Ingólfr Arnarson (modern Icelandic: Ingólfur Arnarson), the first permanent Scandinavian settler

According to both Landnámabók and Íslendingabók, monks known as the Papar lived in Iceland before Scandinavian settlers arrived, possibly members of a Hiberno-Scottish mission. Recent archaeological excavations have revealed the ruins of a cabin in Hafnir on the Reykjanes peninsula. Carbon dating indicates that it was abandoned sometime between 770 and 880.[1] In 2016, archaeologists uncovered a longhouse in Stöðvarfjörður that has been dated to as early as 800.[2]

Swedish Viking explorer Garðar Svavarsson was the first to circumnavigate Iceland in 870 and establish that it was an island.[3] He stayed during the winter and built a house in Húsavík. Garðar departed the following summer, but one of his men, Náttfari, decided to stay behind with two slaves. Náttfari settled in what is now known as Náttfaravík, and he and his slaves became the first permanent residents of Iceland to be documented.[4][5]

The Norwegian-Norse chieftain Ingólfr Arnarson built his homestead in present-day Reykjavík in 874. Ingólfr was followed by many other emigrant settlers, largely Scandinavians and their thralls, many of whom were Irish or Scottish.[6] By 930, most arable land on the island had been claimed; the Althing, a legislative and judicial assembly was initiated to regulate the Icelandic Commonwealth. The lack of arable land also served as an impetus to the settlement of Greenland starting in 986.[7] The period of these early settlements coincided with the Medieval Warm Period, when temperatures were similar to those of the early 20th century.[8] At this time about 25% of Iceland was covered with forest, compared to 1% in the present day.[9] Christianity was adopted by consensus around 999–1000, although Norse paganism persisted among segments of the population for some years afterward.[10]

The Icelandic Commonwealth lasted until the 13th century when the political system devised by the original settlers proved unable to cope with the increasing power of Icelandic chieftains.[11] The internal struggles and civil strife of the Age of the Sturlungs led to the signing of the Old Covenant in 1262, which ended the Commonwealth and brought Iceland under the Norwegian crown. Possession of Iceland passed from the Kingdom of Norway (872–1397) to the Kalmar Union in 1415, when the kingdoms of Norway, Denmark, and Sweden were united. After the break-up of the union in 1523, it remained a Norwegian dependency, as a part of Denmark–Norway.

Infertile soil, volcanic eruptions, deforestation, and an unforgiving climate made for harsh life in a society where subsistence depended almost entirely on agriculture. The Black Death swept Iceland twice, first in 1402–1404 and again in 1494–1495.[12] The former outbreak killed 50% to 60% of the population, and the latter 30% to 50%.[13]

 

 

Ósvör, a replica of an old fishing outpost outside Bolungarvík

Around the middle of the 16th century, as part of the Protestant Reformation, King Christian III of Denmark began to impose Lutheranism on all his subjects. Jón Arason, the last Catholic bishop of Hólar, was beheaded in 1550 along with two of his sons. The country subsequently became officially Lutheran, and Lutheranism has since remained the dominant religion.

 

 

A map of Iceland published in the early 17th century by Gerardus Mercator

In the 17th and 18th centuries, Denmark imposed harsh trade restrictions on Iceland. Natural disasters, including volcanic eruptions and disease, contributed to a decreasing population. In the summer of 1627, Barbary Pirates committed the events known locally as the Turkish Abductions, in which hundreds of residents were taken into slavery in North Africa and dozens killed; this was the only invasion in Icelandic history to have casualties.[14][15] The 1707–08 Iceland smallpox epidemic is estimated to have killed a quarter to a third of the population.[16][17] In 1783 the Laki volcano erupted, with devastating effects.[18] In the years following the eruption, known as the Mist Hardships (Icelandic: Móðuharðindin), over half of all livestock in the country died. Around a quarter of the population starved to death in the ensuing famine.[19]

In 1814, following the Napoleonic Wars, Denmark-Norway was broken up into two separate kingdoms via the Treaty of Kiel but Iceland remained a Danish dependency. Throughout the 19th century, the country's climate continued to grow colder, resulting in mass emigration to the New World, particularly to the region of Gimli, Manitoba in Canada, which was sometimes referred to as New Iceland. About 15,000 people emigrated, out of a total population of 70,000.[20]

A national consciousness arose in the first half of the 19th century, inspired by romantic and nationalist ideas from mainland Europe. An Icelandic independence movement took shape in the 1850s under the leadership of Jón Sigurðsson, based on the burgeoning Icelandic nationalism inspired by the Fjölnismenn and other Danish-educated Icelandic intellectuals. In 1874, Denmark granted Iceland a constitution and limited home rule. This was expanded in 1904, and Hannes Hafstein served as the first Minister for Iceland in the Danish cabinet.

 

 

HMS Berwick led the British invasion of Iceland.

