On 10th May 1940 the British landed a detachment of Royal Marines in Iceland. It was an unopposed invasion designed to deny the island to the Germans.
A force of Royal Marines was landed in Iceland by H.M.S. Berwick and H.M.S. Glasgow on the 10th May and were received in a friendly manner by the inhabitants, though an official protest was made. Three merchant vessels (2 Swedish and 1 Danish) were found there and sent to the United Kingdom. The German Consul and staff and 20 prisoners were taken off.
The following analysis of the situation in Iceland was made in a report to the War Cabinet :
29. Prior to the outbreak of hostilities there was evidence of extensive investigations carried out by Germans, who penetrated even to the remoter districts of Iceland, in the guise of fishermen, entymologists, mink farmers and meteorologists. There was also very considerable propaganda activity, and visits of submarines, cruisers, &, to judge by the length of their stays, made possible a thorough survey of all fiords suitable for military disembarkations or sheltering submarines. There were perhaps 60 adult German men at that time in the island.
Since September 1939 the addition of 65 men from the wrecked ship Bahia Blanca and the presence of a more active German Consul at Reykjavik has considerably altered the situation. The new consul, Professor Gerlach, Was formerly Professor of Pathology at Basle, but had lost his chair as a result of his propaganda activities. In October last he was joined by a certain Adolf Smith sent over from Germany in a submarine. Reports from Iceland indicate that an internal coup is feared.
30. The Icelandic police amount to 100 men, of whom 70 are stationed in Reykjavik. Normally they are scattered and unarmed, and their chief, Hansem, is suspected of close association with the Germans, although he enjoys the confidence of the Prime Minister. The Naval forces of the Republic consist solely of a fishery-protection vessel of little military value. The port facilities of the Island are not confined to Reykjavik. Other towns with good harbours and reasonable facilities for shipping are Akureyri and Hafnarfjordur. The whole coast, except a small stretch in the east, is permanently ice free.
See TNA CAB/66/7/3
Iceland was to become a a vital base for British and later, United States, forces in the Battle of the the Atantic.