In Iceland “fishing is politics.” Iceland's economy has been largely dependent on fishing activities for economic development and employment as well as for the generation of foreign exchange. Therefore, any decision related to its fisheries generates high levels of interest in Iceland's political circles.

On four occasions since World War II, Iceland unilaterally extended its fishing jurisdiction. These extensions put Iceland in direct conflict with other nations with fleets fishing within these limits, principally those of Great Britain and West Germany (Fig. 12.1). While West Germany opposed these extensions, it took a less militant stand than the British and eventually acquiesced to Icelandic demands. Great Britain, however, opposed any precedent-setting extensions of coastal jurisdictions, especially those that might infringe on its activities on the designated high seas. The ensuing conflicts between Iceland and Great Britain are popularly referred to as the “Cod Wars.”

Since the first Anglo-Icelandic conflict over cod in the early 1950s, the share of Iceland's foreign exchange generated by its fisheries declined from a high of about 90 percent in the early 1950s to about 80 percent at the end of the last Cod War in the mid-1970s. This still represented a sizable national dependence on the exploitation of one variable natural resource. Iceland was (and still is) the nation that is most dependent on the exploitation of fish populations, outdistancing its closest competitors by a wide margin (Fig. 12.2).