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Varela Reaps Martinelli’s Populist Seed in Panama

By: Pablo José Gutiérrez Fernández III - Sep 26, 2014, 10:16 am
Current president of Panama, Juan Carlos Varela (right), is continuing the paternalism initiated by his predecessor, Ricardo Martinelli (left).
Current president of Panama, Juan Carlos Varela (right), is continuing the paternalism initiated by his predecessor, Ricardo Martinelli (left). (Flickr)

EspañolMuch was said during the last election in Panama about how Ricardo Martinelli’s government was destroying the country’s institutions. Buying off congressmen, the near elimination of the separation of powers, rampant corruption, among other things, became the talk of the town.

Voters could not wait to remove Martinelli from power and elect a leader who would restore the country’s damaged institutions and create an environment of peace and democracy. The public did not want to see Martinelli reelected through his puppet candidate José Domingo Arías, whose running mate for the vice presidential seat was the first lady at the time, Marta Linares de Martinelli.

Juan Carlos Varela, vice president during the Martinelli administration, sold himself as a staunch opponent of Martinelli. The constant attacks by José Domingo Arias and various candidates of the ruling Democratic Change (DC) party helped Valera completely separate himself from Martinelli and be seen as the true opposition candidate.

Valera’s running mate, Isabel Saint Marlo, was another important piece in the election of the Panameñista Party candidate. Saint Malo gave Varela’s campaign an air of institutional stability. She was also able to convince those who were tired of the Martinelli administration’s handouts to ultimately vote for Varela.

In various interviews, she repeated that subsidies needed to be reduced, focalized, and eventually phased out. A Panamanian candidate had not uttered these words in a very long time. The fact that she is not a politician, in the traditional sense, also attracted many independent voters to the El Pueblo Primero (The People First) alliance.

On May 4, Panamanians elected Varela as the new president of the republic.

Four months later, we find ourselves in a situation that could possibly be even worse than the one we were in when Martinelli was in power. While the previous president was harming the country’s institutions in various ways, Varela threatens to completely undermine the republican foundations of Panama, or what little is left of them.

During the campaign, Varela promised to install a system of price controls. This raised various alarms among different sectors in the country, but it was not something that was considered devastating. However, to the surprise of many voters, things were only going to get progressively worse.

Not only did price controls bring about the expected problems, it was the first of many attacks on one of the our most important institutions: private property.

The Varela administration has approved laws that are completely opposed to the principles of private property, and the freedom to make use of it. One clear example of this is the new law that regulates private business owners’ ability to charge customers for parking.

Just a few months ago, one of the largest and most important shopping centers in Panama City, MultiPlaza, decided to begin charging for the use of its parking space. They granted customers a free period, depending on the sort of activity to be conducted at the mall.

Sadly, for Panamanian politicians, this is unacceptable, and goes against “social justice.” The new law does not allow businesses, shopping centers, or malls to charge for the use of their parking spaces. In other words, one does not completely own one’s property, and the government’s approval is needed to make full use of it.

Another measure that has undermined the rule of law is the proposed legislation that would establish a subsidy for pregnant women who are not registered in the Social Security Fund. In other words, we are rewarding irresponsibility, instead of incentivizing sexual education, or simply incentivizing people to use the right tools to support themselves economically.

These sorts of subsidies create a dependency and sends the message that it does not matter what life choices you have made, the government is here to solve all your problems. This is what these subsidy policies imply and what is destroying the instutional fabric of the country.

Varela’s administration has also expanded and increased other subsidies and state programs, like the “120 to 65” initiative — a state pension of US$120 a month that is given out to people who are 65 years of age and do not have a retirement fund. The program was previously set to “120 to 70,” and originally began as “100 to 70.”

The controversial “Universal Scholarship” also saw an increase, which represents an additional expenditure of $75 million. There is also the support program for people that buy houses at low prices. If the house is priced at $50,000 or less, the government grants a “housing voucher,” which Varela increased by 100 percent from $5,000 to $10,000.

As we can see, all the talk of reducing subsidies was just empty rhetoric.

At the start of the year, Vice President Saint Malo said: “This is not about extending paternalism; it is about giving people the necessary tools in order for them to rise up through their own efforts. The temporary subsidies are necessary, but the permanent ones are bad. Nothing beats the joy of success based on your own effort.”

Sadly, the current administration is cultivating the paternalist seed that Ricardo Martinelli planted. In the long term, this could end up being very costly, since subsidies have a snowball effect and nobody wants to suffer the political consequences of eliminating subsidies.

Therefore, I am increasingly fearful that the foundation is being laid for an even more populist government, or even worse, a socialist government that takes advantage of the Martinelli administration’s rotten leftovers. I hope to be proven wrong and that the course is corrected, but things do not look good so far.

Translated by José Niño.