Panama’s Democracy Goes South

The incomparable Mary O’Grady in the Wall Street Journal:

Panama’s Democracy Goes South

When supermarket magnate Ricardo Martinelli became president in 2009, free-marketeers celebrated, but the honeymoon was short-lived.

Some 15,000 ships, carrying 5% of the world’s sea-going cargo, already pass through the Panama Canal every year. But when a third set of locks capable of handling larger vessels is completed in 2014, analysts expect the annual canal cargo volume to double. This will ensure that in the 21st century, “the path between the seas,” as historian David McCullough called it, will be an even more significant international trade route.

The economic importance of this legendary passage is but one reason that a stable and free Republic of Panama is a security interest for the Western Hemisphere. That, in turn, is a good reason to heed the warnings from a growing chorus of Panamanians that center-right President Ricardo Martinelli is moving the country toward authoritarianism.

“He is constructing public works but tearing down institutions,” says Aurelio Barria, a Panamanian businessman and the leader of Civic Crusade, a nonpartisan movement famous for its democratic advocacy during the dictatorship of Gen. Manuel Noriega. As if to prove Mr. Barria’s point, on Thursday Mr. Martinelli went ahead with his plan to pack the Supreme Court by naming three new judges who will grow the bench to 12 from nine. Opposition parties pledged to fight the move.

James Madison wrote that “in framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.” The trouble for Panama is that Mr. Martinelli is out of control.

When the supermarket magnate was sworn in as president on July 1, 2009, free-marketeers around the region celebrated. Until then, Hugo Chávez copycats seemed to be popping up everywhere. Mr. Martinelli’s victory in Panama suggested that democratic capitalism could make a comeback. But the honeymoon was short-lived.

The erosion of Panamanian pluralism under Mr. Martinelli seems to have originated in the 71-seat unicameral national assembly. In the last election, his party, Democratic Change (CD), won a mere 13 seats. But since then Mr. Martinelli has been able to persuade 23 other deputies to either defect to the CD or to vote with him in a coalition, thus providing the simple majority he needs for passing laws and confirming judges even as former supporters have become adversaries.

It is not entirely clear how Mr. Martinelli won over all those politicians. But it is worth bearing in mind that the Panamanian constitution was written during the military dictatorship and as such centralizes a lot of power in the executive. Thus Mr. Martinelli has enormous discretion in steering funds to selected congressional districts, and he seems to have used it.

Like Mr. Chávez in Venezuela, who also has a majority in a unicameral national assembly, Mr. Martinelli’s legislative advantage has allowed him to govern unchecked, despite loud protests from the independent press. And like Mr. Chávez, Mr. Martinelli has understood the power of the public purse. critics charge that he is corrupt. But that’s hard to know. What is troubling is that close Martinelli cronies have too often been named to posts that ought to be manned by politically independent professionals. One example is the comptroller general. She is a long-time Martinelli associate and the former internal auditor of one of his own companies, leaving the public wondering whether there is anyone really watching the till. He also seems to prefer no-bid contracts for the many public works that he is launching. This has heightened suspicions about the misuse of public funds.

Meanwhile he is reaching for more. Since 1997 privatization revenues have been cordoned off in a special fund with the stipulation that only the interest from the principle could be spent. But this government is creating a new vehicle for future privatization proceeds, and it will have no such constraints. Mr. Martinelli has announced that he will be the one to name its entire board of directors.

Now the president is hinting that he would like another term. Consecutive re-election is not permitted under the constitution, and changing that would require Supreme Court cooperation. He has already named four of the high court’s judges. (One of those, who is now president of the court, handled press censorship for the Noriega dictatorship.) A fifth is a reliable ally. Throw in the three new seats that he advocated for and filled, and two-thirds of the court is his.

Even if, as critics contend, Mr. Martinelli is a power-hungry caudillo, some might be tempted to tolerate him because he is not left-wing. Importantly he is not threatening property rights. But that ought to be little comfort. Once the institutional checks and balances that defend society against dangerous demagogues are destroyed, the door is open to candidates across the political spectrum. Just ask the Venezuelans.