Why you should care
Because Iceland’s history is about far more than fish and Björk.
Named for the drifting Arctic ice that has blocked its coasts for centuries, Iceland has long relied on the sea — from the underwater volcanic eruptions that first formed the land mass to the abundant supply of fish that feeds its people. Less well known is how the sea granted Iceland a strategic location between belligerents during World War II — one that eventually served as a welcome foothold for the Allies in the battle for the Atlantic. True, a number of Icelandic fishermen perished in German attacks, but that period is still referred to by Icelanders as “the Blessed War,” says Thorvaldur Gylfason, a professor of economics at the University of Iceland, because it transformed their country from “bust to boom.”
[Iceland] was basically a bunch of mud huts in 1900 and still quite primitive in terms of infrastructure [in the early ’40s].
Guðmundur Jónsson, history professor at the University of Iceland
From his office, Guðmundur Jónsson, Gylfason’s colleague in the history department, can see Reykjavik Airport — a relic that dates to 1940, when British forces came ashore and “occupied” Iceland in a bid to save it from Nazi invasion. They built the airfield — still used for domestic flights — to serve their transport needs. Icelandic authorities formally complained about the occupation but told islanders to welcome their new guests, and most folks, historians say, were relieved it was the Brits and not the Germans who landed first. While Nazism enjoyed a small measure of success there, winning 2.8 percent of the vote in Reykjavik local elections in 1934, it never gained widespread popularity. When the Americans entered the war in 1941, they freed up their British allies by taking over the Icelandic occupation a year later.
U.S. soldiers found themselves on an island still reeling from the Great Depression. Throughout the 1930s, “markets were down, GDP contracted and unemployment rose,” says Jónsson. Bilateral trade treaties in Europe had disadvantaged Iceland by driving down fish exports and pushing up unemployment. Soon after the war broke out, Brits began importing Icelandic fish, which helped, but the island “was basically a bunch of mud huts in 1900 and still quite primitive in terms of infrastructure” in the early ’40s, Jónsson explains.
So the American troops, in need of facilities, brought an infusion of cash, engineering know-how and equipment to ensure that roads, buildings and bridges would be constructed at a fast clip. They trained locals to do the work, and once the facilities were built, they still needed maintenance. All that work eased unemployment and put lots of cash into circulation — not least because workers typically got higher wages than traditional island jobs offered. Before long, an American base along with Keflavík Airport — the island’s main air transport facility today — had been completed, giving the country a much-needed modern makeover.
The 50,000 U.S. troops added considerably to the native population of just 120,000 in the early 1940s. The Yanks needed places to sleep and things to eat and wear, creating a hefty demand that jacked up the domestic economy. Jónsson estimates that between exports and an internal boom, Iceland enjoyed an “average growth rate … above 9 percent a year” throughout the war, transforming it from one of the poorest nations by Western European standards to one of the most developed.
In the domestic sphere, fraternizing between American soldiers and Icelandic women — “The Situation,” according to island authorities, who tried but failed to stop it — led to many marriages and a small exodus of local females. “Some say [Iceland’s women] learned men could be more civilized than the Icelandic men,” says Jónsson, a discovery that afforded the women a new social status. And though historians still refer to Iceland’s island mentality when it comes to international affairs, there’s no doubt that the war years opened the nation’s eyes to events taking place beyond its coastal borders.
Once the war was over, Iceland — hellbent on maintaining its independence after gaining full freedom from Danish rule in 1944 — invited the American visitors to leave the island. The U.S. heeded the request, but, eager to maintain influence over a territory of such strategic importance, it arranged for Iceland to receive huge grants of Marshall Plan aid. Unlike the majority of grant recipients, though, the island wasn’t in ruins, so American authorities had to massage the rules a bit to secure funds that financed U.S. imports and built factories, Gylfason says. The injection of wartime cash also enabled Iceland to pass comprehensive legislation for social security, as well as education and heath care reforms.
Home to two dozen active volcanoes, Iceland was forged by an eruption 20 million years ago and continues to be reshaped by explosions of molten lava. But in just a few years when the world beyond its frigid borders was at war, the land of fire and ice was utterly transformed from primitive outsider to political player, cementing its legacy as an island of surprising extremes.