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Business & Economy Briefs

We're number 57

The annual United Nations Development Program international report on living standards, which is based upon social and environmental factors as well as economic figures, puts Panama in 57th place among the UN's nearly 200 member nations. That's a decline from 52nd place in last year's report, but Panama is still ahead of most other Latin American countries. Latin America's highest standards of living are in Argentina, Uruguay and Chile, while the best overall positions on the UN list are occupied by countries in Northern Europe and North America.

Panama gets 2003 Miss Universe pageant

On July 24 representatives of the Panamanian government and Donald Trump's organization signed a deal that will bring next year's Miss Universe pageant to Panama. The Panamanian government will subsidize $5 million of the event's estimated $9 million cost, but the Moscoso administration expects that this will be recouped from tax revenues generated by an influx of tourists whom it expects will spend some $85 million while here. The signing was accompanied by events featuring the current Miss Universe, Oxana Federova, to which the large corporate media, the leading lights of the nation's fashion and tourism industries, and members of Panama's governing families were invited.

Official jobless rate up

The Comptroller General's unemployment figures, which in this as well as previous administrations have been considered by most economists as understatements of the problem, show the nation's jobless rate increasing. According to the latest report, 20.6 percent of Colon province's work force is jobless, while 16.4 percent of Panama province's workers are unemployed. The comptroller estimates that the national unemployment rate is 15 percent, 2.6 percent higher than when the Moscoso administration took office. Due to various problems in methodology, many experts argue that the true unemployment rate is a few percentage points higher than what the government reports.

Manzanillo International Terminal to get huge break

After having argued that the "equalization" deal that gives Hong Kong-based Hutchison Whampoa a discount of more than one billion dollars in payments owed the government for the Balboa and Cristobal port concessions amounts to discrimination and unfair competition, Seattle-based Stevedoring Services of America is likely to receive some $300 million worth of real estate in the former Canal Zone to settle its claim. The breaks given to the port concessionaires are being strongly defended in ad campaigns by the companies and the government, but polls indicated that the great majority of Panamanians are opposed to the Moscoso administration's "equalization" moves.

Government revokes bridge design contract while construction is underway

A few days after work began on a second Pacific side bridge over the Panama Canal, the Moscoso administration rescinded the design contract with the Louis Berger International Group - TY Lin consortium and demanded the return of some $500,000 already paid. The consortium, citing a contractual provision that the government has to give 30 days' notice to rescind the contract, is refusing to return the money. According to the consortium, the Ministry of Public Works interposed numerous needless and unwarranted demands and delays in order to force a default and get the contract transferred to Cowi Engineers and Planners. Now it seems that the German builders, Bilfinger Berger, are working against a deadline on a $170 million construction project without a plan and the government is headed for a series of high-stakes lawsuits. Because Louis Berger International is a US-based company, a source within the US State Department told El Panama America that Washington is "closely following" the situation.

Rodin family feud gets worse

In the long-running feud between business tycoon Lew Rodin and his son Peter on the one hand and Lew's other son Martin on the other, Martin Rodin and several of his business associates have been ordered not to leave Panama while authorities probe into allegations that land near Portobelo belonging to the family company, Motores Internacionales, was sold without the knowledge of Lew and Peter Rodin. Martin Rodin says that the decision to sell was taken at a 2001 board of directors meeting at which all the shareholders were represented. In another twist, Lew and Peter Rodin, along with government insurance regulators, are accused of prying into confidential bank records and trying to have their adversaries jailed by questioning the solvency of the bonding company that put up the high bails imposed on several figures under investigation in the CEMIS affair. The bottom line may have been drawn by a meeting between Lew Rodin and President Moscoso, in which the former reportedly offered to "rescue" CEMIS --- that is, to take it away from his son Martin. That won't happen if Martin Rodin prevails in his attempt to have the courts declare his 82-year-old father mentally incompetent. The intra-family argument, which is entwined around allegations that bribes were paid to ensure the legislature's approval of the CEMIS multi-modal transportation and industrial park development, has spawned multiple lawsuits, accusations of criminal conduct and vitriolic press conferences. President Moscoso said that she doesn't know how the complicated dispute will end, but still thinks that the project is important for Panama's development.

Stephen Jones out at CEMIS

Stephen Jones has resigned as legal representative of the Consorcio San Lorenzo, the developer of the ambitious CEMIS project that centers around Colon's France Field airport. Although not formally charged with any crime, Jones is free on a million-dollar bail while an investigation of legislator Carlos Afú's allegations that bribes were paid to obtain approval of the contract for the project proceeds.

Turf war between ARI and Panama Canal Authority

The Panama Canal Authority (ACP) has decided that it won't turn over any real estate that it owns and no longer needs for its operations to the Interoceanic Regional Authority (ARI), which was set up during the Endara administration to receive and dispose of properties received pursuant to the 1977 Panama Canal Treaties. The ACP argues that by law canal properties are "inalienable," and thus not available for ARI's real estate business, and says that from now on any unused property will go to the Ministry of Economy and Finance instead. ARI director Alfredo Arias protests that the ACP now controls more real estate than the US military did.

ARI won't allow kids to use Howard's ball field

Though ARI director Alfredo Arias has been taking out expensive full-color newspaper ads showing how he's teaching Panamanian kids about the flag, he won't let them raise the flag over the baseball field at the former Howard Air Force Base. Panama is hosting a regional tournament for boys aged 13 to 15 and the baseball federation requested to use the field, which, like most of the rest of Howard, is vacant. Arias refused the request, for reasons which remain unclear.

Amador racetrack plan draws criticism

Plans to move the nation's horse racing facilities to the former Fort Amador are drawing widespread criticism. Former ARI director Nicolás Ardito Barletta is in the forefront of the critics, who argue that putting the racetrack at Amador will create traffic nightmares and ruin the area's recreational value. Many urban planners and people currently use Amador and its causeway concur.

