For many Icelanders, WW2 is actually known as “blessað stríðið” or “the blessed war", as the country has the war to thank for its independence, economic boom and security.
At the beginning of the war, Iceland was under rule of the Danish crown. This changed after Nazi-Germany invaded Denmark on the 9th of April, 1940. From this all communication between the two countries was instantly severed. With this new found freedom, Iceland took back sovereignty that day, electing a provisional governor, Sveinn Björnsson, whom eventually went on to become Iceland’s first president when it formally severed its ties with Denmark and truly declared its independence on the 17th of June, 1944.
Over the course of the war, Iceland was amicably occupied by British, Canadian and American forces. Who provided protection for the country, in order to stop Nazi-Germany from gaining it as a foot hold in the Atlantic.
Iceland’s occupation brought an incredible boost to their economy, which, like many other countries, had been crippled by the Great Depression. Occupying forces provided ample opportunity for significant employment and dramatically upscaled both Iceland’s infrastructure and technology. Finding only dirt roads and no airports, Allied troops built tarmacked roads and airports, including Iceland’s biggest and most important today: Keflavík International Airport.
Iceland also made significant trade with Britain, this in spite of Nazi-Germany’s trade embargo and the risk of U-boat attacks.
All in all it would seem Iceland was one of the few countries that enjoyed the war for the prosperity it brought them, but what would you expect from the descendants of Vikings?
Further Info: https://www.history.co.uk/history-of-ww2/iceland-during-ww2