Panama's leader duels with his vice president over graft charges

An unusually public war of words and highly charged accusations between Panamanian President Ricardo Martinelli and his vice president over links to corruption has divided the conservative government, with both top leaders calling for each other's resignation.

Vice President Juan Varela has threatened to sue Martinelli after the president accused him of having contacts with an alleged corrupt business network in Italy.

Holding up copies of Italian newspapers from a month ago, Varela said it was Martinelli who should step down, given that his name has surfaced in the case against Valter Lavitola, the former director of the daily Avanti, who is being held in a Naples jail on charges that he tried to extort former Italian Prime Minister Silvio Berlusconi and made payoffs to Martinelli on behalf of a group of businessmen.

"This is an embarrassment for the domestic and international images of Panama by those who forged an alliance and won the elections. They are throwing all types of mud at each other," said Samuel Lewis, who is running for the presidential nomination of the Democratic Revolutionary Party (PRD).

The running mates won the elections in 2009 after forming an alliance with other opposition parties. After they assumed office in July that year, Martinelli appointed Varela foreign minister, but the relations between the two soured last August over disputes among the parties within the alliance. Martinelli removed him as foreign minister but by law cannot fire him as vice president because he was elected to serve out his term until July 2014.

"The government is demonstrating that the democratic institutions have been severely weakened. There is no separation of powers so that these accusations between the president and vice president can be fully investigated by the judicial and legislative powers. Neither one of these branches has the independence or capacity to comply with this responsibility," Lewis told EL PAÍS.

Last week, a group linked to Martinelli, Independents for Change, released a video of Varela greeting Berlusconi and Lavitola when he was foreign minister. Lavitola was arrested in Rome after getting off a flight from Buenos Aires, where he spent six months on the run. Italian prosecutors say the former newspaper director tried to extort Berlusconi in exchange for not publishing photos of his parties with prostitutes several years back.

Investigators also say that Lavitola, who usually presented himself as "a middleman" between Panamanian government officials and a group of Italian businessmen, made payoffs to Martinelli in exchange for building contracts for jails. Lavitola has denied all the charges.