Multiple Perspectives on Panama’s Political Shift

The May 4 victory of Juan Carlos Varela over both center-left candidate Juan Carlos Navarro and outgoing President Ricardo Martinelli’s chosen successor, Domingo Arias, stunned the Panamanian and international press. However, though observers unanimously agree that the results defied both political maneuvering on the part of President Martinelli and predictions from pre-election polls, the election’s implications for Panama’s political future are still being deciphered. Some sectors raise doubts as to whether Varela’s win will really be able to affect policies at the national level given the fact both Varela and Martinelli identify ideologically with the center-right, and in light of Verala’s position as Martinelli’s vice president since 2009. What seems certain, however, is that the election’s outcome heralds a period of turmoil in Panamanian politics regardless of whether a substantive change in policy is at hand. Varela’s triumph came over a joint ticket that would have placed Martinelli’s own wife as vice president under the outgoing president’s handpicked presidential candidate. The bitterness of the defeat will only accentuate Personal enmity between Martinelli and Varela that promises to complicate Panamanian affairs in the near future.

Panama has been the site of enviable economic growth under Martinelli, whose building boom has made Panama’s capital “a new Miami,” outfitted with Central America’s first metro. [1] That ability to carry out economic projects has gained Martinelli considerable prestige. However, Martinelli’s economic drive has also been complemented by a crusade to deconstruct limits on executive power. This authoritarian streak has generated considerable resentment in a Panamanian populace that is loath to forget the country’s decades of dictatorship. Accusations of corruption have also plagued the administration, and many Panamanians have reason to believe Martinelli’s economic program is not all that it was originally made out to be. The Los Angeles Times observed after the election that “there were persistent questions about whether Martinelli’s cronies were the real beneficiaries and whether such growth was sustainable.” [2] While Forbes reports that Panama witnessed a slashing of poverty and unemployment rates during Martinelli’s term, the country’s persistent inequality has contributed to Panama’s status as the having the “second worst income distribution in Latin America.” [3] The government’s burgeoning debt (which grew by 70 percent under Martinelli) and the country’s rising inflation rate have also become cause for concern. [4]

Coincidentally, Martinelli’s own vice president has been at the forefront of criticism of Martinelli’s policies. Juan Carlos Varela and Ricardo Martinelli initially joined forces in a 2009 deal between Martinelli’s young Partido Cambio Democrático and Varela’s more established Partido Panameñista that catapulted Martinelli into the presidency. The plan originally envisioned Varela campaigning for the presidency this year with Martinelli’s support. [5] Yet BBC Mundo now describes the pair as peores enemigos (worst enemies) and traces their rupture to 2011, when Varela opposed Martinelli’s attempts to wrest greater executive power from the legislative and judicial branches. [6] Varela’s public denunciations of Martinelli’s attempts to buy off politicians and pack the Supreme Court elicited unsuccessful libel charges from Martinelli’s lawyer in 2012, and constitutional provisions that make Varela’s status as vice president permanent during Martinelli’s entire term (in spite of calls from both politicians for their rival to step down) have fanned the flames of the soap operatic dispute. [7] Ultimately, Martinelli’s attempts to capture the Panamanian state by removing constitutionally imposed term limits also failed, spurring his promotion of the ill-fated Arias ticket with Martinelli’s wife in what many deemed to be a thinly veiled move to remain in power. [8]

As a result of Martinelli’s multiple initiatives to expand executive prerogatives and Varela’s very public resistance, the narrative of Varela as a champion of openness against Martinelli’s cronyism arises in multiples accounts of current Panamanian affairs. Certain elements of Varela’s track record and proposed populist policies accentuate that narrative. Before distancing from Martinelli, Varela proposed the 100 por 70 plan, in which Panamanians older than 70 would receive a monthly $100 USD stipend. [9] Such proposals have helped Varela cultivate the image of a politician with experience coordinating social policy. Upon election, Varela also promised that Panamanian politics were going to “pass from being a business to being a service,” while emphatically stating that corruption “is over.” [10] His most drastic and central campaign proposal was his call for price controls on staple foods in order to help Panama’s poor against inflation in a country where the price of the “basic food basket” (the food a family of four would theoretically buy in a month) rose by 25 percent since 2010. Although many observers worry that the price control measures could push Panama down Venezuela’s tumultuous path, the president-elect has already announced that his first action as president will be to impose emergency price restrictions on 22 basic foods. [11]

Yet in spite of media fixation on Varela’s upset victory and proposed reforms, an attitude of healthy skepticism as to whether Varela will really change many of Martinelli’s policies is probably more suitable for the present situation. Many news outlets, while acknowledging Varela’s surprise win, have also noted his similarity to Martinelli. Beyond being former political allies, both men come from Panama’s wealthy class and from the country’s business sector, with Martinelli’s supermarket chain even selling Varela’s liquor products. Most sources expect Varela to perpetuate the majority of Martinelli’s neoliberal policies, including the ambitious and expensive Panama Canal expansion. The two might even share similarities in their propensity for underhand dealings given the fact that Varela, too, is under investigation for money laundering. [12] With these similarities in mind, one is left with the suspicion that the two men’s differences are primarily rooted in their personal feud.

