Panama’s new President-elect José Raúl Mulino has won election by promising to return Panama to its economic boom years. But tackling drug trafficking and white-collar crime could prove a bigger challenge.

Mulino won the May 5 presidential election with 34% of the vote, beating out seven other candidates.

The Panamanian people “trusted our proposal because they had hopes of getting out of the hole in which the last 10 years have put them,” Mulino said in his victory speech.

Mulino was originally slated as the vice presidential candidate for former president Ricardo Martinelli, under whom Mulino served as security minister. But in March, Panama’s electoral tribunal declared Martinelli ineligible due to his 2023 money laundering conviction.

Mulino took his place, and after facing a constitutional challenge to his candidacy, was permitted to run on May 3, just two days before the election. Martinelli, who was the polling front-runner when he was banned, has campaigned for Mulino over video from the Nicaraguan embassy, where he is avoiding arrest by Panamanian authorities.

On the campaign trail, the president-elect promised tough-on-crime security strategies, anti-corruption purges, and a crackdown on unauthorized migration across the country’s southern border with Colombia.

Below, InSight Crime outlines three security challenges facing Mulino when he takes office July 1.

Gangs and Prisons

Panamanian criminal groups have attempted to maintain a low profile, but the new administration will face challenges related to their increasing sophistication, as well as structural problems in the prison system.

Over the course of his political career, Mulino has called for “mano dura,” or heavy-handed security strategies, to confront delinquency in Panama. During his time as security minister, public spending on security skyrocketed, while the homicide rate dropped from 23 per 100,000 inhabitants in 2009 to 15 per 100,000 in 2014.

Homicides have remained low in Panama compared to the rest of the region. Authorities recorded a homicide rate of 11.5 per 100,000 in 2023, on par with countries like Uruguay and the Dominican Republic.

These low violence levels are part of a concerted business strategy by Panama’s criminal groups, Julio Alonso, a Panamanian security expert, told InSight Crime.

“Many of them have remained quiet or low profile to prevent the authorities from taking further action,” he said.

Calor Calor and Bagdad, the country’s two main rival gang federations, have become more sophisticated in recent years, moving further up the supply chain to broker drug trafficking deals outside Panamanian territory.

“The Panamanian [drug trafficker] is growing,” Alonso told InSight Crime. “They are already buying drugs directly in Colombia and doing business to tie their drug traffickers to Panama.”

SEE ALSO: Panama Became Logistics Hub for Drug Trafficking ‘Super Cartel’

Gangs control Panama’s overpopulated and under-resourced prison system, turning it into a haven for criminal operations and recruitment, rather than a deterrent.

Panama’s prison population expanded nearly 50% from 2012 to 2024, according to the country’s prisons director. Its incarceration rate has reached about 566 per 100,000 population in 2024, dwarfing other nations embroiled in penal crises like Paraguay (194) and Ecuador (176). Panamanian prisoners often live in appalling conditions, with the population exceeding prisons’ capacity by 63%.

The government announced the construction of a new $86 million prison in January with hopes of alleviating overcrowding in other facilities. But Mulino has already promised to prioritize a variety of expensive infrastructure projects like trains and bridges, so it’s unclear whether he’ll have the cash or willpower to overhaul the prison system.

White-Collar Crime

Mulino’s relationship with former president Martinelli suggests he may reverse course on recent efforts to bolster Panama’s fight against money laundering and corruption.

Panamanians see corruption as the country’s biggest problem, even more so than insecurity and inequality, according to a recent survey. All eight candidates, including Mulino, promised to launch corruption crackdowns once in office.

However, Mulino is not known as a strong anti-corruption enforcer. He has maintained a close relationship with Martinelli, who the United States has designated for “involvement in significant corruption” for his association with an array of scandals. Mulino himself was imprisoned for embezzlement in 2015 before being released six months later after procedural errors voided the case against him.

“It is very, very hard for there to be a different or more positive environment in the fight against corruption because of the history that these characters bring,” Carlos Barsallo, a lawyer and former president of Transparency International Panama, told InSight Crime.

Panama has made significant improvements to money laundering rules since the infamous 2016 Panama Papers scandal, a massive leak of financial documents detailing large-scale money laundering through Panama.

The country now has a beneficial ownership registry, which makes it harder for corrupt actors and criminals to set up shell companies to launder money. In March, the European Union removed Panama from its list of high-risk countries for money laundering, citing its “strengthened legal and regulatory framework” to combat the criminal economy.

But laws are only one side of the coin. Corruption, a lethargic judicial system, and a general lack of willpower have all inhibited effective implementation of new rules. Trials for the Panama Papers, for example, are just now underway, eight years after the case broke.

“It is good to have the laws, but that is just the start of a long process,” Barsallo told InSight Crime.

Human Smuggling

Record numbers of migrants crossing the Darién Gap, a stretch of jungle straddling the Panama-Colombia border, have fueled organized crime in both countries.

The situation on the Panamanian side of the border is chaotic. Small groups, consisting primarily of locals, rob, kidnap, and perpetrate sexual violence against migrants.

In response to the issue, Mulino has campaigned on “closing” the Darién Gap. “Migrants have to understand that Panama is not a transit country,” he said during a recent visit to the region.

SEE ALSO: Gaitanistas License Migrant Smuggling in Colombian Darién Gap: Report

But efforts to close the border do not address the root problems of migration through Panama, said Juan Pappier, deputy director of the Americas program at Human Rights Watch.

“Trying to make crossing the Darién Gap even harder for them will force many to risk their lives in other, more dangerous paths,” he said. “Panama will have even less control over what is happening.”

The lack of a controlling force on the Panamanian side also poses the risk that the Gaitanistas (Autodefensas Gaitanistas de Colombia – AGC), a group that controls the Colombian side of the border, could try to expand their influence in Panama.

Feature image: President-elect José Raúl Mulino with former president Ricardo Martinelli during the presidential campaign. Credit: Martin Bernetti, AFP