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13th Aug 2022

Panama Papers: Iceland PM half-resigns

  • Protests will continue in Reykjavik, if the coalition parties don't call for elections. (Photo: Art Bicnick)

The government of Iceland is fighting for survival following Panama Papers revelations that its top people held offshore accounts.

Prime minister Sigmundur David Gunnlaugsson said on Tuesday (5 April) he would leave his office but denied he was resigning.

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  • Gunnlaugsson has become the first political casualty of the Panama Papers leaks.

In a statement, he said the vice-chairman of his Progressive Party, Sigurdur Ingi Johannsson, would "take over the office of prime minister for an unspecified amount of time".

"The prime minister has not resigned and will continue to serve as chairman of the Progressive Party," the statement read.

In effect, though, Gunnlaugsson is expected to hand his resignation to president Olafur Ragnar Grimsson on Wednesday.

Johannsson is currently the minister for fisheries and agriculture.

It remains unclear whether he will get the support of the Independence party that forms the coalition with the Progressive party.

The two coalition parties hold a comfortable 38-25 majority in the Icelandic parliament. If they find a way to reshuffle the government, an early election may not be needed.

The Independence party’s chairman, finance minister Bjarni Benediktsson, has said he hopes they’ll reach an agreement in the coming days to save the coalition.

"There are too many big and important issues at stake," he told Icelandic television on Tuesday evening amid large-scale anti-government street protests.

His party members are not convinced, however. MP Ragnheidur Rikardsdottir, who chairs the Independence party's parliamentary group told daily Morgunbladid that it was “not self-evident that Sigurdur Ingi Johannsson would become prime minister, even though Gunnlaugson has stepped down”.

Asked whether it was an option to seek an agreement with the opposition, she said: "Personally, I think we could do that and I think we should."

Johannsson is a relatively inexperienced politician. He first became an MP in 2009 and has served as minister of fisheries and agriculture since the current coalition came to power in 2013.

Before Gunnlaugsson's resignation, Johannsson tried to back him up and didn't see any wrongdoing in the revelation that the prime minister and his wife ran an offshore company.

"Well, they have to keep their money somewhere, it's not that easy to have money in Iceland," he told Iceland's Channel 2, sparking outrage on social media.

Meanwhile, the opposition stands unified behind its initial no-confidence motion. Replacing Gunnlaugsson with his deputy "is not enough", opposition MPs told reporters.

"I haven't seen any protest signs asking for Johannsson to become the Prime minister, nor to have the Independence party taking over. These politicians simply don't understand what is going on in this case," Pirate party member Helgi Hrafn Gunnarsson told Icelandic TV.

Protests are also likely to continue in Reykjavik if the coalition parties do not call an election.

Last night, hundreds marched from the parliament to the headquarters of the Independence party, showing anger at the attempts to avoid a snap vote.

"Out with the crooks - and the whole government!" people shouted. "Iceland - most corrupt country" - "Not in my name" - "We don't want you - Leave!" protest signs said.

’This hurts’

Benediktsson, the finance minister, was also outed in the Panama Papers for having had a 33 percent stake in a Seychelles-based company used to buy property in the Middle East.

He has said that his case is different to the PM’s because he fully abandoned the business world when he became party leader in 2009.

Icelandic political science professor Eirikur Bergmann says Iceland is in crisis mode again, after going through an economic and political crisis in 2008-09.

"In the wake of Gunnlaugsson's resignation the coalition government hangs by an ever-thinning thread - and risks imminent collapse if its leaders cannot placate the angered public," he said in The Guardian, a British daily.

Bergmann says Gunnlaugsson's political career, which began in 2008, has been a roller-coaster ride. He started out as the people's saviour, but ended up looking arrogant and shady.

"For Icelanders, this hurts," Bergmann said.

An opinion poll published late on Tuesday said that 81 percent of Icelanders wanted the prime minister to step down.

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