Iceland was the first country in the world to have a political party formed and led entirely by women. Known as the Women's List or Women's Alliance (Kvennalistinn), it was founded in 1983 to advance the political, economic, and social needs of women. After participating in its first parliamentary elections, the Women's List helped increase the proportion of female parliamentarians by 15%. It disbanded in 1999, formally merging the next year with the Social Democratic Alliance, although about half of its members joined the Left-Green Movement instead. It did leave a lasting influence on Iceland's politics: every major party has a 40% quota for women, and in 2009 nearly a third of members of parliament were female, compared to the global average of 16%. Following the 2016 elections, 48% of members of parliament are female.
In 2016 Iceland was ranked 2nd in the strength of its democratic institutions and 13th in government transparency. The country has a high level of civic participation, with 81.4% voter turnout during the most recent elections, compared to an OECD average of 72%. However, only 50% of Icelanders say they trust their political institutions, slightly less than the OECD average of 56% (and most probably a consequence of the political scandals in the wake of the Icelandic financial crisis).
Iceland is a representative democracy and a parliamentary republic. The modern parliament, Alþingi (English: Althing), was founded in 1845 as an advisory body to the Danish monarch. It was widely seen as a re-establishment of the assembly founded in 930 in the Commonwealth period and suspended in 1799. Consequently, "it is arguably the world's oldest parliamentary democracy." It currently has 63 members, elected for a maximum period of four years. The president is elected by popular vote for a term of four years, with no term limit. The elections for president, the Althing, and local municipal councils are all held separately every four years.
The president of Iceland is a largely ceremonial head of state and serves as a diplomat, but may veto laws voted by the parliament and put them to a national referendum. The current president is Guðni Th. Jóhannesson. The head of government is the prime minister who, together with the cabinet, is responsible for executive government. The cabinet is appointed by the president after a general election to the Althing; however, the appointment is usually negotiated by the leaders of the political parties, who decide among themselves after discussions which parties can form the cabinet and how to distribute its seats, under the condition that it has a majority support in the Althing. Only when the party leaders are unable to reach a conclusion by themselves within a reasonable time span does the president exercise this power and appoint the cabinet personally. This has not happened since the republic was founded in 1944, but in 1942 regent Sveinn Björnsson, who had been installed in that position by the Althing in 1941, appointed a non-parliamentary government. The regent had, for all practical purposes, the position of a president, and Sveinn would later become the country's first president in 1944.
The governments of Iceland have always been coalition governments, with two or more parties involved, as no single political party has ever received a majority of seats in the Althing throughout the republican period. The extent of the political power possessed by the office of the president is disputed by legal scholars[which?], in Iceland; several provisions of the constitution appear to give the president some important powers, but other provisions and traditions suggest differently. In 1980, Icelanders elected Vigdís Finnbogadóttir as president, the world's first directly elected female head of state. She retired from office in 1996. In 2009, Iceland became the first country with an openly gay head of government when Jóhanna Sigurðardóttir became prime minister.
Iceland is divided into regions, constituencies and municipalities. The eight regions are primarily used for statistical purposes. District court jurisdictions also use an older version of this division. Until 2003, the constituencies for the parliamentary elections were the same as the regions, but by an amendment to the constitution, they were changed to the current six constituencies:
South (southern half of Iceland, excluding Reykjavík and suburbs).
The redistricting change was made to balance the weight of different districts of the country, since previously a vote cast in the sparsely populated areas around the country would count much more than a vote cast in the Reykjavík city area. The imbalance between districts has been reduced by the new system, but still exists.
74 municipalities in Iceland govern local matters like schools, transport, and zoning. These are the actual second-level subdivisions of Iceland, as the constituencies have no relevance except in elections and for statistical purposes. Reykjavík is by far the most populous municipality, about four times more populous than Kópavogur, the second one.
Iceland, which is a member of the UN, NATO, EFTA, Council of Europe and OECD, maintains diplomatic and commercial relations with practically all nations, but its ties with the Nordic countries, Germany, the United States, Canada and the other NATO nations are particularly close. Historically, due to cultural, economic and linguistic similarities, Iceland is a Nordic country, and it participates in intergovernmental cooperation through the Nordic Council.
Iceland is a member of the European Economic Area (EEA), which allows the country access to the single market of the European Union (EU). It was not a member of the EU, but in July 2009 the Icelandic parliament, the Althing, voted in favour of application for EU membership and officially applied on 17 July 2009. However, in 2013, opinion polls showed that many Icelanders were now against joining the EU; following 2013 elections the two parties that formed the island's new government—the centrist Progressive Party and the right-wing Independence Party—announced they would hold a referendum on EU membership.
Iceland was the neutral host of the historic 1986 Reagan–Gorbachev summit in Reykjavík, which set the stage for the end of the Cold War. Iceland's principal historical international disputes involved disagreements over fishing rights. Conflict with the United Kingdom led to a series of so-called Cod Wars, which included confrontations between the Icelandic Coast Guard and the Royal Navy over British fishermen, in 1952–1956 due to the extension of Iceland's fishing zone from 3 to 4 nmi (5.6 to 7.4 km; 3.5 to 4.6 mi), 1958–1961 following a further extension to 12 nmi (22.2 km; 13.8 mi), 1972–1973 with another extension to 50 nmi (92.6 km; 57.5 mi); and in 1975–1976 another extension to 200 nmi (370.4 km; 230.2 mi).
According to the Global Peace Index, Iceland is the most peaceful country in the world, due to its lack of armed forces, low crime rate, and high level of socio-political stability. Iceland is listed in the Guinness World Records book as the "country ranked most at peace" and the "lowest military spending per capita".