Panama's vice president wins presidential vote

In a surprise victory, Panama's vice-president, running as an opposition candidate, won the country's presidential election on Sunday, the election tribunal said.

Juan Carlos Varela, of the center-right Panamenista Party, who helped outgoing President Ricardo Martinelli's get elected in 2009 but later fell out with him, had 39 percent of the vote with more than 80 percent of votes counted on Sunday evening.

"You are the next president of the republic," Erasmo Pinilla, the head of the tribunal, told Varela by telephone. The result thwarts an attempt by Martinelli to extend his grip on power by electing a hand-picked successor.

Varela, who takes office July 1, dedicated his victory to Panama's democracy. Waving the nation's flag at a rally to celebrate his victory, he vowed to put aside the partisan bickering of the past five years and clean up government amid the widespread perception of corruption that worsened under Martinelli.

"Whoever wants to do business should grab their things and go to the private sector," he told a cheering crowd in a clear swipe at the outgoing president.

Most pre-election polls had given a razor-thin lead to ruling party contender Jose Domingo Arias, Martinelli's hand-picked candidate. According to official results, at the time he was declared the winner, Varela had 39 percent of the votes, compared to 32 percent for Arias. Former Panama City Mayor Juan Carlos Navarro was third in the seven-candidate field with 27 percent.

The president said Sunday before the polls closed that he was prepared to hand power to whoever is declared the winner, even if by a single vote, and called on all candidates to show "integrity to recognize whoever triumphs."

Varela, a 50-year-old engineer, is the scion of one of Panama's richest families, owner of the Varela Hermanos rum distillery. He left the 2009 presidential race to throw his conservative Panamenista party's support behind Martinelli in exchange for the vice presidency. But Martinelli dismissed him as foreign minister in 2011 for refusing to back his plan for a referendum seeking consecutive re-election. Varela's became the president's fiercest critic, accusing him of taking kickbacks for a government radar system contract. Martinelli denied the charges.

A free-market conservative, the 50-year-old Varela studied engineering at the Georgia Institute of Technology and has strong social credentials. Before breaking with Martinelli in 2011, he was the architect of the government's popular "100 for 70" program that provides a $100 monthly stipend to Panamanians over age 70 without a pension or retirement benefits.

Varela inherits oversight of a major expansion of the Panama Canal, which briefly stalled earlier this year after a row over costs between the canal and the building consortium. He faces the challenge of maintaining buoyant economic growth and ensuring the benefits trickle down in a land where a quarter of the population lives in poverty.

The election campaign was focused more on personalities than policy, which is not expected to change dramatically under Varela. Campaign dirty tricks continued on Sunday, with fake front pages of the newspaper La Prensa circulating with false reports alleging the last-minute withdrawal of Arias and Navarro from the race.

Prior to the vote, many voters had voiced dissatisfaction with Arias, whose running mate was Martinelli's wife, seen by opponents as a proxy for the outgoing president. Many worried that Martinelli, a billionaire supermarket magnate, would be the power behind the throne if voters chose Arias, a soft-spoken former housing minister, and even seek to change the constitution to eliminate a two-term cooling off period before becoming eligible again to seek the presidency.

"I think most of the country is against re-election in disguise," said lawyer Pablo Jiustiani, 34, in Panama City's up-market San Francisco neighborhood, shortly before polls closed.

Martinelli's five-year presidency has been characterized by strong economic growth but also tarnished by allegations of corruption.

Wire services