But Martinelli dismissed him from an additional role as foreign minister in 2011 for refusing to back a plan for a referendum to allow president's to serve consecutive terms.
Since then, Varela has been the president's fiercest critic, accusing him of taking kickbacks for a government radar system contract with Italy's Finmeccanica.
Martinelli denied the charges and in turn marginalized Varela from decision-making, never tiring of calling the vice president a parasite for collecting supposedly collecting a government paycheck without doing any work.
Varela, meanwhile, was accused off receiving payments from the daughter of a political ally convicted in the U.S. of laundering money for an illegal online gambling ring.
Varela said in a February interview he would continue Martinelli's drive to improve Panama's infrastructure, the linchpin of the president's 60 percent approval rating.
Associated Press writer Juan Zamorano reported this story in Panama City and Joshua Goodman reported from Bogota, Colombia.
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