However, there are plans to utilise Iceland's geographical advantages to make the country the world's server farm. It makes sense; server facilities use increasingly vast amounts of electricity, both for powering servers and cooling them. Iceland, however, has a cold climate (providing for natural cooling), and more electricity than it knows what to do with (thanks to geothermal energy), all generated with negligible carbon emissions, and is conveniently located in the middle of the North Atlantic, within easy reach of both North America and Europe.
Iceland has been busying itself laying fibre optic cables to connect the country with North America and Europe. The cables coming in provide a capacity of more than five terabits/sec - all with server farms in mind.
Travelling down this pipe, data sited in Iceland is just 17 milliseconds from London.
If the foreign governments have economies dependent on the stability of Iceland, they might not risk upsetting this with an invasion (in the same way that economic relations between Taiwan and China have made a full-scale Chinese invasion less likely). Though perhaps Iceland, if it does become strategically important, will need to establish a defence force of some sort to help guarantee that stability.
Having Iceland as the world's server farm is a mind-blowing idea - I guess in line with the globalism that makes India the world's call centre, China the world's factory and so on. I wonder about data security: where would you make an offsite backup - the Falklands? And would foreign companies/governments start taking more of an interest in who is running, or potentially running, Iceland - being wary for example of military coups or invasions? (Imagine Iceland as the next Iraq, holding a valuable resource.) I read recently about US states competing to be the favoured data-centre of that country - even that degree of specialization seemed infra-dig. A Slashdot discussion on this from last year included debate about whether the cold air actually was useful for cooling servers. I've heard that some banks currently ensure