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.