According to the United Nations annual development report, 16 percent of all Panamanians are malnourished, 10 percent of all babies born here are underweight and 14 percent of five-year-olds entering school have stunted growth as the result of malnutritition. The report also said that 13 percent of Panamanians don't have access to clean drinking water. The worst deprivation is found in the country's rural indigenous communities.

For many years economists and sociologists have denigrated Panama's official unemployment statistics, which tend to be made with suspect methodology in the best cases and are fictitious government propaganda in more usual circumstances. Now the International Labor Organization, a United Nations agency, is working with the national government to do a real unemployment study, and first reports are that Panama's true unemployment is around 20 percent, rather than the 13 percent or so that "official statistics" usually claim.

The government's IPAT tourism bureau says that the number of tourists visiting Panama between January and August of this year was up 2.1 percent over the same period in 2001. The most popular point of entry was Tocumen Airport, where 283,143 visitors arrive, as compared to 141,294 people who arrived by sea (mostly on cruise ships) and 46,627 who came overland from Costa Rica. IPAT does not keep statistics on those visitors who enter Panama by land or sea from Colombia.

Although most of Panama's electricity is not produced by petroleum-fired generators, the rise in world oil prices that US and British plans for war against Iraq have caused is given as the reason for electric rate hikes of between four and 14 percent that will go into effect in November. The lower rate increases will be in the areas served by Union Fenosa, while the parts of the country served by Elektra will see the steeper rises.

The Ministry of Economy and Finance reports that government income for the first nine months of 2002 is down some $177.9 million from the same period in 2001, which represents a 13 percent decline. Economists are arguing about what the figures mean. According to the ministry, it's not so much a continued economic tailspin as a reflection that Panama has spent much of the proceeds from privatizing public-owned companies during the previous administration and no longer receives so much revenues from the investment of those funds. Critics say that it's a manipulation designed to back an effort to raise taxes. When only the value added tax (IBTM) is examined, Panama took in 3.7 percent more in the first nine months of this year as compared to the same period in 2001.

At a Panama Week gathering of international business leaders in Washington, Second Vice-President Dominador Kaiser Bazán announced an important change in the way that Panama will seek to join a Free Trade Area of the Americas. Now eschewing bilateral talks, Panama will join with the Central American countries to negotiate free trade as a regional bloc. The Bush administration, which is finding it difficult to sell neo-liberal economic ideals in South American countries whose economies have been devastated by these policies, has instead of a multilateral negotiation to reach an economic integration deal throughout the hemisphere, proposed a series of bilateral negotiations in which the United States would have the upper hand. President Mireya Moscoso was one of the few leaders in the Americas who embraced this concept, but was told by friends and foes of regional integration alike that bilateral acceptance of the US offer would be unacceptable. The change from a bilateral to a collective bargaining strategy gives the free trade process a chance in Panama, but it's very likely that economic integration will be a major campaign issue in the 2004 Panamanian elections, with the PRD likely to argue that this country's interests and identity are more closely linked with those of the Andean countries than with those of the Central American banana republics. Beyond the Arnulfista-PRD disagreements about who we are and how we should merge the economies of the Western Hemisphere, there is and will be major opposition to a Free Trade Area of the Americas on the part of Panama's labor unions, many farmers, those business sectors with national monopolies and leftist groups.

Telecarrier, a phone company whose backers include members of the Motta family and whose intentions are to compete head-to-head with the hated UK-based Cable & Wireless when their telephone monopoly ends on January 31, is running TV ads. However, Telecarrier can not tell potential customers what their prices will be because Cable & Wireless is stalling negotiations about interconnecting phone systems, making demands that competitors require lengthy access codes, pay exhorbitant connection fees or otherwise be required to do things that will keep them from providing a service that people will want to use. BellSouth, which also wants to compete with Cable & Wireless, has complained about the same things. A number of top Moscoso adminstration officials are on the Cable & Wireless board of directors, and the company is using all of its power and influence to maintain an effective monopoly.

Metro area regional health director Carlos Rodríguez recently went on television to denounce an economic crime --- unfair competition. He said that Stone's, a popular Panama City nightclub, is frequented by wild and promiscuous young women looking to meet young men for sexual encounters for which no money is exchanged, and that amounts to unfair competition for Panama's houses of prostitution. It is not clear whether money was exchanged to elicit this official advertisement for Stone's. In most places a pronouncement like Rodríguez's would leave its maker jobless in short order, but the Moscoso administration operates by different standards.

