Kiwanis International, Banistmo and the Caja de Ahorros are teaming up to the tune of $950,000 to fund three projects by the Patronato Panama Viejo, the restoration of the old city's cathedral tower and nunnery and the building of a small museum. The old city was devastated in 1670 by a force led by the Lord Lieutenant Governor of Jamaica (or ordinary pirate according to the Spanish tradition), Sir Henry Morgan. After the British invasion the capital was moved to a more tenable position that's now known as the Casco Viejo. In the latter part of the 20th century Panama City's urban sprawl again engulfed the old city in the metro area. Recent archaeological digs put into question the tradition that Panama City was founded by Pedro Arias d'Avila --- Pedrarias the Cruel --- by demonstrating that there was already an indigenous town at the site when the Spanish conquerors set up their capital in Panama Viejo.

In the July 4 issue of the Credit Suisse - First Boston Emerging Markets reports, the international bank said that it looks like the contraction in Panama's Gross Domestic Product has ended, but the signs are that there won't be a quick economic recovery. The bank's analysts based their calculations on the Ministry of Commerce and Industry's figures for new business permits for large and small enterprises (which fell between January and May of 2002 as compared to the same months of 2001), and on the number of businesses of various sizes that applied for dissolution for the same months (which declined). The data suggest, according to the analysts, that the economic contraction may be coming to an end, but it warned that "the Panamanian economy could bump along the bottom for some time, and in the meantime it will remain extremely vulnerable to shocks." Two factors that Credit Suisse - First Boston cited for its pessimism about an early strong recovery were the decline in canal revenues and the stalemated national dialogue on tax reform.

Even though it claims to have set new records for the size of morning television audiences with its World Cup soccer broadcasts, MEDCOM lost nearly $500,000 in the deal. They paid about $1.7 million for the broadcast rights and other costs, but in Panama's weak advertising market sold only $1.25 million in ads. Channel 4's broadcasts of the events, which at halftimes and before and after the matches switched to Bennigan's, where black faces were not seen and in one episode the reporter wore a skimpy American flag dress, proved annoying to many a viewer. No figures are available about how many people clicked off the Bennigan's scenes. The real problem, however, was not that the audience was unimpressed by the shallow bar talk and much less that the games were not exciting, but merely that the games began early in the morning and a lot of people who otherwise may have watched were unwilling to alter their sleeping habits or unable to change their work schedules. At many Panamanian workplaces, however, people spent the mornings watching television rather than working. Retailers reported an increase in TV sales and the morning crowds at bars and restaurants with large TV screens went way up during game times.

The Supreme Court, in accepting an appeal by Cable & Wireless of a Public Services Regulating Board order that C&W had to accept connections between its phone network and the trunk phone system run by TRICOM, stayed that order pending further proceedings, which means that now TRICOM users can't reach most Panamanian phone numbers. Cable & Wireless and BellSouth have opposed TRICOM, arguing that the concession that the Moscoso administration granted to the Dominican-based telecommuncations company violates exclusive cell phone concessions that the former two companies bought during the P_rez Balladares adminstration and last through 2007. BellSouth and Cable & Wireless do not compete on the basis of price, and their tacit monopolistic agreement has left Panama with some of the highest cell phone rates in the region. TRICOM, arguing that its system is distinct from cellular phone service, had promised to give consumers lower prices if they were allowed onto the Panamanian market.

In a Dichter & Neira poll commissioned by La Prensa, 60.7 percent of those polled said that they oppose the "equalization" deal in which Panama Ports, the local subsidiary of Hong Kong-based Hutchison Whampoa, was relieved of its contractual obligation to pay $22 million per year plus 10 percent of gross receipts for its concession at the ports of Balboa and Cristobal. The survey found 18.2 percent in favor of the deal and 21.1 percent undecided. The company and the national government have been spending a lot of money on advertisement in recent weeks, trying to convince the public that "equalization" means new jobs.

Hutchison Whampoa's competitor in the ports business, Manzanillo International Terminal (MIT, a subsidiary of Seattle-based Stevedoring Services of America), is demanding a rebate of some $300 million to cover the costs that were incurred in the construction of their port in the Coco Solo area of Colon. The company has a contract that provides that if a competitor gets a tax break or a subsidy, then MIT will be entitled to the same. Because the Moscoso administration is essentially giving the ports of Balboa and Cristobal to Hutchison Whampoa for free and because those ports were already going concerns when they were privatized, MIT argues that the Panamanian government owes it a similar subsidy, that is, reimbursement for the cost of building their port facility.

In the first eight months of the current fiscal year, which began last October, Panama Canal revenues have dropped 1.54 percent as compared to the same period in the previous fiscal year. The decline is due to a weak international economy in general and especially to a decision by the People's Republic of China to ban the importation of genetically modified grain, which has cut shipments from the eastern part of North America through the canal to Chinese ports.

