Sigrún Davíðsdóttir's Icelog

Together with leaders from Russia, Ukraine and a few other countries Iceland isn’t happy to compare itself with the story of prime minister Sigmundur Davíð Gunnlaugsson played a key role in tonight’s exposure of the Panama law firm Mossack Fonseca. Documents shown do not support his earlier version of his involvement with Wintris, the BVI linked to him and his wife.

In an interview on Rúv professor of history and a frequent commentator on the collapse and related matters Guðni Th. Johannesson said: “First and foremost I find it sad that men, who want to and claim they want to lead by good example, who say the grand plan is to believe in Iceland then decide that their money is better off elsewhere.” – His words are directed to the prime minister who repeatedly has talk of the necessity to believe in Iceland.

The focus is now ia on the political future of the prime minister. It is unlikely he will see this exposure as any reason to step down as prime minister and leader of the Progressive party. One question is what his own party will do. Since the election 2013 Gunnlaugsson has seen the support for the party dwindle. The exposure now is unlikely to reverse that path, which might make the party’s members of parliament despair for their future in the elections set to be in spring 2017. So far, no one has dared to step forth to criticise the prime minister.

Another and more relevant question is what the coalition partner, the Independence party, will do. Given the anger in Iceland over the revelations – already clear even before the program on Rúv tonight (here, in Icelandic) – it would be a political harakiri for the Independence party to support the prime minister.

However, as shown by the Panama Papers Indepence leader and minister of finance Bjarni Benediktsson also had an offshore company though that story, however inglorious, pales in comparison to Gunnlaugsson’s company.

Other politicians, shown to have owned offshore companies, will also have to ponder on their position. All owners of these companies have questions to answer not only related to tax but to law on capital controls.

It was not an entirely popular decision within the Independence party to support Gunnlaugsson as prime minister after the election in 2013. The reason was that many thought this was the party’s only way to get into power. With the situation now it’s clear that supporting Gunnlaugsson might have come at a very high price for the party. The situation now will be a tricky topic for the Independence party to handle and that’s what the politics in Iceland in the coming days will revolve around.

During the boom years Iceland turned into possibly the most offshorised country in the world as I’ve pointed out earlier. Iceland has done remarkably well following the collapse in autumn 2008 but the economic revival will have its limits if its political class prefers to be compared to Russia and Ukraine.

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