Only a small portion of Iceland is within the Arctic Circle. Actually the Arctic area is only a few hundred square meters in Grímsey, the northernmost island of Iceland. However, the country is within the Arctic according to all political defined boundaries, making it the only purely Arctic state.
Iceland bears a cold climate and the freezing temperature go easily down to -20 degrees in the winter. The summers are mild, the July mean being around +10°c.
The population is just over 300.000 and the country relies heavily on fish and aluminum export. Due to cheap energy the country has alerted big companies for production that requires significant amounts of energy. The latest trend has been aluminum smelters that can be found both in the East cost as well as in the South-West corner of Iceland.
Iceland is closely related to numerous Arctic issues. It is rich in natural energy resources and even has potential oil fields north of Iceland, in the Dreki area. It has strong Arctic research entities connected to the University of Akureyri in North Iceland and hosts the secretariats for both CAFF and PAME, the working groups of the Arctic Council. One of the main achievements so far has been the the Arctic Human Development Report that was published during Iceland's chairmanship in Arctic Council 2002-2004.
Iceland is also looking to benefit from increased shipping in the Arctic. Possible oil refineries in the Westfjords of Iceland have been mentioned and could be a feasible location because of the highly developed infrastructure in the country.
In addition, as soon as Greenlandic petroleum resource exploitation begins on full speed will Iceland be one of the most likely service centers for East-Greenland exploration due to the short distance between countries and already existing infrastructure in Northern Iceland.
The country is also hoping to be the center of shipping through a hub-port, possibly in the eastern part of Iceland.
Again the infrastructure in the country has many benefits, ahead of other locations such as Kirkenes in Norway.
Source: CIA World Factbook