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 Juan Carlos Varela of the center-right Panamenista Party (PP)
helped Martinelli get elected as president in 2009 but later fell
out with him. He has vowed to tackle corruption, lower inflation and
reduce poverty.
Varela had 39 percent support with about 80 percent of votes
counted, enough for a comfortable victory over his two main rivals,
Jose Domingo Arias or the ruling Democratic Change party (CD) and
left-leaning former Panama City mayor Juan Carlos Navarro of the
Democratic Revolutionary Party (PRD).
"Better times are on the way. There will be an honest, humane
government of national unity, a government of social peace," Varela
told Reuters at a Panama City hotel after the election tribunal
declared him the winner.
Varela ran a campaign largely based around claiming credit for
Martinelli's successes, including a popular program to give $120 a
month to people over the age of 70 and outside the social security
system, and infrastructure projects such as the Panama City metro.
Under Panamanian law, Martinelli was unable to seek re-election but
his wife was Arias' vice presidential running mate and critics
accused the outgoing president of trying to maintain control of
Panama behind the scenes.
He blamed the media for his protégée's defeat, accusing them of
spreading lies. He was also unable to contain his scorn for Varela.
"I know the winner. May God have mercy on us," he said.
Varela, 50, inherits an economy that has grown rapidly in recent
years and oversight of a major expansion of the Panama Canal, which
briefly stalled earlier this year in a row with the building
consortium over costs.
Martinelli, a supermarket magnate, has pushed the canal expansion
and other infrastructure projects that helped spur economic growth.
But his reputation was tarred by allegations that his government
gave contracts and other favors to friends and business interests.
"This government ... will defend to the last cent money that belongs
to the Panamanian people and it will not tolerate corruption,"
Varela told a cheering crowd on Sunday night.
No major changes in policy are expected. All the main candidates had
similar platforms so the campaign focused more on personalities than
proposals.
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"I am so overwhelmed, I can barely find words," said Agustin Cerru,
54, as sounded the horn of his car, a Varela banner flying from the
window. "A lot of people didn't think we were going to win."
Pollsters had put Varela in third place, though not far behind his
two main rivals in what was expected to be a very close race.
A banking and trading hub, Panama is best known for the canal that
links the Atlantic and Pacific Oceans. Accounting directly for 8
percent of gross domestic product, it has helped fuel the fastest
growth in Latin America in the last few years.
Varela, whose family runs Panama's biggest liquor company, faces the
challenge of maintaining buoyant growth but ensuring more of the
benefits trickle down in a land where a quarter of the population
lives in poverty.
At up to $624 a month, the minimum wage in Panama is among the
highest in Latin America, but many of the country's poorest are
feeling the bite of nagging inflation.
The discontent has led to a nationwide construction strike over pay
since April 25. That has halted thousands of projects, including
work on the canal expansion, much to the annoyance of Martinelli,
who will hand over power on July 1.
(Additional reporting by Noe Torres; Editing by Simon Gardner,
Elinor Comlay and Kieran Murray)
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