External relations

Iceland has participated actively in international cooperation. Iceland belongs to a group of Nordic countries that includes Denmark, Sweden, Norway and Finland, as well as Greenland and the Faroe Islands. The Nordic countries have established wide-ranging cooperation in a variety of fields, including economic affairs and international representation, in which the Baltic States have increasingly been taking an active part. Iceland is a member of the Nordic Council and specialised institutions such as the Nordic Investment Bank. Iceland became a member of the United Nations in 1946 and is an active participant in most of its affi liated agencies. Iceland is a founding member of the Bretton Woods institutions that were established in 1945, the International Monetary Fund (IMF), and the International Bank for Reconstruction and Development (World Bank). Iceland is one of the original members of the Organisation for Economic Cooperation and Development (OECD) and of the European Bank for Reconstruction and Development (EBRD). It joined the Council of Europe in 1950 and has participated in the Organisation for Security and Cooperation in Europe since it was initiated in 1975.

In 1964, Iceland became a party to the General Agreement on Tariffs and Trade (GATT), the predecessor to the World Trade Organisation (WTO). Iceland joined the European Free Trade Association (EFTA) in 1970 and entered into a free-trade agreement with the European Economic Community in 1972. In May 1992, the member states of EFTA and the European Union signed an agreement to establish a zone for the free movement of goods, services, capital and persons, the European Economic Area (EEA), which took effect on January 1, 1994.

Iceland participates in numerous Free Trade Agreements (FTAs) through its EFTA membership with countries including Canada, Chile, Croatia, Egypt, Israel, Jordan, Lebanon, Macedonia, Mexico, Morocco, the Palestinian Authority, Singapore, the South African Customs Union (SACU), the Republic of Korea, Tunisia and Turkey. In addition to the Free Trade Agreements, the EFTA States have concluded Joint Declarations on Co-operation with several countries, including Albania, Algeria, MERCOSUR, Peru, Serbia, Ukraine and Colombia. Work is in progress on FTAs with Thailand, the Gulf Cooperation Council, India, Indonesia and Russia. Iceland has enacted bilateral Free Trade Agreements with Greenland and the Faroe Islands.

Iceland is a founding member of the North Atlantic Treaty Organisation (NATO), established in 1949. The US maintained a permanent military presence at a base in Iceland from 1951 until 2006. Peacetime defence is now the responsibility of the Icelandic government, but arrangements have been made for the return of US forces in times of crisis or war, and there is a broad cooperation with Denmark, Norway and France regarding security and defence.

Economy of Iceland,Central Bank of Iceland