So far, the swiftest and most high-profile fallout of the Panama Papers leak has been the recent resignation of Iceland's prime minister Sigmundur Davíð Gunnlaugsson. He resigned after the Papers showed that his wife had financial connections to a hedge fund that played a significant role in the collapse of Iceland's economy in 2008–09. But as Janet Elise Johnson points out in the Boston Review, Gunnlaugsson was simply replaced by another government official with ties to Iceland's financial elite. Indeed, the real revelation of the Panama Papers, argues Johnson, is just how dense and extensive the global political-financial web is. However shameful and corrupt may be the financial activity described in the leak, most of it is perfectly legal. Here's an excerpt from Johnson's piece:
In other words, while the Panama Papers’ exposure of powerful figures’ tax shelters may help map the connections between finance and politics, in Iceland as elsewhere, the underlying networks of power are deeply entrenched and most likely will survive the latest embarrassing disclosure ...
In her 2009 book Shadow Elite, Janine Wedel describes a new kind of flexible network at play, not just in post-communist contexts such as Russia, but also in the United States, where only one person has so far been named in the Panama Papers. Wedel finds that, instead of engaging in illegal activities, elites have been changing the rules to suit their goals, relying in part on the revolving door between government and the private sector. Much of what stinks of corruption—including the use of shell companies and offshore accounts—is legal. This appears to be true, for example, of the allegations connected to U.K. Prime Minister David Cameron and Ukrainian President Petro Poroshenko. But the hypocrisy is galling. Cameron asked citizens to endure austerity, and Poroshenko promised “to wipe the country clean” of corruption, while both benefitted from offshore accounts. (Illustrating Poroshenko’s resilience, it was his rival for power, Prime Minister Arseniy Yatsenyuk, who resigned this month.)
Image: Icelanders gathered before parliament in Reykjavik on April 4, 2016. Via Boston Review.