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Panamanians Seek Economic Boost at the Polls AS/COA Online 4/30/09
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| Panamanians choose a new president May 3. (AP Photo) |
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 lays 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, including that the opposition candidate could win a decisive victory on Sunday,” 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 have arrived in Panama to monitor the transparency of the vote. Panamanian newspaper La Prensa provides complete coverage of the election. Angus Reid Global Monitor offers 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.
Read the article as originally published at the AS/COA website.
Interview: COA’s Eric Farnsworth on Panama’s Presidential Election AS/COA Online 04/29/09
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In an interview with AS/COA Online’s Carlos Macias, Council of the Americas’ Eric Farnsworth lays out what the results of Panama’s May 3 presidential election could mean for the country’s economy and for bilateral relations with Washington. He explains that Ricardo Martinelli, who leads in polls, “has always been able to navigate the very complicated relationship with the Unites States.” As an officer in the Department of State beginning in 1990, Farnsworth was involved with work focused on the reestablishment of democracy in Panama after Operation Just Cause.
AS/COA Online: Given the popularity that President Martin Torrijos enjoys as his term ends, why is the opposition candidate Ricardo Martinelli ahead in the polls over the candidate from Torrijos’ party, Housing Minister Balbina Herrera?
Farnsworth: I think for a couple reasons, not the least of which is that Panama’s growth has stalled dramatically. Over the past several years Panama enjoyed growth at 8, 9, or 10 percent annually, which was at times the highest in all of Latin America. Panama’s population enjoyed that and began to get a little bit used to it. But now with the economic crisis that’s impacting the entire world and Panama’s reliance on international trade for its own well being, growth figures for Panama have decreased quite a lot. Some observers have made the case that the population is growing restless for a return to economic growth and that, obviously, has political implications, including that the opposition candidate could win a decisive victory on Sunday.
AS/COA Online: If Martinelli wins on Sunday, what does it mean for the future of the U.S.-Panama Free Trade Agreement?
Farnsworth: It’s a promising sign because Martinelli has said publicly that he wants good relations with the United States and his record bears that up. He was a former government minister, he was a former chairman of the Panama Canal, and so he’s worked with the United States quite closely in the past. He understands the historical relationship with the United States and he is somebody who is business-oriented and has always been able to navigate the very complicated relationship with the Unites States.
I’m optimistic. I think that he has the right vision for relations if, indeed, he is elected. If he’s elected, I think it’s a promising sign for the bilateral relationship.
AS/COA Online: What would a possible Martinelli administration mean for further Panama Canal development?
Farnsworth: Again, I think it’s a positive, and the reason why is Martinelli understands very clearly the needs of the Canal and the needs of global commerce because he has been so directly involved with Canal issues for a long time. He is sensitive to the needs of the Canal and sensitive to the entire expansion project that’s going forward. Of course, the Canal is the goose that lays Panama’s golden eggs. He understands that it really is a key to Panama’s future. I don’t have any hesitation to think that if he is elected president that the Canal project would continue to go forward and would be a big success.
AS/COA Online: Where does Panama stand in terms of its relations with other Central American countries?
Farnsworth: Well, it’s an evolving relationship. Panama remains unique in many ways. One is the historical relationship with the United States. And traditionally it’s been a crossroads. It’s a crossroads for Latin America and it’s also a crossroads from east to west. So you don’t have the same type of economy or the same type of history as the rest of Central America or, indeed, South America. Panama has not yet worked out its own self-identity to understand if it really is part of Central America yet or if it’s more of an independent actor in the Central American context.
And that issue has real implications, for example, in the context of Central American trade. If Panama saw itself more as a Central American country it would already have a free-trade agreement already with the Unites States through the DR-CAFTA. So these self-image issues have practical implications for Panama’s position in terms of not just global politics, but global economics.
AS/COA Online: And what about its relationship with South America?
