Panama’s President-Elect Vows ‘Profound Change’ as Cloud of Corruption Hangs Over Varela

May 7, 2019
4:37 PM
Originally published at Latin America News Dispatch

Panama’s presidential candidate for the Democratic Revolutionary Party (PRD) Laurentino Cortizo (C) celebrates his win after being elected President of Panama, in Panama City on May 5, 2019. (Photo by Johan Ordonez/AFP/Getty Images)

By Vaclav Masek 

With 33 percent of the total vote share, Laurentino “Nito” Cortizo of the Democratic Revolutionary Party (PRD) was elected as Panama’s new president on Sunday, putting the country’s largest party back in power after a 10-year absence. The businessman-turned-politician with over 25 years of experience in public office will serve for a five-year period. Cortizo defeated Democratic Change (CD) candidate Rómulo Roux, a corporate lawyer and former minister of foreign affairs, by just two points.

Cortizo’s win signals Panamanians’ desire to prioritize fighting corruption, a key part of Cortizo’s campaign and an issue that has plagued the office of current President Juan Carlos Varela. Cortizo positioned himself as the leader of the opposition against Varela, promising a “zero-tolerance” policy on graft cases. Recent scandals made corruption a key issue for voters, too.

“When back-to-back presidents are involved in corruption scandals, you end up with corruption as the most covered issue along the campaign trail,” said Ana Gabriela Sosa, a 22-year-old Panamanian student living in New York.

Varela is leaving office with an approval rating of less than 15 percent after members of his Panameñista Party (PP) allegedly received illegal payments from the Brazilian construction company Odebrecht, which is at the center of several corruption scandals across Latin America. Former President Ricardo Martinelli (2009-2014), who planned to run in Panama City’s mayoral race, was also banned from running on April 26 as he awaits trial on wiretapping charges.

Sosa voted for Ricardo Lombana, the former Panamanian consul in Washington and one of the three independent candidates running for office. Lombana received 18.95 percent of the vote, coming in third place. Sosa sees Cortizo as part of the political establishment. In this election, his political career worked to his benefit, however. Cortizo is a veteran politician. With a doctorate in international commerce, he served two terms as congressman for the PRD and one as president of the National Assembly. He also served as minister of agriculture during President Martín Torrijos’ administration. His experience helped him win, but his party, the PRD, put him across the finish line, says Elizabeth González, an editor at AS/COA Online.

“Panamanians are not very ideological, which is why the top candidates were all centrists,” González said. “Name recognition pulls the most votes in a country of 4 million, and Nito’s extensive career in politics has given him the greatest advantage on that end.”

The world will watch how Cortizo handles issues of corruption in the country, whose status as a fiscal paradise remains a source of concern for domestic and international authorities. More than $1.2 billion dollars in eluded taxes have been recovered since the global money-laundering scheme known as the “Panama Papers” was revealed.

In order to tackle the structural corruption problems, Cortizo campaigned on making “profound changes” to the Panamanian constitution. Those changes include constraining the age requirements for presidents to between 45 and 75 and creating a retirement plan for public officials to deter extortion. Voters appear to support the constitutional changes.

“Most candidates think reforming the constitution will help address the root of country’s corruption problems by limiting special interests and giving more independence to the judicial branch in particular,” González said. “Nito has made a call for changing the way businesses and contracts are awarded, promising to tilt negotiations in favor of national, rather than special, interests. No doubt his experience makes him a credible assessor of political processes, but I also think it could make him more complacent. Plus his own party has been linked to scandals.”

Cortizo also proposes to enable a technocratic agenda on agricultural commodities. “Do more with less” became an unofficial slogan of his campaign. And with the Panama Canal experiencing a steady rise in maritime traffic over the last five years —even when the country’s economy slowed down— Panama’s privileged geographic position has attracted the interest of new investors.

After cutting diplomatic ties with Taiwan in September 2017, Chinese capital has poured into the Central American nation. To underscore the country’s commitment to strengthening relations with the People’s Republic, all of Panama’s presidential candidates, including Cortizo, vowed to finalize the details of a trade deal with the Asian giant in the coming months.

In his first interview as president-elect, Cortizo told Reuters that the United States might “lose out to China” if it does not cultivate its relationship with Central America. Cortizo added that Washington “needs to pay more attention” as Beijing advances.

Latin America has experienced a “groundswell of support for closer ties with China,” according to Jorge Heine, former Chilean ambassador in Beijing. Recently, China became Latin America’s second largest commercial partner. And President Xi Jinping’s benchmark infrastructure project —the Belt and Road initiative (BRI)— has already reached Panamanian shores. Panama was the first in the region to sign the initiative.

“Chinese and Panamanian leaders have decided that they are keen to develop Panama into the commercial and logistic gateway for Latin America and China,” Heine said. “The Panama Canal remains a global transport hub. And given that seven out of the top 10 largest ports in the world (by container count) are Chinese, the country plays a key role for global shipping trade.”

The recent support from Beijing could complicate Panama’s relationship with the United States, but Heine says Latin American countries need to look beyond North America.

“The United States is in an inward-looking phase, and so is Europe,” Heine said. “China is growing twice the rate the U.S. is growing, and three times of that in Europe.”

Panamanian voters affirmed that domestic corruption remains a key issue at the polls, but Heine says the election also foreshadows a greater geopolitical realignment — one that looks to the South Pacific rather than the North Atlantic.

“This will be the Asian century,” Heine said, “the century of China and India.”