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Canal a Priority as Varela Takes Office in Panama

Canal a Priority as Varela Takes Office in Panama
Panama's new President Juan Carlos Varela delivers a speech during his inauguration on July 1.

Wednesday, 02 July 2014 10:55 AM

Conservative Juan Carlos Varela took office as Panama's president Tuesday pledging to finish a troublesome canal expansion, stamp out corruption and get more people out of poverty.

The 50-year-old rum maker donned the presidential sash in a massive ceremony at Rommel Fernandez stadium in the capital attended by a handful of world figures including U.S. Secretary of State John Kerry, Spanish Prime Minister Mariano Rajoy and Taiwanese President Ma Ying-jeou.

"We've got plenty of laws. What we need are men and women who respect them; that's what I am here for," Varela said to large cheers, warning: "Corruption will not be tolerated in our government."

Varela, who was elected to a five-year mandate in May 4 polls, replaced Ricardo Martinelli, a supermarket magnate who leaves office with high popularity despite corruption allegations.

Panama's vice-president and a former Martinelli supporter, Varela was the surprise winner in a three-way race. Final results put him seven percentage points ahead of his nearest rival, Martinelli loyalist Jose Domingo Arias.

Varela has called for a national unity government to sustain economic growth, reduce inflation, combat violent crime and strengthen democracy.

Venezuela broke ties with Panama in March, when President Nicolas Maduro slammed Martinelli as a corrupt US lackey. But Varela has set dialogue with Caracas as a priority.

And just as Varela was sworn in, Venezuela announced it was restoring bilateral ties. These had been severed when Martinelli sought a meeting at the Organization of American States in Washington to discuss the death of 43 anti-government protesters in Venezuela.

Topping Varela's weighty agenda is finishing an expansion of the Panama Canal, a massive project which is a year behind schedule and has been mired in controversy.

The vast construction project was to have been completed this year, but delays and cost overruns have pushed back the schedule to early 2016.

"We are blessed to have the canal, a major piece of infrastructure which serves our nation, and world trade. As president, I will make sure the expansion is completed successfully, while protecting the state's interest," Varela pledged in his address.

The construction to add wider locks and channels capable of handling much larger container ships is one of the world's most ambitious civil engineering projects.

The 80-kilometer (50-mile) long canal was completed by U.S. interests in 1914 to provide a shorter, safer route between the Atlantic and Pacific.

Work to expand it was interrupted earlier this year over a dispute about who would pay for an estimated $1.6 billion in cost overruns. It was also hit by a strike by workers demanding higher wages.

The stakes are high for the project, with five percent of the world's maritime trade already passing through the canal. The expanded waterway will be able to process 12,000 container ships in its first year of use, triple the current capacity.

Analysts warn Varela has his work cut out.

"There are empty coffers, there are pending disputes between different unions and the canal work is overdue, such that the money that was counted upon is not coming in, and this will affect how he governs," market analyst Jaime Porcell told AFP.

"Varela has to clean up the mess Martinelli left behind and keep the broken promises of other administrations" to lower the prices of basic goods, control crime and punish corruption, lawyer and political analyst Mario Rognoni told AFP.

Varela though takes office amid a huge economic boom in Panama, a small Central American nation of 3.8 million people focused economically on trade, tourism and services.

Panama saw breakneck 8.4 percent growth in 2013 but 26 percent of people live in poverty, according to the government.

Varela has said that his first act as president will be to sign an executive order to control prices of 22 products to lower inflation, his main campaign promise. Price controls are not often on a conservative's policy plan.

He also pledged drinking water for the entire country.

Varela on Monday reached an agreement with the Democratic Revolutionary Party (PRD) guaranteeing him a majority in Congress, which will make it possible for him to pass laws and nominations.

Varela's Panamenista Party holds only 13 of the 71 seats in Congress, but the agreement with PRD creates a 38-seat majority.

© AFP 2019

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Conservative Juan Carlos Varela took office as Panama's president Tuesday pledging to finish a troublesome canal expansion, stamp out corruption and get more people out of poverty.
Panama, Varela
Wednesday, 02 July 2014 10:55 AM
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