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Analysis: The clouds of the Panama Papers hang over new coalition government

By Staff

  • Bjarni Benediktsson The new Prime Minister of Iceland. Bjarni was the minister of finance in the outgoing center-right coalition. Early elections were called after it was revealed that the Prime Minister of that coalition, the disgraced former chairman of the centrist Progress party was caught on tape lying about his holdings in tax havens. Gunnar Andrésson

Today a new three party right-wing coalition government takes power in Iceland. The coalition government of the conservative Independence party, the center-right Restoration and Bright Future, a small centrist party, replaces the center-right coalition of the Independence party and the centrist Progress party. The outgoing coalition was forced to call early elections after the Prime Minister, the chairman of the Progress Party was revealed to have kept significant holdings in tax-havens secret from the public.

Read more: New right-wing coalition formed, former punk-rocker becomes government minister

However, the cloud of the Panama papers also hangs over the current coalition.

Meet the new boss. Same as the old boss.

Sigmundur Davíð and Bjarni Benediktsson
Sigmundur Davíð and Bjarni Benediktsson Sigmundur, resigned as PM and lost re-election as chairman of centrist Progress party following the revelations of the Panama Papers. Bjarni, who was also mentioned in the leaked documents, managed to weather the storm. Photo/Vísir

International media have pointed out that Bjarni Benediktsson the Prime Minister in the in the incoming coalition government was also named in the Panama Papers. The US newspaper the Washington Post covers the news of the new coalition under the headline "Iceland ousted one leader named in the Panama Papers, but ended up with another on the list.

Read more: As many as 22,000 gathered to demand resignation of PM yesterday: Largest mass protest in Icelandic history

As the Washington Post argues, many expected a anti-establishment revolt in Iceland following the massive protests in April, following the revelations of the Panama Papers. Many expected the Pirate Party to be the vehicle of this revolt. Polls had shown the party with as much as 30-40% of the vote, but the support of the party dwindled as the elections neared, and on election day the party managed to secure only 14.5%, making it the third largest party in Parliament.

The protest vote split

Birgitta Jónsdóttir and Jón Gnarr

Birgitta Jónsdóttir and Jón Gnarr as young punkers in early 1980s Birgitta, the leader of the Pirate party and Jón Gnarr, former mayor of Reykjavík and founder of the Best Party. Bright Future is the successor party to the anti-establishment Best Party. Photo/Pressan.is

One reason for the poor showing of the Pirate party is that its voters tend to be younger, and young voters don't show up to vote in the same numbers as older voters. Another reason is that the centrist Bright Future and the newly formed center-right Reformation captured large sections of the protest and reform vote.

While the leftist Left Green Movement and the anti-establishment Pirate Party tried to make the Panama Papers and the need to fight tax evasion and corruption into the main issues in the November 29 elections, Restoration and Bright Future championed on far simpler slogans emphasizing the need for "reform".

Read more: The support for Iceland's Pirate Party is soaring, has never been measured higher

The two parties focused on the need to reform agricultural policy and ease restrictions on the importation of foreign foodstuffs, a pocket-book issue which enjoys widespread support. The other main issue the two parties emphasized was the need to make changes to the fisheries policy and the transferrable quota system which has brought with it enormous concentration of wealth in the hands of the owners of the largest fishing companies.

Punk Rocker in a yellow suit to the rescue

Óttarr Proppé

Not your everyday politician Óttarr Proppé has cultivated the image of a very slick, meticulously groomed rebel. With expensive woolen suits and carefully unkempt hair he creates a persona which bridges the upwardly mobile middle-class hipster, an anti-establishment punker or hippie and 1980s Scandinavian politician. Photo/Ernir

Bright Future also seemed to embody a new type of politics. The party, which is heir to the Best Party, founded by Jón Gnarr, the stand-up comedian who became the mayor of Reykjavík, has attracted creative types, actors and musicians, who many see as a refreshing alternative to the regular suit-and-tie politicians which dominate most other parties. Óttarr Proppé, the chairman of the party, is a former punk-rocker with shaggy yellow hair who likes to wear flashy woolen suits. 

Read moreThe punk rocker that could become Iceland’s next Minister of the Interior

Óttarr and Bright Future have emphasized they want to change "the political culture" of Iceland by fostering conversation and understanding between different points of view and more professionalism. This message, and image, appealed to voters in search for a new, fresh start after the scandals of the Panama Papers. Political commentators in Iceland have pointed out that many now feel betrayed by Óttarr now joining a cabinet led by one of the people in the Panama Papers.

Criticism deflected

Óttarr Proppé and Jón Gnarr

Óttarr Proppé and Jón Gnarr Bright Future is the successor party to the Best Party, founded by Gnarr. However, the successor has demonstrated far less of the radical anti-establishment energy demonstrated by the party Gnarr founded and led. Photo/Daníel

The coverage of the new coalition government in foreign media has generated considerable attention in Iceland, as Bjarni Benediktsson had been very successful in deflecting attention during the Panama Papers scandal: The focus in Iceland was mostly on the disgraced former Prime Minister Sigmundur Davíð Gunnlaugsson. 

Despite the fact that two government ministers from the conservative Independence party, finance minister Bjarni Benediktsson and minister of the interior, Ólöf Nordal, were mentioned in the Panama Papers, along with numerous other high-profile members of the party leadership, Bjarni and other leaders of the party dismissed criticism. Bjarni has steadfastly maintained that he did nothing wrong.

Embarassing report kept secret from the public and parliament
Bjarni Benediktsson faces additional criticism over having kept secret a report on the extent of Icelandic holdings in tax-havens prepared by an investigative commission set up following the Panama Papers scandal. His ministry received the report on September 13, but rather than present the report to Parliament, Bjarni waited until this week to reveal the report. His explanations as to why the report was kept from the public for nearly four months have been contradictory. 

Birgitta Jónsdóttir, the leader of the Pirate party, and Svandís Svavarsdóttir, former minister of the environment and one of the leaders of the Left-Green Movement, have blasted Bjarni over this.

The leadership of Bright Future and Restoration have told local media that while the matter is unfortunate, the explanations Bjarni has given are satisfactory, assuring voters that the incoming government will not repeat the mistakes made by the outgoing government.

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