Panama Papers leak will shift Iceland's politics

Significance

President Olafur Ragnar Grimsson has said neither he nor his UK-Israeli wife Dorrit Moussaieff have any knowledge of such transactions, which have been publicised in the Icelandic media. Grimsson had previously denied any link to the Panama Papers leak of offshore transactions, which have involved former Prime Minister Sigmundur David Gunnlaugsson. Despite initially refusing to resign, Gunnlaugsson eventually stepped down on April 5. A new cabinet has been formed and elections will be held early in autumn.

Impacts

• The new cabinet will most likely continue the previous government's policies, with few changes.
• If the Pirate Party can sustain its support, it may emerge as the strongest party in the next parliamentary election.
• Iceland may remove its capital controls soon, with the Central Bank saying that it will not "get better conditions" than now.
• A new left-wing government would be unlikely to reapply for EU membership without holding a referendum first.