After President Varela's Inauguration, Panama and Venezuela Are Friends Again

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Panama President Juan Carlos Varela
Panama's president, Juan Carlos Varela, addresses the audience during his inauguration in Panama City July 1, 2014.

Shortly after Panama’s new president, Juan Carlos Varela, was sworn into office Tuesday, his Venezuelan counterpart Nicolás Maduro announced he would be restoring full diplomatic ties with the Central American country, ending almost four months of suspended relations between the two after a spat in which Maduro had called Panama's president a "lackey."

“I send a greeting to the president of Panama,” Maduro said on a national radio broadcast Tuesday evening. “We have reestablished diplomatic and political relations today, July 1, and we will deepen economic, diplomatic, and commercial energy ties. Applause and a hug to the Panamanian people.” Earlier Tuesday, Venezuelan vice president Jorge Arreaza also confirmed at Varela’s inauguration that the two countries had restored their relationship.

Maduro’s statement struck a markedly different tone from his last public remarks on Panama on March 5, when he condemned then-president Ricardo Martinelli as a “lackey” of the United States and unilaterally froze all ties. That move came after Martinelli issued a request for the Organization of American States -- the regional body leftist Latin American leaders have often criticized for being dominated by Washington’s agenda-- to mediate Venezuela’s political crisis, then reaching the height of its turmoil with daily anti-government street protests and a mounting death toll.

Martinelli, in turn, called the move “immature” and pointed out that Venezuela still owed Panama a debt of more than $1 billion. He stoked Maduro’s ire even further by accusing the Venezuelan leader of financing Martinelli’s political rivals in Panama’s May presidential election, and by inviting Maria Corina Machado, one of Venezuela’s top opposition leaders, to join Panama’s delegation to the OAS summit in late March.

Now with the inauguration of Varela, formerly Martinelli’s vice president, the Panama-Venezuela relationship has an opportunity to turn over a new leaf. Varela has not commented on the restoration of diplomatic ties, but had stated after his election that he intended to resume relations with Maduro’s government once in office. Besides holding Venezuela’s considerable debt -- owed primarily to Panama’s Copa airline and the Colón Free Trade Zone -- Panama is also a member of the eighteen-member Petrocaribe group that benefits from heavily discounted Venezuelan oil.

Varela, a conservative, broke off with Martinelli’s party in 2011 and won Panama’s presidential election in May with 39 percent of the vote against Martinelli’s pick, José Domingo Arías. Varela has pledged to maintain economic growth, currently at around 8 percent per year, control food prices, stamp out corruption, and oversee the delayed Panama Canal expansion project during his five-year term. 

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