Comptroller approves Naos development deal

Comptroller General Alvin Weeden has approved a contract between ARI and Naos Island Development, Inc. for a $32.25 million hotel, casino, time-share apartment, shopping mall and convention center project on Naos Island, on the Amador Causeway. The company is headed by developer José Esses, and will be required under the contract to pay for certain infrastructure improvements, $6 per square meter rent and four percent of the sale price of time share units. Several other upscale developments at Amador have been announced and come to naught, but a few projects have succeeded. The projected five-star hotel would enter an upscale market that already has a lot of competitors who are losing money, but the growth of the tourism industry and an upturn in the Panamanian economy could change that situation.

Mireya orders 1.4 million liters of milk

Mainly to confront the increasing hunger and malnutrition that affects many of Panama's schoolkids, and also as a boost for Panama's dairy farmers who are having trouble selling their products in a depressed market, President Moscoso has ordered 1.4 million liters of milk for the public schools' glass of milk a day program. To prevent this large order from creating a market distortion that raises the price of milk, she has also authorized more dairy imports if necessary.

Municipal austerity

Panama City's mayor, treasurer and city council president, often at odds, have presented a united front before the city's fiscal crisis and announced restrictions on telephone and electricity use and a hiring freeze. Mayor Navarro says that the city's situation has improved a bit since last year, and that the capital outlay budget won't be affected by the new money-saving measures. While many businesses and drivers have fallen behind on payments due to the city, the municipal government is collecting slightly more than it was this time last year and hopes to further boost revenues by installing more parking meters.

Minister challenges attorney fee ruling

Economy and Finance Minister and Cable & Wireless director Norberto Delgado has appealed to the Supreme Court to overturn a lower court ruling awarding Candelario Santana Vásquez $3.6 million in attorney's fees for representing employees of the old state-owned IRHE electric utility during its privatization. Delgado, who says that the fees are too high and would be at the expense of the ex-employees, is not complying with the court order while his appeal is pending. Organized labor has not rallied behind Delgado, but most of the organizations of Panama's lawyers are backing Santana.

La Prensa drops Talingo

La Prensa has discontinued its award-winning Sunday cultural supplement, Talingo. The supplement, which last year won the Freedom Spaces award from Holland's Prince Claus Trust, did not carry advertising. La Prensa, which has been losing ad revenue and circulation in a tough market that has adversely affected all of Panama's mass communications media, has created Mosaico, a Sunday supplement that covers much of the subject matter that Talingo did. Mosaico does include advertising, but has been able to sell very little of it.

El Siglo moves onto The Visitor's turf

The Visitor - El Visitante, the bilingual free tourist-oriented tabloid published by Focus Publications and distributed at hotels and airports around Panama, was one of several businesses disrupted by the closure of El Universal, which served as printer for various independent publications. Now The Visitor is printed at EPASA, which publishes the nation's biggest-circulation newspaper, the gory sensationalist tabloid La Critica, as well as the more respectable El Panama America. Meanwhile, however, El Siglo has created its own bilingual tourist-oriented paper, Panama Sun & Fun, which is now found in hotels where The Visitor used to be found but no longer is.

Corredor Sur toll hikes lower use

The Corredor Sur raised tolls by about 50 percent at the beginning of July, but now it seems that it hasn't added up to a 50 percent increase in revenue. The most immediate sign that the toll hike is driving customers away is that many buses taking people between Tocumen, Juan Diaz and adjacent areas and the city center that had previously used the Corredor Sur are now taking other routes to avoid the tolls. The Corredor Sur management says that bus owners will have to pass on the extra cost to riders, but raising bus fares is a lengthy and highly politicized process.

Aquiculture gets a break

The Cabinet Council has approved a moratorium on payments for the use of public land and water resources owed it by the nation's shrimp farming industry. In 2000 and 2001 the industry was devastated by the white spot virus and has not recovered from the blow.

Societe Generale leaving Panama

Citing special charges and delays imposed by other countrie on financial transactions that involve Panama, France's second-largest bank, Societe Generale, is closing its operations in Panama City's banking center. Brazil, Venezuela, Mexico, Argentina and Peru all discriminate against transactions involving Panama, mainly because those countries have long experience with their public officials laundering the proceeds of corrupt practices here. Societe Generale joins UBS and ABN Amro Bank in the line of European financial institutions leaving Panama, and its departure is taken by some analysts as another sign that the entire offshore financial services sector's days are numbered.

Chitre airport closed for repairs

Chitre's airport closed on July 22 for 60 days, so that the runway can be rebuilt. During the closure the closest air connection for Herrera province's capital is in Guarare, in Los Santos province.

No professional baseball season

The PROBEIS winter baseball league won't have a 2002-2003 season because Major League Baseball won't allow its players to use substandard fields where the possibility of injury is increased, and the only field that meets the big leagues' standards is the National Stadium. The problem could have been avoided by upgrading just one of the National Sports Institute's (INDE's) facilities, but that wasn't done and the pros won't play ball here this year.

ICAO: ICA overcharged for Albrook airport equipment

A report by the International Civil Aviation Agency (ICAO) says that the Mexican-based ICA construction consortium grossly overcharged Panama's Civil Aviation Directorate for equipment that was installed when Panama City's commuter and general aviation airport was moved from Paitilla to Albrook. Some examples of the overcharges include $664,631 for a microwave automated landing system worth $76,250 and $297,500 for meteoroligical equipment worth $175,000. Comptroller General Alvin Weeden stopped all payments to ICA while an investigation is conducted, but it's not altogether clear how much has already been paid.

© 2002 by The Panama News
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