Years of growth forged prosaic politics. Now Panamanians are fed up

Panama’s elections are unusual. Turnout averages 75%. More than half of the country’s voters are affiliated with a political party, most of which are centre-right and pro-business. Strong economic growth, which averaged 5.9% over the 20 years after the country took ownership of the Panama canal at the turn of the century, led to calm politics. With few ideological snags, politicians could choose the party which suited them best. “Panama’s political parties are like baseball teams,” says R.M. Koster, a journalist and novelist from the United States who has lived in Panama since the 1950s. “They play the same game and the star players switch between them.”

But now Panamanians are fed up. The canal’s water levels are dwindling, threatening flows of trade and government revenue. Billions of dollars must be spent on dams or underground pipes to keep it full. A giant copper mine on the north coast has been forced to close, costing 30,000 jobs; the mine accounts for 5% of GDP once its indirect effects are included, according to Fitch Ratings. Years of fiscal mismanagement and corruption mean two-thirds of Panamanians now desire “radical change”, according to a local poll published in 2023. Some 83% say they are dissatisfied with their democracy. They go to the polls to elect a new president on May 5th.

For the past five years Panama has been run by Laurentino Cortizo, the leader of the Democratic Revolutionary Party (prd). During the pandemic he enacted one of the world’s strictest lockdowns, plunging Panama into its first recession of the 21st century. With no ability to stimulate the economy through printing money (Panama uses the dollar), Mr Cortizo turned to the markets, expanding the national debt from $28bn to $44bn (half of GDP) between 2019 and 2023. Much of this money was spent on what is proportionally one of Latin America’s largest public-sector payrolls. “It was necessary to raise funds to escape the effects of the pandemic,” says Dulcidio de La Guardia, a former finance minister. “But that debt should have gone towards infrastructure projects, rather than filling bureaucrats’ pockets.”

The closure of the Minera-Cobre copper mine compounded the public-finance woes. Half of the government’s annual share of profit from the mine was earmarked for Panama’s underfunded pension scheme. Panamanians took to the streets in great numbers in October 2023, protesting over the mine’s environmental impact. The Supreme Court then declared the mine’s contract unconstitutional and ordered it to be closed. On March 28th Fitch Ratings removed Panama’s investment grade, stating that the closure had “aggravated” existing fiscal challenges.

There are seven candidates for the presidency. The PRD’s vote is likely to be split between its official candidate, José Gabriel Carrizo, and Martín Torrijos, who served as president from 2004 to 2009 and is the son of Omar Torrijos, Panama’s former dictator and founder of the PRD. Rómulo Roux, who finished second in the presidential elections of 2019, has allied his Democratic Change movement to the nationalist Panameñista Party. In recent months Mr Roux and Mr Torrijos, together with Ricardo Lombana, a candidate with Another Way Movement, have been vying for second place in the opinion polls.

The candidates all promise to spend billions to replenish the waters of the Panama canal. The easiest option is to dam the Río Indio to the west of Panama City, though the resulting reservoir would displace locals. A longer-term fix would be to build 100km (60 miles) of tunnels and pumping stations from Bayano lake to the east of the city, but the estimated $3bn price tag is triple the Rio Indio dam’s. Authorities have understood the threat of water shortages since the canal’s expansion was first proposed in 2006. But consecutive governments have been unwilling to risk their political and economic capital to take action. The new president will have no choice but to embark on one or both of these projects, says Felipe Chapman of Indesa, a consultancy in Panama City.

Smaller parties have noticed recent election victories in Central America, where outsider candidates running on anti-corruption platforms have defeated the traditional parties. One example is Guatemala’s Bernardo Arévalo, but the name of Nayib Bukele, the authoritarian president of El Salvador, comes up more frequently.

“In the past seven years travelling around Panama, the number one thing Panamanians tell me is ‘Be like Bukele’,” says Mr Lombana. He says he will launch a campaign against drug money in Panamanian politics. He also proposes to reform the constitution, to make Panamanian politics cleaner, and in particular to introduce a presidential run-off. Recent Panamanian presidents have been elected with diminishing shares of the vote. Mr Cortizo was elected on just one-third of the ballots.

For now, the single-round vote is playing into the hands of Ricardo Martinelli, a 72-year-old billionaire and former president who posts shirtless selfies from a bench-press machine in the Nicaraguan embassy. He was leading the polls in February when he sought refuge at the embassy after the courts upheld his ten-year prison sentence for money-laundering, and banned him from running for office. His loyal-but-dull running mate, José Raúl Mulino, took over the candidacy (on April 30th the Supreme Court opened a review into the legality of his candidacy). Mr Martinelli had the good fortune to rule while the canal was in its pomp, so many Panamanians associate him with more prosperous times. Opinion polls show Mr Mulino running 15 points ahead of his rivals. Popularity has allowed him to avoid the televised debates, where candidates have had to answer tough questions about jobs, the canal and the mine. His two most catchy proposals are to build a railway of dubious economic value from Panama City to David near the border with Costa Rica—and a hospital for pets. They look like a winning formula. ■