Farnsworth: I think the relationship is generally good. The relationship with South America at this point tends to be almost purely economic. Ecuador, Peru, and Chile are sending their products through the Canal to get to Europe and vice versa. You don’t have the same sort of political issues that you used to have, for example, when the United States controlled the Panama Canal Zone, or Panama was seen as some sort of imperialistic extension of the United States. At that point, the South Americans were skeptical of Panama, let’s put it that way. But since the turnover of the Canal in the end of 1999 the relationship has been built on economics and built on Panama as a maturing democracy and the relations with the rest of South America are generally pretty good.
There is one other aspect that needs to be addressed and that’s the narcotics relationship and that goes directly to Panama’s relations with Colombia. There’s law enforcement cooperation between the two countries as Colombian guerrillas have at times been across the border and taken sanctuary in Panama. But cooperation between those two countries in particular continues, and I think it’s a very good sign.
AS/COA Online: On a different note, what kind of growth prospects do you see for the tourism industry in Panama?
Farnsworth: I think the prospects for tourism in Panama are really quite good. Obviously with the global downturn, tourism generally worldwide has decreased but Panama has something that will always be of interest to international tourists—the Canal. To the extent that you have a strong cruise ship and tourist industry based on global economic conditions, I think Panama will always have a special place in the tourist trade. I think the government has really taken steps to try to build Panama as a tourist destination, not just a pass through. That will allow for even greater tourist revenues and an even stronger position for Panama in the global services economy. That’s really what the basis of Panama economy is of services, and tourism is certainly a part of the overall strategy.
ARENA, FMLN Face Off in El Salvador AS/COA Online 03/10/09
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| Rotating campaign ads show the faces of ARENA’s Ávila (L) and the FMLN’s Funes. (AP Photo) |
Update: FMLN candidate Mauricio Funes has been elected as the next president in El Salvador after winning with approximately 51 percent of the vote, ending the 20-year rule of the ARENA party.
Salvadorans head to the polls on March 15 to elect their next president. Voters will choose between the governing Alianza Republicana Nacionalista (ARENA) party candidate Rodrigo Ávila and the opposition’s Farabundo Martí National Liberation Front (FMLN) candidate Mauricio Funes. Recent polls and international media forecast that the leftist FMLN candidate appears poised to unseat ARENA, which has held power since 1989. Ávila says that a Funes victory would bring in a government similar to that of Venezuelan President Hugo Chávez.
A poll conducted by Central America-based CID-Gallup released two weeks before the elections shows Funes leading the race by more than five percent over his opponent. But the election is not won yet; President Antonio Saca noted that the key to win the election remains in the hands of undecided voters, who make up as much as 20 percent of the electorate.
Funes, a former television journalist, has long been outspoken critic of the government. The FMLN nominated him in September of 2007. Since then he has attempted to calm critics who point to the leftist roots of his party. In an interview with the Honduran newspaper La Prensa, Funes said his political platform uses Brazilian President Luiz Inácio Lula da Silva as point of reference rather than Chávez. He also said that, as president, he would not join regional agencies such as the Bolivarian Alternative for the Americas if doing so would threaten bilateral relations with the United States.
Ávila, a former chief of the national police, closed his campaign with a massive rally at the Cuscatlán Stadium in San Salvador shouting the slogan “Country yes, Communism No.” In an interview with Univision’s Jorge Ramos, Ávila extolled the economic improvements gained under two decades of ARENA rule. He also defended his record as a police chief in the 1990s. Ramos also interviewed Funes a week earlier.
The state of the economy and security stand as priority issues in the election. El Salvador has the second-highest homicide rate in the world after Iraq, reports the Miami Herald in an article about Salvadoran gangs. The Economist Intelligence Unit predicts a marked slowdown in the country’s GDP growth through 2010 and warns that, “regardless of the final outcome in the presidential election, no party will have an outright majority in Congress, complicating policy implementation in the next four-year term.”
