The state of Islandia has for long been a friend and trusted ally of the western world as a member of the PfP community. Islandia’s wealth originates from its rich oil and gas resources. In addition to this, the country’s well integrated multiethnic population and status as an income tax safe haven has made it a popular resort for westerners and western multi-national companies and industries.

There is religious freedom in Islandia and the population is not dominated by any specific religion or religious movement, but consists of a well-balanced grouping of Muslims, Protestants, Catholics and Jews.

Apart from an Army Home Guard and a Coast Guard, Islandia has no armed forces of significance, but has traditionally relied on its good relationship with the western countries.
 
The Islandian isles of Samsoe, Anholt and Laesoe have belonged to Islandia since the eighteenth century. The Islandian independent enclave in northern Vendia was originally a part of Islandia, but became independent in 1974. Vendia sold the enclave and the isles to Islandia for 1001 Islandian Crowns in 1707. At that time Vendia had interest in neither the enclave nor the isles because they were not thought to possess any natural resources or riches and were of no significant strategic importance.

From 2005 to 2006 oil was discovered inside the Islandian territorial waters surrounding the three isles by Islandian geologists who were able to exploit the subsurface deeper than ever before.