Icelanders were surprised that President Reagan and Soviet leader Mikhail S. Gorbachev suddenly settled on Reykjavik as the site of their summit conference next weekend. But no Icelander seems awed by the selection. They feel sure that Reykjavik, small as it is, can cope and that Iceland, rich as it is in both antique and modern achievement, can make itself better known throughout the world.
A little more than 130,000 people live in Reykjavik and its suburbs-55% of the total population of Iceland-but most of the capital's population is relatively new. Reykjavik has grown by five times or more since World War II.
Television announcements have appealed for all Icelanders to stay away from Reykjavik restaurants this week, making room at tables for the 3,000 or so journalists and officials coming for the Reagan-Gorbachev summit. The appeal reflects how few facilities there are in Reykjavik to take care of so many visitors. The town has fewer than 1,000 hotel beds and only 10 restaurants that are listed in the official hotel and restaurant guide as those with "full service international menu."