In light of the distinction between personal differences separating Martinelli and Varela (which appear to be many in number) and ideological differences between the two (which are not nearly as clear), some Panamanian commentators, like José Ángel Pérez Garrido, have declared the election to be less important as a victory for Varela and more significant as a victory for the Panamanian people. In Pérez Garrido’s view, Panamanians proved that a president intent on manipulating the Panamanian system would not be able to buy off the country’s votes. In that sense, Pérez Garrido describes Varela’s triumph not so much as an electoral victory, but instead, as a mandate from the Panamanian people for a shift away from underhanded politics and corrupt machinations. [13] Given Panamanians’ record of ousting the incumbent party in every election since 1989, this mandate is not altogether new. Still, there remains uncertainty as to whether such a mandate for substantive change will be carried out.

It is likely Martinelli’s and Varela’s personal resentment will affect Panama’s politics even more powerfully in the coming months as Varela makes his transition into power. Varela’s decisions on political appointments will dictate the nature of his governing coalition, which bears particular import since Martinelli’s party still holds a majority in the Panamanian legislature. Martinelli has also personally made clear that he will not quietly bow out of Panamanian politics following the electoral loss. The result, unfortunately, looks like a period of tumult in the Panamanian political realm, characterized by caustic politics and high-stakes economic battles surrounding policy on the Canal Zone expansion and price controls. This political turmoil will definitely bear the markings of the two politicians’ embittered rivalry, but whether the tumult will yield progress for Panama at large remains to be seen.

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One thought on “Multiple Perspectives on Panama’s Political Shift

  • May 16, 2014 at 10:47 pm

    Detroiters of a certain age range and political inclination might ask whether somebody has been “down for the struggle” as a litmus test. Martinelli has been much worse than described here and his main opponents from the winning Panameñista and Partido Popular alliance and the PRD both failed to really oppose the corruption, human rights violations, dispossessions of rural communities or devastation of the farm section via “free trade.” Quite simply, in 2009 the PRD ran the woman to whose house General Noriega first ran during the 1989 invasion and the American Embassy brokered a deal in which her two opponents, Martinelli and Varela, formed an alliance to stop her. At the time Martinelli was the stronger candidate was Martinelli and the arrangement was that Varela would step aside and run for VP, and in five years’ time it would be his turn and Martinelli would support Varela for president. But Martinelli got a bit power mad and sought to change things to allow re-election, which would specifically break the deal he had made with Varela in 2009. Varela would not countenance that and this was the reason why the Martinelli and Varela alliance broke apart a little more than two years into the five-year term. Varela did not quit the alliance over a matter of principle, he was thrown out of the alliance because he didn’t go along with an inflation of Martinelli’s ambitions at Varela’s expense.

    So what were the issues in the campaign? Martinelli’s ambitions and his attempt to rule by proxy for another five years — you might say Putin-style, but Putin never put his wife on the ballot and Medvedev does not come across as a dolt — did not go over well in a country where the habit is to throw the ruling party out in each general election. But really, by far and away the most important issue in voters’ minds was the inflated cost of food. A distant second was this crime wave we have been going through. Varela called for price controls on food staples, which will be difficult to implement now that so much of Panama’s food is imported and because of the provisions of free trade agreements. His two main opponents talked neoliberal ideology that did not address the issue of food prices in any coherent way. The PRD may be Panama’s affiliate of the Socialist International, but Varela, whose party has strains of fascism in its 20s to 40s roots, ran a bit to the left of the PRD. In the end, voters went with whom they saw as the least negative alternative to Martinelli.

    So are you going to talk about economic miracles, the Miami of Central America or the Next Dubai? About 40 percent of us work in the informal sector and we didn’t get any raises, we just got inflated grocery bills and a 40 percent hike in sales taxes. Plus Martinelli ran the debt way up with overpriced no-bid contracts from which he took a skim, and this alienated most of the oligarchs, who would rather not lose their beach homes to confiscatory taxes to pay for this overspending, and Washington, which was annoyed at US companies being shut out of Panamanian government contracts.

    Varela is talking about being a bit more prudent about government spending, as if he has much of a choice about that, and about how he hopes to continue many of Martinelli’s policies with financing from foreign investors. It may not work, but if it doesn’t I don’t expect Varela to pick a fight with somebody to distract attention in the Martinelli style. Labor and rural Panaam may be restless, but nobody with the power to make it happen is talking about making Panama ungovernable. Martinelli will try to keep control over certain public institutions after he leaves, but he is unlikely to succeed. The support he bought is rapidly evaporating. I doubt that we will see much turmoil on his account.


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