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Panama will swear in a new president today

Ricardo Martinelli has his work cut out for him.

Twenty years after the United States removed Manuel Noriega from power, and with the recent focus on Honduras, Panama has been well below the radar for most Americans:

But it is a strategically important country that is playing a growing role in global trade. Indeed, it is estimated that 5 percent of all international trade-and a much higher percentage of U.S. trade-goes through the Panama Canal. [Outgoing President] Torrijos has successfully promoted Panama as a tourist hotspot and commercial hub. It is an increasingly popular retirement destination for Americans; indeed, U.S. expatriates helped fuel the recent Panamanian housing boom.

Ricardo Martinelli will officially be sworn in as president of Panama today and will serve a five-year term. The occasion will mark Panama’s fourth peaceful presidential transition since the overthrow of Noriega in 1989. Martinelli, who was the candidate of the conservative Alliance for Change party, won a landslide victory of 59 percent to 36 percent over Hugo Chavez favorite Balbina Herrera in the May elections.

Martinelli is a confirmed capitalist in a region where the Castro brothers and Chavez have been actively trying to export their brand of Marxism. Panama’s president-elect has a degree in business administration from the University of Arkansas (Class of 1973) and earned an MBA from the INCAE Business School in Costa Rica. He has experience in government and in the private sector. Martinelli served as Panama’s director of Social Security from 1994 to 1996, and from 1999 to early in 2003 was minister for canal affairs and chairman of the Board of Directors of the Panama Canal Authority. He is chairman of the board of a large chain of supermarkets, chairman of two other companies and sits on the boards of at least eight others.

In an interview with the Miami Herald in March, Martinelli said that his administration “would be a much more pro-American government” than one which would have existed under Herrera, whom he described as a dangerous ally of Chavez:

Asked for specific foreign policy changes that his government would bring about, Martinelli cited more vigorous efforts to get the U.S.-Panama free trade agreement passed by the U.S. Congress, more votes in line with U.S. foreign policy in the United Nations on issues such as Israel’s stand in the Middle Eastern conflict or human rights in Cuba, and closer relations with Colombia.

Martinelli has promised a foreign policy that would “maintain a relationship of mutual respect and friendship” with Cuba and Venezuela, but “not an ideological relation that could generate commitments that go against the interests of our country.” During the presidential campaign:

Martinelli attempted to portray himself as ideologically connected with Colombia’s Uribe and the Dominican Republic’s Fernandez. In an interview with AFP, Martinelli even promoted himself as the first of a wave of change in Latin America moving away from the “left.” While many analysts saw this election as helping the US-Panama relationship, it’s good to remember that Martinelli is center-right and much closer to the GOP in the US than to the current US president’s party. Martinelli also offered promises to remove Panama from the Central American parliament and consider changing diplomatic recognition to China, both moves would be shifts in Central America’s foreign policy worth watching.

Martinelli’s administration will be under considerable pressure to perform:

According to La Prensa, he will now have to face the challenge of keeping his campaign promises to solve the country’s crime, education, health, and public transport problems, and to cut poverty.

But the number one issue on the minds of Panamanians is the country’s economy, and voters will hold Martinelli to his campaign rhetoric:

La Prensa reminded its readers that one of Martinelli’s key campaign promises was to “revive the economy in the first 100 days of the administration.” He proposes to do this by creating jobs and signing a free trade agreement with the U.S.

The Panama Canal is important not only to Panama’s economy, but also to the global economy and that of the U.S. Martinelli’s prior experience as an effective manager of the canal should prove to be a valuable asset for efficient management of the waterway. Panama’s political stability depends on it. That is why much is expected of Martinelli, not only by his own countrymen, but by the rest of the world as well:

In a global economic environment characterized by recession and financial upheaval, Panama stands out as a relative bright spot. The United Nations Economic Commission for Latin America and the Caribbean projects that Panama’s economy will expand by 4 percent in 2009 while the regional economy as a whole will contract by 0.3 percent. But 4 percent annual GDP growth represents a major drop from 9.2 percent growth in 2008 and 11.5 percent growth in 2007. In those years, Panama benefited from robust global trade and a massive housing boom. Its unemployment rate plummeted. Now international trade is shrinking rapidly and, as Jeremy Schwartz notes in the Austin-American Statesman, the Panamanian real-estate sector “might be heading for a sharp downturn.”

Panama’s new president will have other important issues to deal with. Inflation has driven up the nation’s cost of living sharply, and Martinelli will have to provide Panamanians with better public services in the form of health care and education than did his predecessor. And if all that were not enough, the country has recently experienced a spike in its crime rate.

While managing all of these things, Martinelli will need to keep a sharp eye on Chavez and the Castros, who will be working in the shadows to undermine his government. Misery loves company, and the dictators would like nothing better than to see a Marxist Panama which would use the canal as leverage against the U.S. and other Western nations. Given recent events in Honduras, Martinelli might have one more friend in the region than he had previously counted.

Still, Martinelli will have his work cut out for him. With an American president who seems to be more friendly to communist regimes than to traditional U.S. Central American allies, Panama’s new leader will have to provide exceptional leadership. We wish him well.

- JP

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