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| Icelandic parties reach deal to avoid election after PM's departure | |
| (about 5 hours later) | |
| Iceland’s two ruling coalition parties have agreed to continue working together and will appoint a new prime minister following the departure of Sigmundur Davíð Gunnlaugsson amid mounting outrage over his family’s offshore holdings, local media reported. | |
| Related: Iceland PM steps aside after protests over Panama Papers revelations | Related: Iceland PM steps aside after protests over Panama Papers revelations |
| Fisheries minister Sigurður Ingi Jóhannsson told reporters on Wednesday that an accord had been concluded but would not confirm reports that he was the most likely candidate to replace Gunnlaugsson, who became the first major casualty of the Panama Papers when he stepped aside on Tuesday. | |
| The move will allow the government to avoid a snap election it would almost certainly lose, and to sidestep demands from an increasingly angry opposition and many Icelanders – who were set to demonstrate outside parliament for a third straight day – for it to stand down. | |
| “The only way to repair the complete breach of trust between the nation and this government is for it to resign and for fresh elections to be held,” said Birgitta Jónsdóttir of the anti-establishment Pirate party, which would win most votes, according to an opinion poll released on Wednesday. | |
| The prime minister’s office said on Tuesday that Gunnlaugsson, who exited after leaked documents revealed his wife owned a British Virgin Islands-based company with multimillion-pound claims on Iceland’s failed banks, had not resigned but was handing over the office of prime minister “for an unspecified amount of time” to Jóhannsson, the deputy leader of his Progressive party. | |
| Finance minister Bjarni Benediktsson, the leader of the Independence party, the junior partner in the centre-right coalition that has an absolute majority in parliament, had earlier said he hoped the coalition would continue. | |
| The speaker of the Icelandic parliament, Einar K Guðfinnsson, told the state broadcaster, RÚV, that a no confidence motion tabled by the opposition parties would not be put to a vote while discussions between the coalition partners were ongoing, since the situation was volatile and the proposal “could be obsolete by tomorrow”. | |
| Opposition leaders were furious at what they saw as the government’s manoeuvring. “The coalition is trying to cling on to power while making the absolute minimum of changes in order to escape the public,” said Arni Pall Arnason of the Social Democratic Alliance. “The government doesn’t want to confront this issue or face the public.” | |
| The opposition scents blood, insisting that Gunnlaugsson’s departure, which followed a mass protest by up to 23,000 Icelanders outside the Reykjavik parliament on Monday night, was not enough to appease public anger at the revelations. | |
| Jónsdóttir said Gunnlaugsson’s departure still left two other ministers in government whose names appear in the leaked documents and noted that a poll in March had given Jóhannsson, the prime minister designate, an approval rating of only 3%. | |
| “They cannot just put a sticking plaster over this,” she told the Guardian. “This is a broken bone. It’s better for the government to go now so it doesn’t have to go through the humiliation of defending itself on this.” | |
| But observers predicted the government would ride out the storm. “Unless something very unexpected happens, it seems likely to me that this government has survived and will continue and hope that this dies down,” said Stefania Oskarsdottir, an associate political science professor at Iceland University. | |
| Any new election would be likely to result in a victory for the radical, anti-establishment Pirate party, according to the latest poll. | |
| The party – which was founded in 2012 as a libertarian movement campaigning for grassroots democracy, more political transparency and internet freedoms – has the support of 43% of the electorate, the Gallup poll conducted on Monday and Tuesday for the Fréttablaðið newspaper and Stöð 2 television showed. | |
| That is significantly more than the combined score of the governing Progressive and Independence parties, which stood at 11.2% and 21.6% respectively. | |
| Related: Iceland’s PM faces calls for snap election after offshore revelations | |
| Iceland has barely recovered from a devastating depression triggered by the collapse of its three major banks – with liabilities totalling more than 10 times the country’s GDP – in the financial crisis of 2008. | |
| Revelations that Gunnlaugsson’s wife had invested her share of the proceeds from the sale of her family’s business in an offshore company that held millions of pounds worth of bonds in the three banks have sparked public fury and mass protests. | Revelations that Gunnlaugsson’s wife had invested her share of the proceeds from the sale of her family’s business in an offshore company that held millions of pounds worth of bonds in the three banks have sparked public fury and mass protests. |
| Gunnlaugsson is also accused of a serious conflict of interest because his government has been involved in negotiating deals with the collapsed banks’ international creditors, of which his wife’s company is one. | |
| Gunnlaugsson, who has repeatedly denied any wrongdoing, sold his 50% stake in the company, Wintris Inc, to his wife for a symbolic $1 at the end of 2009 but did not declare an interest in the company when he was elected an MP earlier that year nor when he became prime minister in 2013. | |
| His office said the couple had provided detailed answers to questions about the Wintris assets, which they had “never sought to hide”. | His office said the couple had provided detailed answers to questions about the Wintris assets, which they had “never sought to hide”. |
| The holdings had been reported on his wife’s income tax returns since 2008 and all relevant taxes had been paid in Iceland, it said. No parliamentary disclosure rules had been broken. The Guardian has seen no evidence to suggest tax avoidance, evasion or any dishonest financial gain on the part of Gunnlaugsson, his wife or Wintris. | The holdings had been reported on his wife’s income tax returns since 2008 and all relevant taxes had been paid in Iceland, it said. No parliamentary disclosure rules had been broken. The Guardian has seen no evidence to suggest tax avoidance, evasion or any dishonest financial gain on the part of Gunnlaugsson, his wife or Wintris. |