Five days in a mostly slow Panamanian economy

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bridge
A bright spot in a generally dismal economy: the Atlantic Side bridge over the canal is just about ready to open. Even with expensive pieces yet to come before it’s part of a Caribbean coast road from Colon to Bocas del Toro, it will immediately make crossing the canal faster and safer than it ever was. Photo by the Presidencia.

A slow if not paralyzed economy here

by Eric Jackson

Sunday:

The Chamber of Commerce is calling for an unspecified boost for the nation’s tourism sector. The organization claims that over the past two years some 25,000 tourism sector jobs have been lost.

Got rid of the permanent tourists? Check. Put the brakes on Venezuelans coming in? Check.

Those two things did not directly wreak all of the complained-of havoc, probably not even most of it. But the intangible figurative “unwelcome” mat has its consequences, too. How many Americans who for some reason or another could not get or chose not to get permanent resident status here nevertheless had homes here, which they left every so often to then re-enter on a new tourist visa, and meanwhile had family and friends come visit during our dry season and the northern winter, said visitors registering as ordinary tourists but now no longer visiting here?

Tourism figures? Those gather in several categories. Including business travelers. Figure that economic hard times across much of Latin America mean less business at the Colon Free Zone, so fewer buyers coming to visit. But the loss is not just a cyclical thing. Why come to Panama, taking the risk that some criminal at customs or immigration at the airport will notice a declaration of a lot of money to buy things in Colon, and pass word on to armed robbers working on the outside? Why do that when it’s safer, easier and cheaper to do shopping, buying and shipping arrangements online? Structurally, the Internet is suppressing our business tourism sector. A new convention center on Amador is not going to make a huge difference there.

The usual rabiblanco emphasis on the one-time big score — that ultra-rich tourist who doesn’t mind getting cheated and isn’t too annoyed by inferior service — remains the dream of people who should not be in the tourism business but may find themselves owning expensive but largely empty hotels or resorts. Such folks often sell out to foreigners who know the business. The wonderful and not too expensive retail services that get carried by word of backpackers’ mouths? Said downscale visitors sometimes come back a few years later when richer and with families in tow, prepared to spend more money, but the proprietors of the sorts tourist enterprises that cater to them are often disdained.

For now. With Chinese business, and Chinese tourists, on the way, will the famous Chinese retail ethic take a strong hold on Panamanian tourism? There would be complaints but overall it would probably grow the industry.

Monday:

It was a bank consolidation, after a pause from the rash of those a few years ago. In a ceremony in Costa del Este, Global Bank bought Banvivienda for $245 million.

It’s actually hard to say with great precision who is “local” in the financial sector these days, but by all accounts Global Bank is one of those and with this acquisition it is now number two in the nominally Panamanian banks, behind Banco General.

How much of the money in these institutions is in the name of anonymous Panamanian companies owned by foreigners is always an interesting question, but since the 1989 US invasion Panamanian bankers have been averse to dealings that make them look like money launderers — leave those up to the State of Delaware or the City of London. The bankers here would just as soon go along with OECD transparency demands, unlike the Panamanian law firms that organize corporate shells in many jurisdictions for the rich and famous.

Does bank consolidation mean fewer options and less service for most Panamanians? Not really. The great majority of Panamanians do not have bank accounts. The majority of Panamanian businesses are informal and can’t have bank accounts. A few banks will issue accounts to lower-end depositors, but there appears to be an agreement among banks not to compete for this business.

Global Bank gets some 39,000 depositors with this deal. Banvivienda was headquartered in the upscale and heavily Venezuelan Costa del Este. The crackdown on Venezuelans has not especially meant raids and deportations there — the Venes who got out early and brought a lot of money with them are well settled, except that those with professional skills can’t practice professions here and a lot of Panama’s creole aristocracy doesn’t want to have anything to do with them. Those sorts of rabiblancos especially do not want their kids dating Venezuelan kids. But for now Costa del Este seems like less of a growth area so the absorption of their neighborhood bank would seem natural.

The owners of Banvivienda take a five percent stake in Global Bank according to the terms of the deal.

Overall across the sector, new bank loans and bank revenues are down a bit this year in Panama. The uninsured banking industry here is not so heavily regulated but its member banks generally do not survive government interventions. Thus their policies tend to be conservative. Wild swings, novel swindles and government bailouts are not common parts of the banking scene here.

Tuesday:

National Assembly president Yanibel Ábrego was annoyed. She lashed back at her critics. “This is a campaign against the National Assembly,” she declared. “It’s a campaign of the economically powerful against the political class of this country!”

See, she and her colleagues had been on a little shopping trip and Panamanians heard about it over the weekend. Ábrego used $213,000 of the legislature’s budget to rent eight luxury SUVs for the less than one year that the current officers will be such. Eight vehicles for the use of three elected officials, Abrego and assembly vice presidents Leandro Ávila and Carlos Motta. Plus another $4,000 for the legislature to buy its very own drone. She and her colleagues were getting bad mouthed about it. 

