The problems Panama’s next president must tackle first

José Raúl Mulino, who will take Panama’s top job on July 1, will have to forge political alliances and address the Panama Canal crisis, but his relationship with former president Ricardo Martinelli could be a stumbling block.

Mulino's cabinet picks – including Julio Moltó, set to become trade and industry minister, José Luis Andrade as public works minister and Felipe Chapman as economy and finance minister – represent a combination of technical experience, support for the private sector and political and strategic appointments, local media reported. 

“I see a government that could have and deepen a robust alliance with the private sector… as Mulino’s party has sort of a business profile,” political analyst Eduardo Núñez told BNamericas

But Mulino’s right-wing Realizando Metas party won only 14 of 71 seats in congress, so he will have to compromise. “The key [to agreements] will be topics that aren't polarizing. It will also depend on the ‘political muscle’ he develops to push them forward,” Núñez said. 

One uniting issue could be the Panama Canal, whose crisis of capacity has been exacerbated by droughts, leading the canal authority in March to reduce the number of ships permitted to pass from 38 per day to just 20. 

El País reported that the authority estimates the crisis will generate losses of US$500-700mn this year.

More complications are on the horizon, as other Central American countries have announced plans to build dry corridors that compete with the canal, including a US$10bn project in Honduras that has been presented to international investors and foreign government bodies. 

Furthermore, Mulino is close to Ricardo Martinelli, who was president from 2009 to 2014, but was sentenced to more than 10 years in prison for money laundering. After the verdict, Martinelli fled to the Nicaraguan embassy in Panama City, while his asylum application is being processed. Their relationship could affect potential alliances with the center-left PRD party. 

“The challenge is deciding whether he will take Martinelli’s stance with all its contradictions or if he will create his own brand, for which he would have to distance himself from the former president,” Núñez said. “This could cause tensions within the party, its lawmakers or its leader.” 

Mass protests sparked last year, after a new contract with First Quantum Minerals for its Cobre Panamá copper mine was approved, could also return.

“There is an accumulated issue that hasn't been resolved, derived from the social protests, that in some way was reflected in the election, with votes going to candidates that didn't belong to parties,” said Núñez.

“The question is how fast Mulino can consolidate a unity government, establish goals, develop a government identity that allows him to work toward clearly established objectives despite the multi-sectorial composition of his cabinet, and establish a government dynamic that expands its capacity,” he added.