Updated on April 5 at 11:44 a.m. ET
Iceland’s prime minister, faced with massive protests calling for his resignation following revelations about him in the Panama Papers, stepped down Tuesday after President Ólafur Ragnar Grímsson declined to immediately dissolve Parliament and pave the way for snap elections.
Ingi Jóhannsson, the minister of agriculture and fishing, told RUV, the broadcaster, that Sigmundur David Gunnlaugsson had resigned as prime minister.
Jóhannsson said Gunnlaugsson would remain the chairman of the center-right Progressive Party, and Jóhannsson himself would assume the prime minister’s post. The move still needs the approval of the prime minister’s coalition allies in the Independence Party as well as the president.
Gunnlaugsson becomes the first victim of the Panama Papers, a day after he refused to step down following the release of the documents.
The documents from Mossack Fonseca, the Panamanian law firm at the center of the leaks, allege Gunnlaugsson hid millions of dollars of investments in his country’s banks in an offshore company. Gunnlaugsson and his wife, Anna Sigurlaug Palsdottir, bought the company in 2007, but he failed to declare his interest in it when he entered parliament two years later. The documents show Gunnlaugsson later sold half the company to his wife for $1. Owning a shell company is not in itself illegal, and indeed Gunnlaugsson has denied he broke any rules. But when asked in 2009 if he ever had an offshore company, he replied: “Myself? No. … Well, the Icelandic companies I have worked with had connections with offshore companies.”
On Tuesday, the pressure mounted. Reuters reports that opponents of the prime minister allege a conflict of interest because Gunnlaugsson’s center-right government “is involved in striking deals with claimants on” Icelandic banks that went bankrupt after the 2008 financial crisis. The opposition demanded a vote of confidence on Gunnlaugsson’s government. The ruling coalition controls 38 of Parliament’s 63 seats, and it was unclear if the Independence Party, a coalition ally of the ruling center-right Progressive Party, would support Gunnlaugsson. In the end, it didn’t matter.
In a Facebook post earlier in the day, Gunnlaugsson said he was “proud of [his] work in politics” and not afraid to put it to the electorate. “I am also proud of my wife and the integrity and self-sacrifice that she has always shown,” he added.
President Grimsson, after meeting Gunnlaugsson, said he would make a decision on dissolving Parliament only after discussing the matter with other parties.
“I need to determine if there is support for dissolving (parliament) within the ruling coalition and others,” he said. “The prime minister could not confirm this for me, and therefore I am not prepared at this time to dissolve parliament.”
The issue of banking and banking secrecy is a sensitive one in Iceland, which has only recently recovered from the financial crisis caused by implosion of the country’s banking sector in the global recession of 2008. Icelanders blame the country’s politicians for that fiasco. Gunnlaugsson entered national politics in 2009 and was elected prime minister in 2013.
“If this was a comedy it would be funny but this is actually our head of state,” Birgitta Jonsdottir, the head of the Pirate Party, one of Iceland’s largest, wrote in Newsweek Europe on Tuesday. “This is not what Icelanders are like and this is not what Iceland is.”
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