The National Democratic Institute prepared a report on January legislative elections as well as the March 15 presidential elections. According to their data, ARENA had outspent the FMLN through January 18, with the former accounting for 65 percent of campaign spending and the latter just 19 percent. In the January election, the FMLN won a plurality of votes in the Legislative Assembly by winning 35 out of 84 seats. However, ARENA won the mayoralty of San Salvador, ending over a decade of FMLN control of the capital.
Some have wondered what role Washington will play in this election, given past U.S. involvement in Salvadoran politics. A Boston Globe op-ed recalls the country’s 2004 election, when the Bush administration drummed up fears by implying that an FMLN victory could result in a change in migratory status for Salvadorans living in the United States. According to the U.S. State Department, Salvadorans working in the United States sent $3.8 billion in remittances in 2008, benefiting more than 22 percent of the population. As expected, in December the U.S. Citizenship and Immigration Services bureau extended the Temporary Protected Status for Salvadorans until September 2010. Still, over 200 American academics wrote to Secretary of State Hillary Clinton asking for a U.S. government statement of impartiality.
Angus Reid Global Monitor offers a timeline and background information on the election.
Chávez Clears the Road for Reelection AS/COA Online 02/18/09
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| Chávez will run for his second reelection in 2012. (AP Photo) |
In a decisive electoral victory on February 15, Venezuelan President Hugo Chávez won the right to run for his second reelection and possible third presidential term after voters approved an end to term limits. This is a political rebound for Chávez, who lost a proposed constitutional reform in December 2007 and important mayoralties in municipal elections last November. With this renewed mandate, he faces the daunting task to deal with rampant insecurity and corruption, rising inflation, and imminent economic adjustments to his vast social programs and fiscal expenditures.
Venezuelan electoral authorities announced that the “Yes” vote won by 54.86 percent of the “No” vote received 45.13 percent with a participation of more than 70 percent. International observers gave the referendum high marks for transparency and underlined the trustworthiness of the referendum’s official tally. But Chávez’s use of all state institutions and media at his disposal to push the amendment strained the process since the beginning. Chávez exerted pressure by emphasizing the lack of political alternatives and warning that Venezuela would crumble without his leadership, said pollster Luis Vicente León.
The opposition accepted their defeat with temperance and asked Chávez to turn his attention to the domestic agenda. Caracas’ Major Antonio Ledezma said that hopefully politicians “have turned that page of the political agenda” and that people “voted yes to solutions for garbage disposal, insecurity, inflation, and anarchy that overshadows governability.” In an interview with the Los Angeles Times, Tal Cual Editor Teodoro Petkoff stressed important inroads made by winning 10 percent of the vote in this referendum in comparison to Chávez’s 2006 reelection victory margin of 64 percent. “And I don’t have the slightest doubt that the deterioration of Chavez’s support will continue through the next presidential election in 2012,” Petkoff adds.
Meanwhile, economists sound the alarm about the dangers laying ahead for the government due to falling revenue from oil exports and inflation. “I would say that Venezuela can count on a sizeable cushion of reserves and foreign exchange liquid assets to help it ride the current economic down cycle. But not for very long. By all accounts, Venezuela is destroying assets much more quickly than it’s been building them, given today’s oil prices,” says Eurasia Group’s Patrick Esteruelas in an AS/COA interview. The Financial Times reports that Chávez announced in his victory speech that he will redouble efforts to face the crisis; he was followed by his Finance Minister Ali Rodriguez, who cautiously referred to a stimulus package to control inflation but said that they are waiting to see at what level crude prices settle at to better determine their revenues for this year.
International leaders greeted Chávez’s victory at the polls positively. Colombian President Álvaro Uribe congratulated Chávez for his “democratic victory” in an effort to strengthen bruised bilateral relations. Spain’s government also praised the electoral outcome in Venezuela and urged for continued dialogue to bridge differences between the political parties, El Nacional reports. Even the U.S. government acknowledged the “civic spirit” displayed by Venezuelans and cautiously hailed Chávez’s accomplishment.
At a February 9 AS/COA panel discussion on the Venezuelan referendum, Barclays Capital Senior Economist for the Andes Alejandro Grisanti said that, even with a victory for Chávez on Sunday, he still must deal with harsh economic realities that could further harm his approval ratings when running for an hypothetical third term in 2012.