The Danish–Icelandic Act of Union, an agreement with Denmark signed on 1 December 1918 and valid for 25 years, recognised Iceland as a fully sovereign and independent state in a personal union with Denmark. The Government of Iceland established an embassy in Copenhagen and requested that Denmark carry out on its behalf certain defence and foreign affairs matters, subject to consultation with the Althing. Danish embassies around the world displayed two coats of arms and two flags: those of the Kingdom of Denmark and those of the Kingdom of Iceland. Iceland's legal position became comparable to those of countries belonging to the Commonwealth of Nations, such as Canada, whose sovereign is King Charles III.

During World War II, Iceland joined Denmark in asserting neutrality. After the German occupation of Denmark on 9 April 1940, the Althing replaced the King with a regent and declared that the Icelandic government would take control of its own defence and foreign affairs.[21] A month later, British armed forces conducted Operation Fork, the invasion and occupation of the country, violating Icelandic neutrality.[22] In 1941, the Government of Iceland, friendly to Britain, invited the then-neutral United States to take over its defence so that Britain could use its troops elsewhere.[21]

 

 

British warship HMS Scylla (right) collides with Icelandic cost guard vessel ICGV Óðinn in the Atlantic Ocean during the Third Cod War

On 31 December 1943, the Danish–Icelandic Act of Union expired after 25 years. Beginning on 20 May 1944, Icelanders voted in a four-day plebiscite on whether to terminate the personal union with Denmark, abolish the monarchy, and establish a republic. The vote was 97% to end the union, and 95% in favour of the new republican constitution.[23] Iceland formally became a republic on 17 June 1944, with Sveinn Björnsson as its first president.

In 1946, the US Defence Force Allied left Iceland. The nation formally became a member of NATO on 30 March 1949, amid domestic controversy and riots. On 5 May 1951, a defence agreement was signed with the United States. American troops returned to Iceland as the Iceland Defence Force and remained throughout the Cold War. The US withdrew the last of its forces on 30 September 2006.

Iceland prospered during the Second World War. The immediate post-war period was followed by substantial economic growth, driven by the industrialisation of the fishing industry and the US Marshall Plan programme, through which Icelanders received the most aid per capita of any European country (at US$209, with the war-ravaged Netherlands a distant second at US$109).[24][25]

Vigdís Finnbogadóttir assumed Iceland's presidency on 1 August 1980, making her the first elected female head of state in the world.[26]

The 1970s were marked by the Cod Wars—several disputes with the United Kingdom over Iceland's extension of its fishing limits to 200 nmi (370 km) offshore. Iceland hosted a summit in Reykjavík in 1986 between United States President Ronald Reagan and Soviet Premier Mikhail Gorbachev, during which they took significant steps towards nuclear disarmament. A few years later, Iceland became the first country to recognise the independence of Estonia, Latvia, and Lithuania as they broke away from the USSR. Throughout the 1990s, the country expanded its international role and developed a foreign policy orientated towards humanitarian and peacekeeping causes. To that end, Iceland provided aid and expertise to various NATO-led interventions in Bosnia, Kosovo, and Iraq.[27]

Iceland joined the European Economic Area in 1994, after which the economy was greatly diversified and liberalised. International economic relations increased further after 2001 when Iceland's newly deregulated banks began to raise great amounts of external debt, contributing to a 32 percent increase in Iceland's gross national income between 2002 and 2007.[28][29]

In 2003–2007, following the privatisation of the banking sector under the government of Davíð Oddsson, Iceland moved towards having an economy based on international investment banking and financial services.[30] It was quickly becoming one of the most prosperous countries in the world, but was hit hard by a major financial crisis.[30] The crisis resulted in the greatest migration from Iceland since 1887, with a net emigration of 5,000 people in 2009.[31]

Iceland's economy stabilised under the government of Jóhanna Sigurðardóttir and grew by 1.6% in 2012.[32] The centre-right Independence Party was returned to power in coalition with the Progressive Party in the 2013 election.[33] In the following years, Iceland saw a surge in tourism as the country became a popular holiday destination. In 2016, Prime Minister Sigmundur Davíð Gunnlaugsson resigned after being implicated in the Panama Papers scandal.[34] Early elections in 2016 resulted in a right-wing coalition government of the Independence Party, the Reform Party and Bright Future.[35] This government fell when Bright Future quit the coalition due to a scandal involving then-Prime Minister Bjarni Benediktsson's father's letter of support for a convicted child sex offender.[36] Snap elections in October 2017 brought to power a new coalition consisting of the Independence Party, the Progressive Party, and the Left-Green Movement, headed by Katrín Jakobsdóttir.[37]

After the 2021 parliamentary election, the new government was, just like the previous government, a tri-party coalition of the Independence Party, the Progressive Party, and the Left-Green Movement, headed by Prime Minister Katrín Jakobsdóttir.[38]