The internal politics of the widening of the Panamá Canal

Joshua Keating at Foreign Policy‘s blog Passport today points to the global ramifications of the widening of the Panamá Canal — a third lane is set to open in 2014, and it will allow much wider ships to pass through the Canal than the “Panamax” vessels currently designed to pass the Canal.

The new lane, which will allow for more efficient ships — economically and environmentally — is expected to affect global trade and energy flows in multiple ways, absolutely.

It’s not quite as rosy as all that — the third lane’s opening date is now all but certain to be later — in 2015 (well after the date of the next Panamanian general election in May 2014).

Although the Canal’s expansion is indisputably an economic boon to the small Central American country, it may not be such a boon for the fortunes of Panamá’s current president, supermarket magnate Ricardo Martinelli, who swept into office in a landslide 2009 promising to restore Panamá’s record GDP growth rates following the worldwide economic slump in 2008.

Since the U.S. handed over sovereignty and control of the Canal to Panamá in 1999 (the result of a controversial agreement — at least in the U.S. — signed by Jimmy Carter in 1977), Panamá’s already solid postwar GDP growth skyrocketed.  Starting in 2000, Panamá saw a rise in GDP growth that peaked at 12% growth in 2007 — it bottomed out at 3% in 2009 before bouncing back up to nearly 11% growth last year.

Much of that growth is of course linked to the Canal and construction and service industries tied to it.

Each successive administration has taken advantage of Panamá’s increased wealth: Mireya Moscoso, who came to power in 1999 and presided over the transfer of the Canal to Panamá, used Panamá’s economic prospects to strengthen social programs, especially for children.  Her successor, Martín Torrijos, initiated the Canal expansion project in 2006, and tried to lessen political corruption in Panamá.

Martinelli has presided over the return to breakneck GDP growth, and he’s also enacted a fair share of legislative reforms, which have merited approving nods from global investors.  As you might expect from a center-right businessman-president, Martinelli has enacted tax reforms to simplify tax collection, he has invested $20 billion into Panama’s infrastructure and he has championed the U.S.-Panamá free trade agreement, which was approved by the U.S. Congress and enacted into law by U.S. president Barack Obama in late 2011.  But Martinelli has also enacted an increase in the minimum wage and instituted pensions for the elderly.

Given his success so far, given the return of the Panamanian economy to double-digit growth rates, and given the lead up to the opening of the Canal’s third lane, you’d think that Martinelli would stand to gain most of the credit for that.  Instead, however, it’s much more unclear — Martinelli’s party is far from certain to make gains in 2014.

As noted, that the deadline has slipped to early 2015 means that Martinelli and his party won’t be able to ride a wave of Panamanian patriotism to electoral success.  But there are other reasons, too.

Panamanian presidents are limited to two non-consecutive terms, so Martinelli himself will not be able to run immediately for reelection in 2014.  When Martinelli made waves about potentially amending the Panamanian constitution to allow him to run for immediate reelection, the reaction was so harshly negative that Martinelli had to sign a declaration in February 2012 that he would not try to seek the presidency in 2014.

And many of the infrastructure projects that Martinelli has championed — such as the new Metro that he is building in Panamá City (home to 1.3 million of Panamá’s 3.4 million citizens) — are causing frustration by voters annoyed by traffic jams and construction-related delays.

Nonetheless, Martinelli has high hopes that his party, Cambio Democrático (Democratic Change), can outpace the longtime party of the Panamanian center-right, the Partido Panameñista (the Panameñista Party) in 2014.  The Panameñista Party ultimately joined a coalition with Martinelli in the 2009 general election and holds slightly more seats than Martinelli’s party — for now — in Panamá’s national assembly.  When Martinelli appointed the Panameñista Party’s Juan Carlos Varela as his vice president and foreign minister, he essentially promised Varela that he would be the center-right’s coalition presidential candidate in 2014.  But Martinelli has increasingly squabbled with Varela, and he Martinelli now seems to favor his minister of social development, Guillermo Ferrufino, for president in 2014.

The Canal’s expansion has not especially helped Torrijos, whose legal and political problems are clouding any comeback in 2014.  But he, of course, launched the expansion project in the first place.  Nonetheless, the split on the right could ultimately benefit his Partido Revolucionario Democrático (PRD, the Democratic Revolutionary Party), the main party of the Panamanian center-left.  The party was founded by his father, Omar Torrijos, Panamá’s pro-U.S., progressive military dictator in from 1968 until his assassination in 1981. Torrijos formed the party in 1979 in an attempt to turn Panamá toward democracy, in relation to the 1977 treaty with U.S. president Jimmy Carter to turn over the Canal to Panamá (a transition that was complicated for the next decade, at least, in the saga of strongman Manuel Noriega).

Notwithstanding a robust field of potential candidates, in 2014, the PRD is expected to back former Panamá City mayor Juan Carlos Navarro as its presidential candidate — the first test comes later this month on August 26, when the PRD elects its secretary-general, a role that Navarro is seeking personally in advance of his presidential campaign.  Navarro lost the nomination in 2009 to Balbina Herrera, a political hack with close ties to the former Noriega era, and a robust anti-Navarro contingency exists in the fragmented PRD.  It nonetheless seems more likely than not that Navarro will win the PRD’s nomination later in 2013 and then, polls show at least even odds to win the presidency.  If he becomes the PRD’s secretary-general on August 26, it seems all but certain that he will be the PRD’s nominee and can move to solidify his slight frontrunner status for 2014.

In a poll in late January by La Prensa in Panamá, each of the three candidate polls around 30% each — a virtual three-way tie.

Given that Panamá’s experience with democracy is still so new, and given that, aside from the PRD (which itself thrives in large part on the Torrijos brand), post-Noriega politics in Panamá have been more personality-driven than party-driven, there’s no reason Martinelli shouldn’t be able to use the lead up to the Canal’s expansion to his favor.  But so far, it’s not been nearly so easy.

Photo credit to Kevin Lees — photos taken at Miraflores Locks and Panamá City, January 2009. 

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