising. Nonetheless, the government is working hard to put things right. Changes are expected in the tourism sector in particular, with the abolition of VAT benefits and the creation of a tax on foreign tourists from 2024 to finance Iceland's eco-committed actions to cope with the influx of tourists.