The Japanese government will be opening an office of the Japan External Trade Organization (JETRO) in Panama on October 21. The main aim is to encourage small Panamanian businesses to export agricultural products to Japan, and to acquaint farmers here with crops that are not traditional in Panama but in demand in Japan.

On October 23 the Legislative Assembly passed modified version of President Moscoso's educational decentralization law on third and final reading. There will be 13 administrative regions --- one for each province or indigenous comarca --- and five regional teacher selection boards.

Though it has lost before in arbitration, the courts and public opinion, Panama's Social Security Fund (CSS) is doing battle once more with the Compañia Nacional de Seguros over delays in the completion of a public hospital in Aguadulce. The insurance company bonded the construction contractors, the hospital hasn't been finished on time, and in response to the CSS's complaints the contractors and their insurers have argued that the delays have been caused by specification changes and other problems created by the social security system. In an earlier case, the CSS lost in arbitration and before the courts, but then a social security tribunal imposed a $1.7 million fine. That action, which has been blocked by the courts while appeals are pending, prompted alarm not only from the insurance industry but from business organizations in general, who argued that it amounted to the derogation of the rule of law that protects businesses when they deal with the government. But meanwhile the hospital still isn't done, and in a new case arising from the further delays, a CSS tribunal has imposed another fine on Compañia Nacional de Seguros, this time for $1.4 million.

On October 15 about 200 Ngobe protesters from Bocal del Toro crossed the Bridge of the Americas and made their way to the Palacio de las Garzas to demand titles to their land. In Bocas many families have occupied lands for generations without holding legal titles. Under the law they are theoretically protected by squatters' rights, but one major sport in Bocas politics is for developers to claim land that others own by squatters' rights, bribe local officials to evict the residents, and then sell the land to unsuspecting foreigners, who will then find themselves thrust into disputes with local communities. During her campaign Mireya Moscoso promised to give the Bocas residents who are vulnerable to such abuses titles to their lands, but so far she hasn't done so and the protesters came all the way to the capital to demand that she honor her commitment.

Civil Aviation Director Jorge Rodríguez is "answering" questions with smirks, insults and finger-pointing at his predecessor Jaime Fabrega, but two Boeing 727s have disappeared from Civil Aviation Directorate (DAC) hangars and one has been spotted in Angola. Fabrega, for his part, is livid about being blamed for a theft that took place on his successor's watch. The planes had been seized to ensure that employees of the bankrupt Pacific International Airlines would be paid back wages they were owed. Now the workers have lost the security for their payment and Rodríguez is snickering about it on television. This is only the latest in a string of scandals at the DAC under the Moscoso adminstration. The most notable cases have been the "spontaneous combustion" fire that destroyed the agency's records while an investigation of the theft of hundreds of thousands of dollars worth of aviation fuel was underway, and the HP-1430 helicopter insurance fraud scam in which an aircraft in a presidential entourage landed in the Gulf of Panama and was then sunk by police on orders from top administration officials. The destruction of DAC records also contributes to the diversion of Panamanian aircraft for international terrorist purposes. In the most noteworthy example of that, Colombian AUC death squad leader Carlos Castaño has boasted about his group's theft and use of Panamanian aircraft in his country's media, but has not been charged in connection with these crimes by this country's authorities.

On October 16 Transito police slowed metro area mass transit to stop buses and ticket drivers who were not wearing uniforms. They also took a number of buses off the road for lack of proper licenses or permits, for or safety violations. The police let some buses go on their way after confiscating illegal horns, klaxons, sirens or music speakers. A number of riders were annoyed by the commuting delays caused by the crackdown, but others approved, especially to the extent that safety and noise standards were enforced.

After negotiations with the banking industry, the Banking Superintendent's Office has announced new regulations that would allow financial institutions to close "suspect accounts" once 10 days have elapsed after notification of the Financial Analysis Unit, and which set an 18-month limit on the time that banks can hold onto collateral that has been taken to satisfy debts. The latter regulation is likely to mean some cheap used car and real estate deals in the short term, and probably helps those banks that have been slow to foreclose and repossess during Panama's economic crisis.

