Panama: New President, Canal’s Future, China

Panama has a new president – a conservative Jose Raul Mulino who won the election with 34% of the vote, 9 points more than Ricardo Lombana of the center-right Movimiento Otro Camino party. Mulino was nominated as a member of the Realizando Metas formation after the movement’s leader Ricardo Martinelli (former president from 2009 to 2014) was declared ineligible by the Electoral Tribunal due to money laundering and took refuge in the Nicaraguan embassy.

Mulino welcomed this position, explaining that he will govern with “responsibility and humility” and emphasized that he is not “somebody’s puppet.”

Meanwhile, Panama is coming to the end of a long phase of drought that has had a serious impact on the Panama Canal, an important source of income for the country that is one of the richest in Central America but is going through a period of crisis. The drought affected vessel transit, as the lakes feeding the locks (the elevation difference between inlet and outlet is 28 meters) were at historic lows. From 38 ships per day in transit between the end of 2023 and early 2024, the figure dropped to 24 ships and is now back to 32. But extreme climate events are also a concern for the future, so there are thoughts about work to improve the flow of water, work that will cost almost 1 billion dollars, according to the Italian economic newspaper Il Sole 24 Ore. The new government will have to find a solution.

Similarly, Panama’s new geopolitical position, established in 2017, when it severed relations with Taiwan and moved closer to China, should be reaffirmed. The country was the first in Latin America to join the Belt and Road initiative, and exchanges with Beijing have increased in recent years. According to Il Sole, from $46 million per year in 2018 to $1.2 billion in 2022. The situation is not pleasing the USA, which sees Central America as a “natural” zone of influence.