Panama: Mulino wins
President-elect Mulino will stick with former President Martinelli and mirror his policy preferences, but that does not guarantee success.
Mulino = Martinelli.
The biggest question people have about President-elect José Raúl Mulino is whether he will remain allies with former President Ricardo Martinelli or break with his former running mate, as has happened so many other times in recent Latin American history.
My answer is that Mulino and Martinelli are close allies and very likely to remain so over the coming five years.
It's wrong to call the new president a puppet. José Raúl Mulino is lifelong political figure who brings his own views, networks, and leadership to the table. And yet, Mulino has repeatedly demonstrated loyalty to Martinelli and needs the former president's support to obtain and maintain a majority congressional coalition and move his agenda forward. Martinelli's wife was on stage during his victory rally. The former president's networks are vital to the next president's ability to influence the Congress. Martinelli's alliance will give the new president public support in the early stages of his presidency.
The former president, currently hiding in the Nicaraguan embassy to avoid jail, holds all the keys to a successful Mulino presidency. I've seen speculation that the president-elect could break with Martinelli to get a coalition together. It's far more likely that Mulino embraces the former president and builds the coalition with Martinelli as the base.
The Congress is divided. Political parties are broken.
Martinelli's/Mulino's party took 13 seats in the 71-seat legislature, making it the largest of the parties in that institution. That seems bad, and it's even worse than it looks. Several of the parties including the Mulino/Martinelli RM and the current ruling PRD have factions within them that could split apart. The 21 independents are not a cohesive bloc (though there is a cohesive sub-bloc within them of more than a dozen who will align with the pro-Lombana opposition). These are less ideologically cohesive parties and more like groups of politicians who decide to hang out together on the ballot. That works because voters in Panama demonstrated with their support for Mulino, Lombana and the independent candidates that they dislike and distrust traditional party structures anyway.
Counter-intuitively, the parties' weaknesses should allow Mulino to form a majority for the first part of his term and get something passed. Go find 36 votes. That's Mulino's job and there is a way to add them up one by one or in small groups until he hits that magic number. He can probably even go beyond, up to 40-45 votes or so with the correct alliances.
However, the political reality of that party weakness will catch up with him beyond the presidential honeymoon of 150-200 days. Mulino's fluid majority coalition in the Congress will depend on alliances and favors. As the president's political capital falls, his ability to keep that fragmented group of politicians together in a majority will fade. He must choose his early agenda and battles wisely because party loyalty will not keep the coalition together.
Mulino wants to be a big-spending, pro-business president.
The markets really want pension reform because markets are convinced that presidents elected with narrow pluralities and weak legislative coalitions should tackle the one issue guaranteed to sink their popularity and political alliances. Politicians, despite all the bad things written about them, are generally smarter than that.
Mulino's campaign, to the extent it made any policy announcements, promised subsidies for the poor and a return to larger economic growth, not austerity and higher taxes. Also, if you believe the analysis Mulino will largely govern as a Martinelli stand-in, then looking back to Martinelli's term could give hints as to where he goes with policy. When in office, Martinelli spent big on infrastructure and subsidies. His tax reforms cut taxes for businesses but raised revenue thanks to better collection and booming economic growth. In short, expect a pro-business agenda in the sense of infrastructure spending and incentives for the private sector, not austerity.
On the question of the copper mine, Mulino gave an interview to W Radio yesterday in which he hinted that the mine could be partially reopened as part of a plan to pay for its environmentally sustainable closure over a long period of time. For First Quantum, which owns the mine, that should be seen as a position demonstrating the next government will be open to reasonable negotiation.
Can Mulino use the Martinelli magic wand? And is that a good or a bad thing?
Hanging over the next term in office will be this contradiction: Panamanians are angry about corruption and disillusioned with the status of their democracy, so they voted for the candidate tied to a corrupt and autocratic former president.
When in office, Martinelli could bend the other institutions of government to his will and obtain public approval despite everything wrong that he did. Even out of office, many Panamanians remember his term in office as a better time. The question is whether Mulino can also pull this off. Can the next president use economic growth to maintain popularity? And can a mixture of public support and private influence networks force the other institutions of government to work with him?
Mulino's victory came about in part because the Supreme Court handled his eligibility case quite oddly, not ruling on it until 48 hours before the votes were cast. This gave Mulino's rivals no time to consolidate their opposition to him (nobody wanted to drop out of the race as long as it appeared possible the frontrunner might be tossed from the ballot). Was that fortunate delay just luck or some behind-the-scenes maneuvering by Martinelli's political networks? I don't know. But those sorts of questions will follow Mulino's entire term of office.
The potential Mulino can succeed because he has the influence networks to pull off Martinelli-esque political moves is one reason businesses and investors are excited about the potential for his term. Those sorts of potential manipulations of checks and balances are also why anti-corruption and democracy advocates are concerned.
However, both the optimists and the pessimists about a powerful Mulino presidency should be tempered by the political reality of Panama and the similar cases in Latin America. Across Latin America, in cases where the caudillo and his or her successor don't split, that successor still rarely has the same magic wand as the caudillo. In fact, the successor often pays some price and takes the blame for the failings of the caudillo. Mulino will likely stick with Martinelli, but that doesn't mean he will inherit all the characteristics that defined Martinelli's presidency. Once the honeymoon has passed, the chances for political stagnation are high.