Panamanians Seek Economic Boost at the Polls
Panamanians Seek Economic Boost at the Polls
On May 3, Panama's voters chose a business leader who chaired the Panama Canal Authority over a former housing minister from the party currently in power. As the winner, Ricardo Martinelli will oversee the country as it faces economic challenges and a multi-billion dollar expansion of the canal.
Updated May 4: Around 2.2 million Panamanians registered to vote in the presidential and legislative elections on May 3. They chose businessman Ricardo Martinelli from the Partido Cambio Democrático (CD) over the candidate of the ruling party Partido Revolucionario Democrático (PRD) Balbina Herrera, a former housing minister. A sagging economy, rising crime, and corruption allegations weakened popular support for the PRD and bolstered Martinelli’s popularity ahead of Sunday’s election. As the clear winner, Martinelli will oversee the country as it faces economic challenges and a multi-billion dollar expansion of the canal.
His rival was the first female presidential candidate chosen by the PRD. She hoped to get a boost from the popularity of President Martín Torrijos, who enjoys a 57 percent approval rate. Torrijos won the 2004 presidential election with 47.4 percent of the votes. He also managed to win approval for a $5.25 billion expansion of the Panama Canal via referendum in 2006. Despite being more than 10 points behind Martinelli, Herrera assured in an interview with radio personality Dorita de Reyna that in the last month her campaign was better organized after a muddled start. But, as the Nica Times put it, Herrera’s “previous ties to incarcerated former Panamanian strongman General Manuel Noriega has raised more than a few eyebrows.”
On the other hand, Martinelli, a business tycoon who owns Panama’s largest supermarket chain Super99, is viewed as a more pro-U.S. candidate. In an interview with Miami Herald’s Andres Oppenheimer, Martinelli laid out some of his foreign policy proposals, from plans to press for U.S. Congress’ approval of the U.S.-Panama Free trade Agreement to aligning with Washington on Cuba and Middle East policy at the United Nations to strengthening ties with Colombia. Martinelli, who lost against Torrijos in the 2004 election, would seek approval of a flat tax rate, which would fall between 12 and 17 percent for individuals and between 18 and 22 percent for companies.
“Some observers have made the case that the population is growing restless for a return to economic growth and that, obviously, has political implications,” says COA Vice President Eric Farnsworth, whose prior work with the State Department focused on Panama’s return to democracy. Echoing Farnsworth’s statement, Senior Brookings Institution Fellow Kevin Casas-Zamora writes that “the level of political discussion seen throughout this campaign simply does not befit a country with bright development prospects. More seriously, the [PRD] campaign has evinced the lack of institutionalization of political parties, the fickleness of political alliances, the chronic nature of corruption, and the disturbing, and mostly unchecked, role of money in the electoral process.”
Torrijos’ administration has overseen stellar economic growth rates with 11.5 and 9.2 percent in 2007 and 2008 respectively. But the UN Economic Commission for Latin American and the Caribbean forecasts that economic growth will only hit 4 percent this year. Still, that projection makes Panama the hottest prospect in the entire region.
The key for the country’s economic recovery remains tied to the future of the Panama Canal. In the first three months of 2009, total Canal transit declined by 1.4 percent while tonnage movement dropped by 3.3 percent compared to the same period a year ago. The waterway’s income represents 19 percent of Panama’s GDP and 28 percent of the government’s tax revenue. As the former Chair of the Panama Canal Authority, Martinelli is also seen as a safe bet to steer direction of the canal’s continued development.
More than 50 international observers arrived in Panama to monitor the transparency of the vote. Panamanian newspaper La Prensa provides complete coverage of the election. Angus Reid Global Monitor offered a backgrounder of the vote.
COA’s Eric Farnsworth guest blogged about the Panamanian elections for Americas Quarterly. Read his analysis of what the election could mean for that country’s trade policy prospects.
