Panama Election Tightens as Canal Paralyzed Over Strike

Panamanians went to the polls today to elect a new president with Latin America’s fastest-growing economy paralyzed by a construction workers strike that has entered its second week.

Backed by the ruling Democratic Change party, former Housing Minister Jose Domingo Arias had 31 percent support in an April 19-22 poll published by newspaper La Prensa, giving him a four-point lead over ex-Panama City Mayor Juan Carlos Navarro. Vice President Juan Carlos Varela was third at 23 percent. The survey had a margin of error of 1.8 percentage points.

Arias hasn’t been able to capitalize on 60 percent support for President Ricardo Martinelli, who helped oversee the Panama Canal’s $5.25 billion expansion and pushed unemployment to a record low 4.1 percent as hotels and condominiums reshape the capital’s skyline. He also has been criticized for picking Martinelli’s wife, Marta Linares, as his vice presidential candidate despite her lack of political experience.

“People view Arias as an extension of Martinelli and there’s some caution about just handing the presidency to him,” said Risa Grais-Targow, a Latin America analyst at Eurasia Group.

Fueled by government spending, Panama’s $36 billion economy has been among the world’s fastest-growing, with gross domestic product surging an average of more than 8 percent a year under Martinelli. Under Panamanian law, the 62-year-old Martinelli is prohibited from running for a second consecutive term.

Construction Strike

Polls opened this morning to overcast skies in the capital of Panama City and closed at 4 p.m. local (5 p.m. EST). Whoever gets the most votes in the seven-candidate race will take office July 1. There is no runoff.

Construction projects throughout the country have remained idle since April 23, when workers walked off the job in an effort to win a 35 percent salary increase. The strike threatens to further delay the canal’s expansion, designed to accommodate larger ships and help reduce transport costs for commodities such as liquefied natural gas.

The World Bank forecasts that Panama’s GDP will climb about 7 percent this year, the most in Latin America.

At their final campaign rallies last weekend, both Navarro, 52, and Varela, 50, said they would be more open to talks with unions and indigenous groups, who have battled with Martinelli over mining and hydroelectric projects.

With voters saying inflation is their top concern, Varela has advocated price controls on basic foods. Arias has pledged to continue public spending on infrastructure and to boost social security payments.

Voting near the airport in Panama City, Arias said he was confident that he would win and extend the ruling party policies when he takes office.

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