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Interview: COA's Eric Farnsworth on Panama's Presidential Election

April 29, 2009

“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.”

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 wellbeing, 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.