The Free Trade and Consumer Affairs Commission (CLICAC) has announced that the cost of living, as figured in "canasta basica" index of prices of selected consumer goods, rose 1.8 percent from May to June, with a nearly across-the-board increase in food prices. In recent days gasoline and diesel prices have also risen slightly, by two cents per gallon.

Facing the prospect that no legislation would be passed, the Moscoso administration has put off its plans to call a special legislative session to consider educational reforms. A few days before she announced her intentions to call a special session, the president slashed the budget for school repairs and renovations and in the present economic crisis there will be no significant money to invest in education. The teachers' unions, which accuse Education Minister Doris Rosas de Mata of imposing a political patronage system on the public schools, were not consulted in advance about the subjects to be taken up in the special session and lodged their vehement protests about it. Finally, there was no agreement from the PRD and its allies that the president's ideas about education --- whatever they might be --- would garner their support.

The Moscoso administration, which has increased the government's payroll at a time when tax receipts have dropped sharply, wants to raise more revenue for the state. Internationl financial institutions want that too --- in fact, tax reform is one of the requirements in Panama's agreement with the International Monetary Fund. However, Panama's tax system is skewed so that large businesses and the rich don't pay very much, while those on the lower end of the economic scale have been dropping out of the taxed formal economy en masse during the present economic crisis. Wealthy business interests control political life in Panama and have so far blocked any attempt at tax reform, while a tax hike that is seen to add to the burden of working people is likely to cause strikes and rioting in the streets. In these conditions, a formal national dialogue composed of political, business and labor leaders is set to resume on July 16. It appears that there will be some agreement on ways to make tax collection more systematic and efficient, and also to extend sales taxes to cover cell phone, cable TV and certain banking services. Suggestions to tax the fringe benefits of business executives are much less likely to be accepted. The possible reforms are unlikely to add up to the $100 million per year in additional tax revenue that the Moscoso administration seeks to raise, and in the Legislative Assembly the PRD and its allies are warning that no tax reform package will be passed unless Mireya Moscoso reforms many of the costly abuses that have accompanied her declared policy of nepotism.

The Saudi-US Alireza Mobil consortium, which bought the concession to operate the former US Navy Rodman fuel tank farm, Rodman's three piers and the pipeline connecting these facilities, has sold its interests in Panama to the Petroamerica Corporation, an Argentine-Panamanian consortium. Sources in the business community say that in an under-the-table promise made in 1997 when Alireza Mobil bought the concession from the Interoceanic Regional Authority (ARI), a promise was made to give the company a monopoly over fuel bunkering business on the Pacific side by closing down the fuel tank farm under adjacent to he Bridge of the Americas. If this promise was made, it was never carried out and wasn't recognized by the ARI administration under the Moscoso administration. Moreover, the present administration is using the docks contractually promised to Alireza Mobil for the National Maritime Service, Panama's coast guard; and attempts to renovate the pipeline and tanks have run into permit problems. In light of such problems, Alireza Mobil did not make the minimum $25 million in new project investments which were required to be made during the first four years of the contract. The new owners say that they will continue the storage and bunkering business that Alireza Mobil had been operating and will be announcing new projects shortly.

As a result of the Kraft-Nabisco merger, they won't be making Miracle Whip in Panama after November. Kraft, a part of the Philip Morris group, is closing its factory in Tocumen and moving its cheese and condiment production to Venezuela. Elsewhere in the region, Kraft's factory in Guatemala is closing, with the products being made there to be processed at its plant in Costa Rica instead.

The Cantera Buena Fe, a quarry in Veracruz, has been closed by order of Arraijan's Mayor Jaime Barroso, who says that the business was violating the terms of its environmental permit. The quarry's owners have sued the city to get it reopened. Recently the quarry's CEO and legislator Vicente Magall—n accused each other of extortion in a legislative committee meeting that was considering neighbors' complaints about the ways that the quarry affects the area. The biggest bone of contention was the quarry operators' unmet commitment to build an access road that doesn't run through residential neighborhoods.

The Colombian Grupo Bavaria's attempt to purchase both of Panama's beer brewers, Cerveceria Nacional and Cerveceria Baru, has run into problems with the Free Trade and Consumer Affairs Commission (CLICAC) because it would clearly be monopolistic. The commission has blocked the sale of Cerveceria Baru, but that ruling has been appealed. Now another company, Cerveceria Latina, plans to set up shop in Panama. The newcomer to the national beer market has ordered equipment from Germany and plans to establish a plant in Chilibre and a distribution network throughout the country. This development could in turn affect Grupo Bavaria's acquisition moves, because now it can be argued that they won't be creating a monopoly in Panama.

