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It Took Only a Day of Protests for Iceland’s Prime Minister to Resign Over Panama Papers

Iceland's prime minister is the first head of state to resign over the Panama Papers leak.

Icelands Prime Minister Sigmundur David Gunnlaugsson attends a session of parliament in Reykjavik, Iceland on April 4, 2016.



Iceland's prime minister faced calls to resign after leaked "Panama Papers" tax documents showed he and his wife used an offshore firm to allegedly hide million-dollar investments.
 / AFP / HALLDOR KOLBEINS        (Photo credit should read HALLDOR KOLBEINS/AFP/Getty Images)
Icelands Prime Minister Sigmundur David Gunnlaugsson attends a session of parliament in Reykjavik, Iceland on April 4, 2016. Iceland's prime minister faced calls to resign after leaked "Panama Papers" tax documents showed he and his wife used an offshore firm to allegedly hide million-dollar investments. / AFP / HALLDOR KOLBEINS (Photo credit should read HALLDOR KOLBEINS/AFP/Getty Images)

 

This story was updated as new information became available.

On Monday, Iceland’s Prime Minister Sigmundur Gunnlaugsson vehemently vowed on national television he would not resign over his role in shady business deals that were revealed in Sunday’s massive Panama Papers leak.

By Tuesday afternoon, he had stepped down. 

Sigurdur Ingi Jóhannsson, Iceland’s agriculture and fisheries minister, announced on state broadcaster RUV he will replace Gunnlaugsson as premier. It remains unclear what prompted Gunnlaugsson to succumb to demands he give up his leadership role, but local media reported that both the prime minister’s coalition partner, the Independence Party, and Iceland’s President Olafur Ragnar Grimsson would have needed to approve the move. A government spokesman for the prime minister later sent an e-mail claiming Gunnlaugsson had not resigned, but had just temporarily stepped aside “for an unspecified amount of time.”

Gunnlaugsson, who heads the country’s Progressive party and will maintain that title, said Monday that only a lack of confidence from his coalition partners — not protests — could force him out of his seat.

Some of the 11.5 million leaked documents showed that Gunnlaugsson sold his wife a secret offshore investment company for $1 to avoid publicizing his interests in it. The shell company had millions of dollars of claims in Iceland’s failed banks — the same institutions that have caused massive economic struggles in the tiny country in recent years. Although his involvement is a major conflict of interest, it remains unclear whether he broke any laws.

On Monday, thousands of protesters descended on the capital Reykjavik, calling for Gunnlaugsson’s resignation.

They were backed by Gunnlaugsson’s opponents in Parliament. Arni Pall Arnason, head of the Social Democratic Alliance, said “it’s obvious that we cannot tolerate a leadership that is linked to offshore holdings.”

“Iceland cannot be the only Western European democratic country with a political leadership in this position,” he said.

So far, the leaked documents have revealed damning information about more than 140 politicians from 50 countries, including Ukrainian President Petro Poroshenko and Russian President Vladimir Putin.

Photo credit: HALLDOR KOLBEINS/AFP/Getty Images

Siobhán O’Grady is a freelance journalist working across sub-Saharan Africa. She previously worked as a staff writer at Foreign Policy. @siobhan_ogrady

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