It is highly unlikely that our current government is colluding with the US. Transparency is too high and anti-American sentiment as well. Don't forget, we're in total about half the size of an average American suburb, everyone knows everyone, there's very little you can gain from spying as opposed to asking.
Spying electronically on Icelanders is a useless and expensive pursuit, if you want to know anything you go downtown and sit around while your average Joe or Jane talk about it.
Seriously though, it is amazing how much information can be gleaned from someone (rightly or wrongly) if you just sit down and talk with them for a bit. And even more information about someone's true feeling can be determined from their non-verbal communication, something that electronic surveillance (like email snooping) can do nothing about.
There's a recurring joke in advertisement in Iceland. If you have a fringe product with a well defined demographical following (say, upper-middle-class females, 40-50), you'd reach them better by throwing a small party with drinks on the house and inviting them than with media advertisement.
Spying electronically on Icelanders is a useless and expensive pursuit, if you want to know anything you go downtown and sit around while your average Joe or Jane talk about it.