Panama’s Election Seals A Strong Free Market Orientation

Defying polls, conservative Juan Carlos Varela won Panama’s election Sunday, showing that five years of free-market policies merit another five. If he holds course, it’s the best possible outcome.

Nobody thought the openly conservative Juan Carlos Varela could pull off a five-year term in Panama. The former vice president had been been running third in the polls and faced the negative headwinds of Ricardo Martinelli’s five-year conservative rule. It especially didn’t help that Panama’s incumbent parties almost always do poorly in successive votes.

But Varela, who is believed to be at least as conservative as his predecessor, managed to distinguish himself from the status quo.

He did so by breaking with Martinelli in 2011 over the latter’s ill-conceived plan to extend his own stay in office, compounded by a ridiculous and probably unconstitutional move to place his wife, Marta Linares, on the ticket of his hand-picked candidate, Jose Domingo Arias, as vice president.

Net effect: Varela was able to run as an anti-corruption outsider, a better thing for Panama to focus on than a populist referendum on free-market ideas that is often badly argued, despite Panama’s 8.2% average growth rate over the past decade.

The left-wing candidate, former Panama City mayor Juan Carlos Navarro, garnered just 28% of the vote. Varela won with 39%.

It’s a resounding vote for continuing the free-market policies that have opened Panama to the world with free trade, put the nation in the global trade spotlight with its multibillion-dollar expansion and ensured the country’s economic shift from shipping to banking, services, medical tourism and new entrepreneurship. And it may just open the door to improving Panama’s governance as well, if Varela is truly anti-corruption.

The election not only seals Panama’s free market orientation, it also leaves Panama with two competing conservative parties, something similar to the Tea Party and the GOP, and certainly parallel to Colombia, where two center-right parties also dominate and compete.

But it’s worth something only if Varela stays the course with what worked during Martinelli’s administration.

Martinelli not only brought growth to Panama, he was also dazzling on the foreign-policy front, repeatedly showing leadership against the region’s dictators in democratic clothing.

He was the first to break with the Latin consensus that Honduras be isolated after its legislature removed a communist dictator, Mel Zelaya, from power — and swung the region his way.

He also spectacularly exposed arms trafficking between Cuba and North Korea through the Panama Canal, via the power of a Twitter photo — which meant that the matter could not be covered up.

And when Venezuela exploded into an orgy of government thug-rule last February, Martinelli was the one Latin American president who blasted the barbarism and took in thousands of Venezuelan refugees fleeing the hellhole as the regime cut ties.

Along with the free trade, canal expansion and booming growth, it’s an impressive bill to fill. But if Varela means to compete, he will focus on outdoing these accomplishments — and making Panama the hemisphere’s star. So far, things look promising.