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Iceland's ruling party attempts to hold on despite 'Panama Papers'

The deputy leader of the Progressive Party has said he'll take over for Iceland's disgraced PM Sigmundur David Gunnlaugsson. He's hoping to avoid snap elections, which could lead to a new party gaining power.

Iceland was feeling the first tremors from what could be a rocky political transition on Wednesday, after Gunnlaugsson offered to step down following the leak of the so-called "Panama Papers."

On Tuesday,

shortly after the prime minister made his announcement

, the Progressive Party's deputy leader, Sigurdur Ingi Johannsson, said he would step in as Gunnlaugsson's replacement. The government was expected to meet on Wednesday to vote on the matter.

However, an email from the party's spokesperson later that night suggested Gunnlaugsson might not be going anywhere. "The prime minister has not resigned and will continue to serve as chairman of the Progressive Party," the email said.

Island Proteste gegen Premierminister Gunnlaugson

Tens of thousands of people demanded the PM's resignation

Pirate Party out on top?

Gunnlaugsson's party is also trying to stave off new elections in response to the scandal. A snap election could lead to an unprecedented victory for the Pirate Party, a libertarian party that campaigns for political transparency and which won 43 percent of voter support in a poll conducted on Monday and Tuesday.

A different poll conducted last week also had the Pirate Party coming out on top, with the Progressive Party's coalition partner, the Independence Party, coming in second. However, the implication of two of the latter party's ministers in the "Panama Papers" scandal has led left-wing parties to demand new elections.

Gunnlaugsson was initially confronted about his ties to an offshore company in the British Virgin Islands during a television interview with a Swedish journalist. Following the release of the "Panama Papers" - the largest leak of documents in history - tens of thousands of Icelanders gathered in central Reykjavik to demand his resignation.

blc/bk (Reuters, AFP)

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