An investigative report by El Panama America has revealed that the Emergency Social Fund (FIS) spend $196,700 for a Canadian-made water treatment system to provide drinking water for Pacora, but that equipment was inappropriate for the purification the polluted water taken from the Pacora River. Even if the equipment worked, the daily reported, the cost of water purified with it would be about seven times that of water purified by the technologies traditionally used in Panama. The problem has reportedly been aggravated because the manufacturer's attempts to communicate with the IDAAN water treatment technicians have been stymied by the IDAAN office's lack of a working computer keyboard. FIS is headed by Arnulfo Escalona, a member of the extended Escalona clan that has many of its members in highly-paid positions with the Moscoso administration. Under Escalona's leadership, FIS was embroiled in a controversy over a rural road that was built with the fund's financing to serve the farms of Comptroller General Alvin Weeden and Supreme Court magistrate Winston Spadafora (who was then Minister of Government and Justice at the time). Several journalists for the daily were charged with crimes for reporting that story.

Panama and its Central American neighbors are negotiating with several pharmaceutical companies to get lower prices on anti-retroviral drugs with which HIV infections that result in AIDS are treated. The process follows a trend that's happening throughout the Third World. Panama is the region's leader in HIV infection rates. With proper medication the degeneration of an HIV infection into full-blown AIDS can be delayed for years, and the transmission of infections from pregnant women to their children can be dramatically reduced.

Education Minister Doris Rosas de Mata has fired Julio Crespo, padre, from his job as an educational administrator in Panama Oeste after Crespo supported Vice-President Arturo Vallarino in his campaign for the MOLIRENA party leadership against the minister's brother, Jesœs "Maco" Rosas. The Rosas forces claim victory in the party elections, after throwing pro-Vallarino candidates off the ballot in several areas. The election for delegates to the Setember MOLIRENA convention is now being disputed in the courts. Under Doris Rosas de Mata the nation's public schools have been turned into a political patronage scam, with teachers being expected to pay dues to MOLIRENA in order to get assigned to the schools where they want to teach.

Though she had vowed not to go to Kuna Yala, Education Minister Doris Rosas de Mata ended up traveling to the impoverished semi-autonomous indigenous commonwealth to negotiate with striking teachers there. The teachers had walked off their jobs for a week to protest delays in the payment of their salaries and to demand extra pay for having to teach in remote areas in which their travel expenses are high and living conditions primitive. After an agreement to pay back salaries and continue negotiations about the other economic demands, the teachers went back to work.

ARI has announced the signing of a $6.2 million contract to build a theme park based on a California Gold Rush motif, to be built at the former Fort Amador alongside the anticipated "High Fashion Boulevard" development. The former US Army port is the scene of a cruiser port and some hotel and restaurant developments that have actually come to fruition, and many more projects that were highly touted but then quickly evaporated. The government is planning a huge horseracing and casino development at Amador, which is very likely to bring traffic congetsion that will make the causeway's established use as a place for city residents to ride their bicycles or skate on their rollerblades a thing of the past.

Allegedly due to disputes over permits between the Panama Canal Authority and the Ministry of Public Works, the time for the German-based Bilfinger-Berger construction consortium to build a second Pacific side bridge over the Panama Canal has been extended by 105 days. The new bridge, which will cross the canal near Paraiso, has been criticized by the Panamanian Society of Engineers and Architects (SPIA), which argues that the soil conditions at the site are not conducive to the project and points out that the western approach to the bridge runs through the impact area of the US Army's former Empire Range, which by all accounts is full of still-dangerous unexploded ordnance. If SPIA's concerns are not exaggerated, the project is likely to take even longer.

Cranes and other construction equipment are busy around the US Embassy, which is being reinforced against any possible terrorist attack. The embassy is on Avenida Balboa and not far from that busy thoroughfare or small streets on the other three sides, and thus hard to defend from a truck bomb. Since this past September 11 there have been extra Panamanian police guards around the embassy and travel on the side streets has been restricted.

Some 70 families who had been living in the Renta Cinco slum in Panama City's Calidonia neighborhood were evicted on July 4, when a force of riot police moved in at six in the morning to vacate the premises that had been condemned since 1992. The families, which hadn't been paying rent, had been offered options that they couldn't afford by the Housing Ministry. Immediately after the residents had been removed, demolition crews moved in to level the squalid building.

All the slick games that the Interoceanic Regional Authority (ARI) has played over the years --- like offering homes at high prices with the sales pitch that they are in "garden communities" with lots of green areas, then selling the green areas to developers --- have come home to roost. ARI director Alfredo Arias complains that in recent months 75 percent of the houses put up for auction have attracted no bidders. He attributes the problem to the slow national economy, but the word on the street is that ARI is not a trustworthy organization with which to do business.

The Grupo Motta network of companies has created Telecarrier, a company designed to compete in the fixed line telephone business when Cable & Wireless's monopoly concludes at the end of this year, and already invested $45 million into it. On the RPC interview program Enfoque, Telecarrier's general manager Luis La Rocca complained that Cable & Wireless is trying to block the challenge by delaying agreement on a telephone number registry. Cable & Wireless is very unpopular, and as soon as an alternative appears on the market many telephone customers are likely to switch away from the UK-based company as a matter of principle.

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