Read AS/COA extensive coverage on Venezuela’s electoral process and its oil-based economy.
Chávez Tests Popularity AS/COA Online 02/12/09
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| Venezuelans decide about term limits for elected officials on February 15. (AP Photo) |
As Venezuelan electoral workers set up voting stations and bottles of indelible ink for the February 15 referendum, the battle between the “Yes” and “No” sides heats up. On Sunday, Venezuelans head to the polls to decide whether President Hugo Chávez and all elected officials can run for reelection indefinitely. The referendum serves as a test of Chávez’s popularity at a time when inflation and crime rates have soared while falling oil prices threaten subsidies on food, fuel, and medical care. These social programs have thus far been the backbone of a strong chavista movement. But the opposition has made inroads as the economic cracks begin to show.
Yet the Venezuelan government remains confident on that regard, with Chávez claiming his country’s economy to be so strong that “[n]ot even a hair has been touched” by the global financial crisis. Despite his optimism, restructuring efforts are already underway. Citgo—a U.S.-based subsidiary of Petróleos de Venezuela S.A (PDVSA)—announced that it will cut its workforce of 3,762 by two percent, or approximately 75 employees. Additionally, PDVSA’s exploration and operational budget will be reduced between 30 to 40 percent in 2009, El Universal reports.
A new report by the Center for Economic and Policy Research offers up the country’s economic accomplishments in the areas of poverty reduction and GDP growth. But several experts and analysts take a less glowing view. “Venezuela is destroying assets much more quickly than it’s been building them, given today’s oil prices,” said Eurasia Group’s Patrick Esteruelas in an interview with AS/COA Online. Caracas-based Banco Mercantil recently predict that Venezuela’s economy will freeze and public financing could climb from $6.3 billion from last year up to $31.4 billion in 2009, reports Bloomberg.
The Economist offers a look at the political debate occurring among Venezuelans over the benefits of public services involving healthcare and subsidized food products against a backdrop of rampant crime and ballooning inflation. The lead-up to the vote has involved heavy polarization between the “Yes” and the “No” camps and even some violent outbreaks. On February 7, roughly one million people demonstrated in Caracas in support of the No vote and against an end to presidential term limits. Opposition leader Leopoldo López has urged voters to cast their ballots and repeat the December 2007 defeat of Chávez’s new constitution.
Chávez voiced his disapproval of the march but recognized that his followers should not downplay its importance and has gone as far as to condemn the actions of some supporters. A group of his most fervent followers, known as “La Piedrita,” staged teargas attacks on the Vatican diplomatic mission and the home of RCTV Director Marcel Garnier. They also went to so far as to make death threats against opposition leaders. Chávez responded to these actions with a hardened stance, labeling them terrorists and calling for the arrest of its leader Valentín Santana. Spanish newspaper El Pais published an interview with Santana in which he attempts to explain why his group declared some opposition leaders military targets. Additionally, the Venezuelan police arrested 11 suspects—including seven police agents—after a synagogue was attacked and ransacked by vandals on February 1.
At a February 9 AS/COA panel discussion on the Venezuelan referendum, Barclays Capital Senior Economist for the Andes Alejandro Grisanti said that, even if Chávez accomplishes a victory for Chávez on Sunday, he still must deal with harsh economic realities that could further harm his approval ratings when running for an hypothetical third term in 2011.
Sunday’s referendum may serve as Chávez’s last stand. Agencia EFE reports that Chávez vowed to recognize the electoral results, even in the case of defeat. The Venezuelan National Assembly announced that, should the “No” vote win out, the reelection proposal would no come up for another vote.
The Winter 2009 issue of Americas Quarterly features interviews with three candidates barred from running in the November 2008 legislative elections in Venezuela.
Read AS/COA interviews with Venezuelan opposition leader Leopoldo López and student activist Yon Goicoechea.
Carlos Macías Web 