No change of course in Panama

Patricio Navia


Buenos Aires Herald, May 6, 2014

Juan Carlos Varela’s victory in yesterday’s presidential election in Panama perfectly summarizes the presidential campaign debates and the choices Panamanians had. Though the country has experienced economic growth and most Panamanians want to stay the course, they also reject the growing graft and corruption observed in the outgoing Ricardo Martinelli administration (2009-2014).

The fact that Varela was Martinelli’s outgoing vice-president, and an opposition candidate, encapsulates the main message voters wanted to send: stay the course, but get rid of Martinelli.

Varela did not promise a radical change in economic policies. He advocated for better social policies so that the benefits of economic growth can reach the 27 percent who still live in poverty. Ideologically, Varela is as committed to market-friendly policies as Martinelli.

The two politicians parted ways when Varela began to denounce growing graft within the Martinelli administration.

Seven candidates competed in the election, but three led the pack. The government candidate was former minister José Domingo Arias. Martinelli’s wife, Marta Linares, was Arias’ running mate. As a result, Arias ended up becoming a victim of the anti-Martinelli vote. Two out of three Panamanians who voted rejected Martinelli’s candidate.

Juan Carlos Navarro was the candidate of the Democratic Revolutionary Party (PRD), the party of former president Martín Torrijos. Torrijos, who was in power from 2004 to 2009, was barred from running by a constitutional provision that forces ex leaders to sit out two terms.

Varela, who broke with Martinelli shortly after the 2009 election, emerged as the obvious anti-Martinelli candidate. As the election could be seen as a referendum on the president, Varela ended up benefiting from the protest vote.

The 50-year-old Varela comes from a well-off family. The Varela Hermanos Company is the most important alcohol producer and distributor in the country.

Juan Carlos belongs to the family’s third generation. He was educated at a Jesuit school in Panama and got a degree from Georgia Tech University but made a career at the family company after returning from the US.

Varela has been a long term activist of the Panamanian Party—also known as the Arnulfista Party, nicknamed after Arnulfo Arias, the most important leader in the 20th century and three times president of Panama, though always for short terms.

The Panamanian Party was the moderate market-friendly alternative to the more leftist — but also pro-US — movement led by Omar Torrijos, de facto leader of Panama between 1972 and 1981 and the PRD father figure.

After Torrijos’ death in an aeroplane crash in 1981, Panama entered into political turmoil. Manuel Noriega eventually replaced Torrijos as the military leader of the country. Initially close to the US, Noriega distanced himself from Washington and was widely believed to have tampered with the 1989 presidential election. The US withdrew its support and, in late 1989, President George H. Bush ordered the invasion of the country, captured Noriega and put Guillermo Endara in power , the candidate of the Panamanian (Arnulfista) Party.

Endara was a US ally, but he apparently also won the popular vote in the 1989 election, before Noriega rigged it.

Eventually Endara distanced himself from his party, but corruption allegations and government mismanagement under Endara made it difficult for the Arnulfistas to retain power. In the 1994 presidential election, Varela actively supported Mireya Moscoso, Arnulfo Arias’ widow and the party’s presidential candidate. Moscoso lost to PRD’s Ernesto Balladares.

In 1999, Moscoso won the presidential election, with Varela on the role of her campaign chief. In 2004, though Varela already had presidential aspirations, he chose not to challenge PRD candidate Martín Torrijos — the son of the former leader — who obtained an overwhelming victory.

In 2009, Varela was named presidential candidate by the Panamanian Party, but he chose to withdraw his candidacy in support of Martinelli, an independent right-of-centre businessman with stronger poll numbers. In exchange, Martinelli offered him the Vice-Presidency.

After Martinelli took office, the two men never got along. Perceived as soft on political graft and highly personalistic, Martinelli alienated many allies. Eager to have his own chance at the presidency, Varela soon became one of the government’s harshest critics.

Under Martinelli, Panama experienced rapid growth. Since 2009, the economy has expanded at an annual average of eight percent. However, poverty has declined far more slowly, from 33 percent in 2009 to 27 percent in 2013.

Varela’s campaign message was simple: corruption and graft have denied the benefits of growth to one in three Panamanians. In a country of 3.6 million people, more than a million live in poverty.

Having won in an election with high turnout (76.5 percent), Varela will now have an opportunity to deliver. Though the Panamanian economy is slowing and the opening of the expansion of the Panama Canal has been set back, Varela has clear and achievable goals: improving government efficiency, targeting social programmrs to the poorest 40 percent and improving the coverage and quality of education. Also a central part of his campaign promises, combating graft and corruption will be more difficult to achieve for the new president of Panama.