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Icelandic parties reach deal to avoid election after PM's departure Icelandic government stages reshuffle and rejects calls to resign
(about 3 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. Iceland’s coalition government has rejected calls from protesters and opposition leaders to stand down, saying a day after popular fury at the offshore holdings of the family of the prime minister, Sigmundur Davíð Gunnlaugsson, forced his departure that it has reshuffled and will carry on.
The agriculture and fisheries minister, Sigurður Ingi Jóhannsson, was named as successor to Gunnlaugsson, the first major casualty of the Panama Papers leaks, with parliamentary elections due in early 2017 to be brought forward to this autumn, a government spokesman told reporters.
Related: Iceland PM steps aside after protests over Panama Papers revelationsRelated: 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 could allow the hard-pressed centre-right administration to avoid a snap election it would almost certainly lose, sidestepping demands from an enraged opposition and many protesting Icelanders – who demonstrated outside parliament for a third straight day – for it to stand down.
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. “We want new elections,” said Atli Magnusson, a behavioural analyst, standing in a chilly drizzle with 3,000 other protesters – some lobbing yoghurt, eggs and bananas at the walls and windows of the national assembly. “They don’t have our trust any more. What they have done now is not what people are asking for.”
“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. Sigurbog Osk Haraldsdottir, a landscape architect, said: “It’s just the same. We’re getting the same old thing, with a few small changes. This won’t alter anything; we have to vote on what’s happened, and we want these people to go, for good.”
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. Gunnlaugsson stepped aside as prime minister for “an unspecified amount of time” on Tuesday after leaked documents revealed his wife owned a British Virgin Islands-based company with multimillion-pound claims on Iceland’s failed banks. He has repeatedly denied any wrongdoing.
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. After a day of talks between his Progressive party and its coalition partner, the Independence party headed by the finance minister, Bjarni Benediktsson, the government’s decision infuriated opposition parties who have tabled a motion of no confidence in the government on which they are determined parliament should vote this week.
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”. “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 radical Pirate party, which according to poll released on Wednesday would stand to win any new election.
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.” Arni Pall Arnason of the Social Democratic Alliance accused the coalition of “trying to cling on to power while making the absolute minimum of changes in order to escape the public. The government doesn’t want to confront this issue – or to 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 was a prime minister “on leave”, adding that polls had given Jóhannsson, who is favourite to take over the position, an approval rating of only 3% as recently as last month.
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.” But observers predicted the government, which has an absolute majority in parliament, would ride out the storm.
“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.” “Unless something very unexpected happens, it seems likely to me that this government has survived, and will continue and hope this dies down,” said Stefania Oskarsdottir, an associate political science professor at Iceland University.
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 Jónsdóttir’s Pirate party, according to the latest polling.
Any new election would be likely to result in a victory for the radical, anti-establishment Pirate party, according to the latest poll. Campaigning for grassroots democracy, more political transparency and internet freedoms, it has the support of a record 43% of the electorate, the Gallup poll conducted on Monday and Tuesday showed – significantly more than the combined score of the governing Progressive and Independence parties, which stood at 11.2% and 21.6% respectively.
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 revelationsRelated: 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 this week that Gunnlaugsson’s wife invested her share of the proceeds from the sale of her family’s business in an offshore company that held millions of pounds of bonds in the three major Icelandic banks that collapsed in the financial crisis of 2008 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 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 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. He sold his 50% stake in the company to his wife for $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.
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 answered all questions about the assets, which they had “never sought to hide”. All relevant taxes had been paid in Iceland since 2008, it said, and no parliamentary disclosure rules had been broken.
His office said the couple had provided detailed answers to questions about the Wintris assets, which they had “never sought to hide”. 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. Two other cabinet ministers named in the Panama Papers, Benediktsson and the interior minister, Olof Nordal, could be replaced.