greatreporter.com, December 31st, 2006
Area: 102,928 sq km (39,741 sq mi)
Population (2006 est.): 302,000
Capital:
Reykjavík
Chief of state:
President
Ólafur Ragnar
Grímsson
Head of government:
Prime Ministers
Halldór
Ásgrímsson and, from June 15, Geir H.
Haarde
Iceland
's economy continued to grow at a rapid pace in 2006, reaching an estimated rate of 4 1/2%. This brisk increase followed two earlier years of 7 1/2% growth per annum. The healthy gain was mainly based on investment in a 690-MW hydropower project at Kárahnjúkar, in the northeastern mountain region, and an aluminum plant built by Alcoa at Reyðarfjörður on the east coast. These two projects cost $3 billion–$3.5 billion over the construction period of three years and were to be completed in 2007, by which time the economy was expected to have slowed down. By February 2006 the exchange rate and share prices had fallen sharply in the wake of overheating of the economy and turbulence in the currency market. Share prices, however, recovered their loss in the latter half of the year.
In municipal elections in late May, the Progressive Party of
Prime Minister
Halldór
Ásgrímsson
lost much support, which led
Ásgrímsson
to resign on June 15. He was succeeded by
Geir H.
Haarde
, the chairman of the Independence Party. Elections to the Althingi (parliament) were scheduled for May 2007.
On March 15 the
U.S.
government informed the Icelandic authorities that it intended to close down the military base at Keflavík in the next six months. This
U.S.
base had been in
Iceland
since 1951, but with the disappearance of the Soviet threat and the end of the Cold War, it was no longer seen as needed. Although the base was fully closed by late September, the
U.S.
was still formally committed to defending
Iceland
under NATO auspices. In defiance of an international ban,
Iceland
resumed whaling in October, after a two-decade halt.
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