A sparsely-populated North Atlantic island, Iceland is famous for its hot springs, geysers and active volcanoes. Lava fields cover much of the land and hot water is pumped from under the ground to supply much of the country's heating.
Iceland became an independent republic in 1944. Dominated over previous centuries by Norway and Denmark, it does not hesitate nowadays to defend its interests.
It has extended its territorial waters several times since the end of the 1950s to protect its fishermen and their main catch of Atlantic cod from foreign fleets.
Iceland remains outside the EU but, although it has no armed forces, it is a member of Nato. In 1985 it declared itself a nuclear-free zone.
The last US troops left in September 2006. American forces had been stationed in the country without a break since World War II. The US says it will continue to defend Iceland as a Nato ally.
Traditionally a whaling nation, Iceland abandoned the practice in 1989 in line with an international moratorium. It later resumed scientific whaling, intended to investigate the impact of whales on fish stocks, and in 2006 it announced a return to commercial hunts. The move was condemned by environmental groups.
Iceland enjoys a standard of living among the highest in the world. For many years its prosperity depended on the fishing industry. While fish still makes up a large proportion of exports, it now accounts for less than 10 per cent of gross domestic product.
The economy is developing in new areas, not least tourism. Banking and finance reforms have helped to fuel exceptional growth, though there have been worries about economic overheating. Icelandic business has made major investments abroad.
There has been substantial investment in a major industrial aluminium smelter project. Environmentalists have protested that the associated hydroelectric schemes, including the Karahnjukar dam, are being pushed through at the expense of fragile wildlife habitats.
Full name: Republic of Iceland
Population: 301,000 (UN, 2007)
Capital: Reykjavik
Area: 103,000 sq km (39,769 sq miles)
Major language: Icelandic
Major religion: Christianity
Life expectancy: 80 years (men), 83 years (women) (UN)
Monetary unit: 1 krona = 100 aurar
Main exports: Fish and fish products, metals
GNI per capita: US $46,320 (World Bank, 2006)
Internet domain: .is
International dialling code: +354
President: Olafur Ragnar Grimsson
Prime minister: Geir Haarde
Geir Haarde, head of the conservative Independence Party, took office in June 2006.
The Independence Party has dominated politics since Iceland declared full independence from Denmark in 1944. It ruled in a coalition with the Progressive Party from 1995 to 2007.
In the May 2007 parliamentary elections, the coalition held onto its majority with a single seat, but the Progressive Party left the coalition after its poor showing.
Subsequent negotiations led to a coalition between the Independence Party and the Social Democratic Alliance (SDA). The new government has a strong majority and wants to concentrate on children, the elderly and the environment.
Mr Haarde is a staunch opponent of EU membership, but the new coalition has set up a commission to look at the advantages and disadvantages of joining the EU.
Mr Haarde's former government supported the building of smelters powered by geothermal and hydroelectric resources by aluminium giants such as Alcoa. His new SDA coalition partners wanted such developments halted until the environmental and economic impact is known, but as yet no action has been announced to stop or reconsider them.
National radio and TV services are provided by the Icelandic National Broadcasting Service (RUV), a public-service broadcaster owned by the state.
The RUV is obliged to promote the Icelandic language and the nation's history and cultural heritage. Its services are funded by a licence fee, and by advertising revenues.
The Icelandic constitution guarantees press freedom. There is a wide range of publications, which includes privately-owned and party-affiliated newspapers.
The press
Frettabladid - daily
Morgunbladid - morning daily
DV - evening daily
Vidskiptabladid - business
Baejarins besta - West Fjords local news
icelandreview.com - English-language site with news
Television
Icelandic National Broadcasting Service - operates public network Sjonvarpid
Stod 2 - main private station
Syn - private
Skjar einn - private
Radio
Icelandic National Broadcasting Service - public radio, operates two national networks and four regional stations
Bylgjan - main private station
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