WHAT? The economic powers-that-be turning on their old hirelings, the men and women who make our laws?

Well, yes. MOVIN, the Independent Movement, is generally associated with business mogul Stanley Motta and it wants to see a generalized ouster of this crop of politicians. We can argue about whether it is a matter of annoying corruption or just displeasure with who gets the plums. Certainly that part of the Motta family didn’t get a port concession at Corozal that they reportedly wanted because the ACP could not line up the votes.

But let us be less assuming, more charitable, more reasonable, less willing to depart from the known facts of history. Many business leaders here share the public fears about what may happen in an economy going bad and figure that they and the country just can’t afford the extravagant spending, kickbacks from overpriced and often unnecessary in the first place public contracts and appropriations of private and public assets by the politicians and their families.

The politicians are a permanent CLASS now, she says? Not just a grasping caste, looking to by hook or crook make rabiblancos of themselves? The hereditary aristocracy, and those who have actually made or enhanced fortunes by doing reasonably legitimate business, are not amused? The horror! The horror!

Wednesday:

Public sector doctors in Veraguas who treat patients with blood cancers (various sorts of leukemia, lymphomas and a long list of others) denounce management for “genocide,” given that the system has run out of the medications that their patients need to be treated and perhaps to live.

This all comes amid a great hue and cry about the Social Security Fund (Seguro Social or CSS), one part of which is an old age and disability pension system, another part the insured side of a bifurcated public health care system alongside and in cooperation with the Ministry of Health’s facilities and work forces. (There is also a private health care sector, generally staffed by doctors with public sector jobs working on their off hours.)

The cherry picked media hit stories are about outright theft of medicines and supplies from Seguro Social, which also acquires those things for the health ministry’s operations. In the more daring investigative reports in the corporate mainstream media — daring because there is an entrenched CSS board that in scandal after scandal over many years professes to have been caught by surprise and who can be expected to bring in private prosecutors for criminal defamation prosecutions if ever it gets reported that there was no suprise on high — there is talk of “mafias” in the medicine and equipment purchasing departments.

Meanwhile there is another outcry about the pension fund on the verge of being broke (again). The Chamber of Commerce immediately warned that Panama Canal revenues should under no circumstances be used to cover any pension shortfall. The last hue and cry transferred much of Seguro Social — pensions for those under 35 at the time — to Panama City’s private banks. Ask any labor leader who’s not a company union thug and she or he will tell you of the financial sector’s contrivances, of employers who deduct for Seguro Social from their employees’ paychecks and pocket that deducted money, of businesses on the edge of dissolving into informality but trying to preserve an existence that state institutions will recognize which have only theoretical payrolls or payroll deductions. Ask an honest and competent economist who has studied the problem and she or he will tell you of some genuine actuarial problems that might be managed reasonably enough within the public CSS system.

The Seguro Social pension issue that nobody “respectable” will mention is that the fund has been and is being looted on a massive scale by some of the wealthiest and most powerful people in this country. Take, for example, the Ciudad Hospitaliaria, a half-billion-dollar construction project being paid for with funds taken from the CSS. Might it be a rousing success and repay the pension funds so handsomely that there will be no problem? Fat chance. In the numbers we are fed, that money is just gone.

The project was a brainchild of Ricardo Martinelli’s kleptocratic regime, wherein the whole deal was big overpriced public works contracts with part of the overcharge kicked back by construction companies to corrupt politicians who steered the contracts their way. The sales pitch — but not to pensioners present or future, who had no say — was that this medical center would have a few CSS offices and facilities but in its overwhelming majority be dedicated to private sector health care oriented toward “medical tourism.”

Health care for North American and European retirees as they get into the health issues of their declining years? Those people tend to return to their countries of origin for that stuff. Private and public health insurers in their countries know better than to deal with Panamanian companies in that sector and with only a few exceptions just won’t do it.

Health care for all the rich Venezuelans and Colombians who settled here to escape the woes of their homelands? The Colombians were called “scum” in the National Assembly chamber. The South American immigrants were vilified in most of the press and when Vene bondholders swayed La Prensa into becoming their mouthpiece of opposition to the Chavistas thousands of Panamanians stopped reading that paper. Neofascist anti-immigrant groups popped up. Martinelli’s plans to bring in foreign professionals to beat down the wages of Panamanian ones collapsed. So did the plan to legalize the many foreigners who were here illegally, purportedly because of abuses in that program but also very much due to the opposition of immigration lawyers who were left out of the process.

Varela, along with many of the corporate media, caved big-time to the xenophobes. The “permanent tourists” who owned homes, ran businesses and often worked without proper permits while coming in and out on a series of tourist visas that could have been and in many cases were years-long chains, were thrown out. Did Panama get a “better grade” of foreign resident? Actually, what we see are all these empty condo units with no buyers or renters.

