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Juan Carlos Varela, president of Panama, tells Jacopo Dettoni about his expectations from forging diplomatic and business relations with Beijing, and talks about the government reforms designed to avoid another Odebrecht scandal in the country. 

Q: Why did you cut ties with Taiwan and establish formal relations with China?

A: I visited China in 2007 and I was impressed with its economic openness, and then I committed to backing the One-China policy. As soon as I became president, there were conditions to deliver on my commitment. We did it without having an economic agenda in mind, but only thinking of what would be the right thing to do for both Panama and China. We are happy with this relationship; we think it’s going to bring prosperity.

Q: Don’t you fear there will be a political price to pay?

A: I don’t, because Panama is a sovereign country and free to take its [own] decisions. China is the second most active user of the Panama Canal, and the Colón Free Trade Zone is the commercial base for China in Latin America. Within this context, the free-trade agreement [FTA] with China is going to be an important advantage, if we negotiate it well, to strengthen our role as a logistics base in the region. It would be an advantage not only for China, but for other countries too, to use Panama to expand their presence in the region. We will try to close the FTA by the end of my presidency [in mid-2019].

Q: The Odebrecht scandal – a corruption probe that has spread throughout Latin America – didn’t spare Panama. How did you change electoral campaign rules to make the process less vulnerable to external influence?

A: The media part of the campaign – TV, radio and newspapers – is the most expensive, and those candidates who lack the money to run the media campaign are basically left out. For this reason, I backed a reform where it is the same government that pays for the media campaign of the candidates. Those funds will be equally divided between the candidates. In the previous system, all the donations by private companies to the candidates made the process vulnerable, but also barely fair. On top of this, we made campaigning shorter.

Q: You admitted receiving funds from Brazilian construction firm Odebrecht for the 2009 vice-presidential election…

A: During a campaign, all the parties try to gain access to the government, but that doesn’t mean that things are not done with honesty and transparency and that firms still have to face a level playing field when competing for projects at cost favourable for the country’s people. With regard to the 2009 Odebrecht donations [to my campaign], there is no cause-effect between those funds and the contracts the company signed in the following years. I’m 100% responsible for the contracts signed under my presidency. We tendered contracts for more than $11bn, and I’m sure those contracts won’t suffer from the same problems as those signed by the previous administration.

Q: An investigation into Odebrecht’s influence over local politics is still unfolding. Are you confident about your position?

A: I’m confident, indeed. The donations I received have all been reported to the electoral tribunal, and whenever there has been any doubt, I’ve always made them public.  

Q: What is the lesson for the whole region from the Odebrecht scandal?

A: We have to shield political campaigns from money carrying too much [veiled] interest, and make campaigns more transparent. At the same time, accountability and certainty of punishment are key, as well as the co-operation between the financial system and the judiciary. This was a problem for both the public and private sector, which is why our proposal is an ethical agreement between both.

I’m going to sign into law a bill saying that if a politician or a company has been involved in corruption cases, they cannot stay within politics or take part in public tenders.

Q: Fiscal evasion is not yet a crime in Panama. Are things going to change?

A: There is a bill under discussion in Congress: we are going to criminalise fiscal evasion. It’s going to be a battle in Congress, but I hope that the congressmen understand that it’s a necessary step to convey the right message to the world.

This article is sourced from fDi Magazine
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