The Panamanian Constitution prevents the use of the Panama Canal as collateral and the Panama Canal Authority (PCA) has no present plans to issue bonds, but still the transformation of what used to be a US government agency into an entity that takes on the airs of a private corporation appears to be continuing. The latest indication was canal administrator Alberto Alemán Zubieta's announcement that the PCA now has investment grade ratings from the US-based multinational bond rating agencies. This factor could become important if the decision is made to expand the canal by creating a new lake in the Western Watershed or building a larger third set of locks.

On August 16 the Cabinet Council approved the issuance of $250 million in bonds, which would bring Panama up to the maximum allowed debt level currently permissible under the nation's laws. The transactions, which the Ministry of Economy and Finance can execute whenever it judges market conditions to be most promising, may be in the form of buying back old bonds with new bonds.

In an October 16 cabinet meeting Comptroller General Alvin Weeden said that there are "irregularities" in the Social Security Fund and President Moscoso warned that Social Security Director Juan Jované must address Weeden's allegations about problems in his bailiwick rather than organizing public protests against Weeden's campaign. Jované responded by demanding particulars and proofs from Weeden, who so far has not given any specifics about mismanagement or other misconduct on Jované's part. El Panama America and Weeden continued their campaign with allegations of high prices for medicines. That problem is mostly a matter of multinational drug companies' power and Panamanian legislation governing the purchase of medicines, factors which are beyond Jované's control. Basically the issue is that Weeden and private health care and insurance interests want to see Seguro Social in a few specific private hands.

Panama's consulate in Manila has gained international notoriety as a place where seaman's certificates are sold to unqualified people, but there has been no question of accountability for it under the Moscoso adminstration. Panama's admiralty lawyers don't like the situation, and are now joining former Manila consular employee Grace Castro's protests about a new $50 surcharge imposed on applicants for Panamanian seaman's papers, and a requirement that Filipinos who would work on Panamanian-flag vessels must be examined by one of two clinics selected by the consul, Juan Carlos Escalona. The head of the Panamanian Maritime Law Association, Juan Felipe Pitti, says that the two clinics chosen by Escalona are deeply involved in the creation of false seaman's papers, that the $50 surcharge is not authorized by law and there is no record of any of the proceeds from the racket accruing to the national treasury. It is unlikely that Government and Justice Minister Arnulfo Escalona will look into the matter, and Attorney General José Antonio Sossa has a nearly unblemished record of refusing to investigate criminal activity at Panamanian consulates.

Salvador Rodríguez has been elected as the new rector of Panama Technological University (UTP). The US-educated engineer (Utah, '82) will replace Héctor Montemayor and serve a five-year term.

Comptroller General Alvin Weeden asked outgoing Panama Technological University regent Héctor Montemayor to fire Gonzalo Córdoba, the director of the National Science and Technology Secretariat (SENACYT), from his full-time job as a professor, and Montemayor did just that. Weeden claimed that it was costly and unjustifiable for Córdoba to hold two full-time government jobs, and Córdoba said that he'd abide by the rector's decision. Weeden and Córdoba have clashed over the comptroller's desire to control SENACYT computer purchases.

Grupo ADELAG shareholders' hopes of recovering any of their money have been put on hold while lawyers argue about the De la Guardia brothers' purchase of Fiesta Casinos stock through a couple of layers of corporate veil was a legitimate transaction unrelated to Grupo ADELAG or a fraudulent transfer of assets from a corporation that the brothers knew was about to fail into their personal shells. Part of the problem in the case is that the records of Grupo ADELAG were cooked by the Arthur Anderson accounting firm, which was fined $100,000 for its actions. The bankruptcy receiver for Grupo ADELAG, Narciso Arellano, has moved to recover Aquilino and Carlos De la Guardia's personal assets on the basis of fraudulent conveyances at company shareholders' expense, and now the company's bankruptcy case is in abeyance while litigation to declare the brothers' personal bankruptcy proceeds. Nobody has gone to jail or seems likely to do so in connection with the case.

The World Health Organization has declared Panama free of iodine deficiency diseases, the most common of which is goiter. The importance of seafood in the Panamanian diet has minimized this problem, except in remote inland areas. Panama's commercially processed salt is for the most part iodized, but until a few years ago people in some isolated mountainous communities couldn't count on this or other sources of iodine in their diet.

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