Iceland country brief

Overview
Iceland, the least populated of the Nordic countries, is an island located in the North
Atlantic Ocean. Iceland covers an area of 103,000 square kilometres and has a population
of approximately 322,000.
While Iceland is not a member of the European Union (EU), it is a member of the
European Free Trade Association (EFTA) and the European Economic Area, which
entitles it to access the EU internal market. Iceland is a member of international
organisations including the United Nations (UN), the International Monetary Fund (IMF),
the World Bank, the World Trade Organization (WTO), the Organization for Economic
Cooperation and Development (OECD), North Atlantic Treaty Organisation (NATO), the
Organization for Security and Cooperation in Europe (OSCE) and the Arctic Council.

Political overview
Iceland is a parliamentary republic with legislative powers vested in the Althing
(parliament). Icelands Head of State is President lafur Ragnar Grmsson. In Presidential
elections held in June 2012, President Grmsson won his fifth term. The next Presidential
election will be held in June 2016. In March 2016, President Grmsson announced he
would step down and not contest the next election.
The Althing is made up of 63 members directly elected by proportional representation for
four year terms. Following general elections in April 2013, the centrist Progressive Party
(PP) and the centre-right Independence Party (IP) formed a government led by
Progressive Party Chairman, Sigmundur Dav Gunnlaugsson, as Icelands Prime
Minister. However, on 5 April, Gunnlaugsson stood down in light of alleged financial assets
and dealings exposed by the Panama Papers scandal. Mr Sigurdur Ingi Johannsson was
appointed Prime Minister. General elections are expected to be held in late 2016.

Economic overview
Iceland was severely affected by the global financial crisis. The Icelandic economy
experienced high levels of volatility in 2008 and suffered a collapse in the banking system.
In October 2008, the government took control of the three big Icelandic commercial banks
and the International Monetary Fund (IMF) announced an rescue package totalling
US$2.1 billion. The Icelandic economy shrank 6.6 per cent in 2009 and 4.1 per cent in
2010. Since this time, Icelands economy has made a steady recovery. In November 2014,
the OECD reported that economic growth had strengthened and GDP was approaching its
pre-crisis peak level with 2.9 per cent GDP in 2014. Lower inflation, exchange rate
stability, declining unemployment and improved fiscal accounts are all signs of
macroeconomic normalisation. A surge in tourism is contributing to Icelands economic
recovery.

Over 80 per cent of Iceland's energy is renewable and 100 per cent of household
electricity and heating is produced from domestic renewable (hydro and geothermal)
energy resources.

Bilateral relationship
Australia and Iceland established diplomatic relations on 17 April 1984. Australia's
relations with Iceland are friendly with whaling the only major issue of disagreement.
Iceland rejoined the International Whaling Commission in 2002 after having left the
organisation in 1992. There is a small Icelandic community in Australia, with around 930
Australians claiming Icelandic ancestry according to the 2011 census.
In August 2008, Australia and Iceland, together with the United States, signed a
Memorandum of Understanding on cooperation in geothermal technology.
The Australian Ambassador to Iceland is accredited from Denmark. The Icelandic
Ambassador to China has non-resident accreditation to Australia. Iceland has Honorary
Consulates in Sydney and Melbourne.

High level visits

In April 2016, Icelands Ambassador to Australia, Mr Stefan Skjaldarson, presented his
credentials to the Governor-General on Thursday 7 April and held bilateral meetings in
Canberra and Sydney. In October 2002, Australias Minister for Communications,
Information Technology and the Arts, Senator the Hon Richard Alston, visited Iceland and
met President Grmsson.

Bilateral economic and trade relationship

Two way merchandise trade between Australia and Iceland was A$25m in 2014-15. In this
period, Australian exports to Iceland totaled A$ 2.4 million, including measuring and
analysing equipment, telecom parts and equipment and alcoholic beverages. Australian
imports in 2014-15 totaled A$22.5 million and included food processing machines and
parts, medicaments (including veterinary) and non-electrical machinery and parts.