The door was slammed on Venezuelans in particular and generalized nastiness toward all foreigners became socially and governmentally acceptable on Varela’s shift. Still didn’t win Zulay Rodríguez the PRD presidential nomination but the word is out and we are getting fewer foreign visitors and less foreign investment here.

So much for a hospital city oriented toward foreigners and their money, but construction continues on a mission that has failed. The banks that took a large and increasing share of the pension fund back in 2006 and the construction interests that are living off of “investments” like the Ciudad Hospitalaria think that it’s Panamanian working people who ought to pay, because those without the right surnames, political connections and assets always do.

Thursday:

La Prensa readers are told that the Panama Canal Authority (ACP) is looking for new sources of revenue — again.

This time it’s a Liquid Natural gas storage and bunkering facility on the west side of the canal’s entrance at Farfan; a cruiser port and water park in Gatun Lake; and a tourist-oriented cable car over the Miraflores Locks.

THIS TIME. But the ACP has been looking for new revenues for a long time, even as they have assured us that the canal expansion has taken care or its economic problems and will do so for a long time to come.

Two key truths of the matter:

1. It is not possible to predict the world economy, the shape of industries to come and thus the precise shipping needs that the canal may serve many years in advance.

2. Down the rungs of its management, the canal has people who know how to run a canal and its traditional ancillary businesses, but there isn’t much evidence of any competence at any other enterprise in that organization.

Theme parks and cable cars, ‘just like Disney World,’ to rescue the finances of Panama’s principal industrial asset? Sounds like a jobs program for some young rabiblanco who went to Disney World a lot as a kid and got an MBA in getting blasted out of his or her — probably his — gourd at a forgettable US regional university. We have seen such hustles come and go so many times. Remember the Ancon Hill to Amador cable car, with the theme park atop Ancon Hill? Remember the purported dolphin park in San Carlos? Remember Colon 2000, which actually was built and does exist but has not been and is not the tourism salvation of Colon?

The banking and construction people who dominate the ACP board would surely find profitable angles to the proposed new initiatives, which in any case would not happen before the canal authority has a new administrator (shortly) and Panama has a new president (by July of next year). Might they be trying to set their boondoggles in concrete now, before anything changes? To be believed when seen.

The cable car might be interesting, depending on where it goes, and not terribly expensive to build. The survivors of the Islamic State may be researching their chances of a drive-by shooting on the Panama Canal as you read these words.

The Colon theme park on the water might be an idea that could come to fruition, not under present ACP auspices but by some private contract. You know, board member ________ has a cousin who has a company that could hire the right people to do that. But HEY! — that’s in Colon province and it’s the _____ family’s turf! Such are the usual obstacles.

There is a promise of new customers. Are there enough Chinese-speaking Panamanians to take degrading, low-paid jobs in which they dress up in ridiculous costumes for the Asian tourists?

Oh, it’s going to be for Americans after all? Do they have good US tort defense lawyers to defend after the first death or injury in a crocodile attack? But wait — aren’t crocks MiAmbiente’s business, except that they are not allowed to step on the ACP’s turf, which the lake is? And just because decades ago the Canal Zone Police had a special patrol to kill the lake’s larger reptiles to make it safe for recreational purposes, you wouldn’t expect PanCanal management to return to such colonialist practices, would you?

The truth of the matter is that the entire senior management boasts that it’s a different canal than it was at the end of the 20th century. Yes. These folks rose through the ranks as the canal was abandoning and destroying almost all recreational uses of Gatun Lake and many other side businesses that the canal ran under the old US administration. They’re great at office politics and have some engineering and maritime knowledge. There is no reason to believe that they have the skills or business judgment to run a theme park or to pick someone other than one of their pompous cousins to develop and run such a thing.

The bunkering of liquid natural gas? With new international maritime rules, diesel is going to quickly give way to that stuff as the fossil fuel of preference for ships. It’s a no-brainer to have that alongside the canal.

Electric ships? Energy conserving ships? Manufacturing and shipping decisions make with low carbon footprints in mind? Those are coming, we don’t know when and to what extent.

It’s not an easy call to say that gas terminals are going to save the finances of the Panama Canal. Nor is there any special reason why the ACP rather than the Maritime Authority or the Ministry of Economy and Finance ought to have dibs on that business. But there is going to be a need for gas bunkering over the next few years and that demand will probably hold for at least a few decades.

So, when is the ACP’s new Corozal – Diablo port happening? That was their last big effort toward conglomeration. However, it ran into families arguing over who gets it, was located in the wrong place and moreover was touted at a time when the world shipping container business was slow to begin with, so it has not happened. They did run the boat shed people out of Diablo and reduce the recreational uses of that whole area.

 

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