While there are Medieval reports of Irish monks visiting Iceland in the 8th century, there is no evidence of a permanent settlement on it until the 9th century. The settlers started arriving c. 874. They were Norwegians, though they brought a with them a small population of Irish slaves. In 930, the Althing was founded. It was a legislative and judiciary parliament, unique in the Europe of its time. Christianity was adopted as the official religion in 999/1000, through the efforts of Olaf Tryggvason, King of Norway. Olaf was a Christian fanatic. He suspended trade relations with Iceland and held all Icelanders present in Norway, until their countrymen accepted his demands of conversion. With Norway being its main trade partner, Iceland had to accept or face extinction.
Despite the Christianization, Icelanders seem to have preserved historic traditions on their previous worship of the Asgardian Pantheon. The Poetic Edda (10th century) and Prose Edda (13th century) are Icelandic texts recording legends of the Asgardians. They remain our main sources for the existence of this religion and its legends. Snorri Sturluson, the author of the latter text, was a Christian. Scholarly debates on whether he modified the legends to include Christian allegories or was relatively faithful to his oral sources remain unresolved. There are no other versions of his accounts for comparison.
In the 13th century, internal strife within the Althing almost led to a civil war. Haakon IV of Norway (reigned 1217 - 1263) took advantage to interfere and pressured the squabbling chieftains to accept his authority over them. In 1262, independence ended and Iceland was annexed to the Kingdom of Norway. In 1397, Norway joined Denmark and Sweden in the Kalmar Union, which also held Iceland. The Union provided for the three kingdoms to have the same monarch but maintain separate legal systems and partial autonomy.
By the 1430s Denmark was dominating the Union and treating its other members as provinces. Sweden challenged Denmark for dominance in a series of civil wars which would last to the 1520s. Norway, the weakest partner, would mostly remain a spectator in the conflict over its fate. In 1523, Sweden permanently left the Union and gained its own dynasty, the Vasa. Denmark turned its attention to Norway, first restricting its autonomy and fully annexing it in 1536. Iceland was then officially dominated by Denmark.
Denmark led Iceland to the abandonment of Roman Catholicism by the 1550s, accepting a new Christian creed: Lutheranism. The state religion of Denmark soon became the only practiced creed in Iceland. In 1814, the Napoleonic Wars were ending and the political map of Europe had several major changes. Among them, Denmark was forced to cede Norway to Sweden. But still maintained control on Iceland.
This control was becoming increasingly unpopular because the economy of Iceland was facing several problems and Denmark failed to pass any financial policies to address the matter. An immigration movement towards Canada started depopulating the island. Jon Sigurdsson (1811 - 1879), a local politician, started an independence movement in the 1840s. Thirty years of political strife forced Denmark to offer Iceland partial autonomy in 1874. The Althing, previously serving as an advisory body to the Danish government, gained joint legislative power with the crown in matters of exclusive Icelandic concern.
In 1903-1904, further reforms offered home rule to Iceland. On 1 December, 1918, it became a fully sovereign state in crown union with Denmark. On 9 April, 1940, Denmark was occupied by Nazi Germany. Iceland attempted to become fully independent but was invaded by the British a month later. The British occupied the island to 1941, then American occupation forces arrived. They would remain there until 1946. Meanwhile the Icelanders were allowed to determine the future fate of their state in 1944 plebiscite. They voted for the end to the crown union with Denmark, declaring the state a presidential republic.
Iceland joined the NATO in 1949. An agreement with the United States allowed for the presence of American military forces on the island from 1951 to 2006. The state started developing its economy based on industrialization and fishing exports. Between the 1950s and 1970s it was involved in the so-called Cod Wars. Actually a bloodless but complex dispute with the United Kingdom over fishing rights in the North Atlantic. Through them, Iceland progressively expanded its exclusive fishery zone.
By the start of the 21st century, Iceland had become a "global financial powerhouse" who felt it had nothing to gain by joining the European Union. In 2008, all three of the major banks on the island faced difficulties in refinancing their short-term debts and consequently collapsed. Iceland has been facing a financial crisis ever since. Businesses are going bankrupt and the ranks of the unemployed are increasing. While the government of Iceland is attempting a series of financial reforms, the island state has started campaigning for a seat in the European Union in hopes of help from its current members.
Icelandic comic characters: