Corruption pressure will build on Panama’s Varela

Subject

Panama corruption allegations.

Significance

State Prosecutor Rigoberto Gonzalez announced on August 8 the launch of a probe into allegations made against President Juan Carlos Varela, by Brazilian-Spanish lawyer Rodrigo Tacla Duran. Tacla’s remarks, made in a July 27 article in Spanish newspaper El Pais, suggest Varela was involved in corruption linked to Brazilian construction firm Odebrecht. Although not formally a direct investigation of the president, the inquiry, and any potential charges that come out of it, will increase popular criticism of Varela’s government and further undermine his political standing.

Impacts

• Spanish investigations into Odebrecht’s consortium partners could spark a related probe into the financing of the Panama subway project.
• Investigations into Panama’s financing and infrastructure sector may discourage potential foreign investment plans.
• The government’s falling popularity will encourage the opposition to step up legislative challenges ahead of the 2019 elections.