President Moscoso, under intense pressure from Panamanians of all walks of life and from across the political spectrum, has reached an agreement with the Public Utilities Regulating Board and the electric companies, which had been set to raise rates in July. Panama has some of the world's highest electricity bills, the board is more or less controlled by the utilities it's supposed to regulate and the privatized electric companies had "justified" the increase because of the spike in world oil prices that accompanied the US-UK war on Iraq and US-backed attempts to shut down the Venezuelan oil industry and force Hugo Chávez out of office. Petroleum prices have come back down, but the board granted increases in an undisclosed amount anyway. The terms of the deal to keep utility rates from going up have not been released by the government or the companies, but El Panama America reports that in exchange for canceling the rate increase, the privatized companies, in which the government owns a 49 percent stake, will withhold some $30 to $40 million in dividends that will be owed to the state.

The Panama Canal Authority has proposed and the Cabinet Council approved a budget for the fiscal year beginning October 1 that amounts to $924.4 million, some $47 million more than this year's budget. More than $300 million of that will be spent on the public, including $128.3 million in direct transfers to the national treasury and a wide range of services to the general public and government. The larger budget is predicated on the expectation of greater revenues, mainly based on an estimate that the world economy will be improving and thus more ships bearing merchandise will pass through the canal. The Legislative Assembly will have to approve the budget, and is expected to do so.

The Legislative Assembly is considering a package of laws ostensibly designed to speed up the work of the Interoceanic Regional Authority (ARI). The authority was set up to receive and dispose of the non-canal assets, primarily real estate, that Panama received pursuant to the 1977 Panama Canal Treaty. In the original proposal, decisions on contracts worth less than $5 million would have been taken from the 11-member ARI board of directors, which has a number of holdover PRD appointees, and given to a solidly Arnulfista five-member executive board. The legislation would also allow the authority, which is set by law to close down in 2005, to sell on credit. The proposal to set up the smaller executive board was criticized in a resolution by the ARI directors and was withdrawn. The rest of the proposal is still before the legislature, where it is being blasted by the opposition as a subterfuge for the corrupt transfer as much of the former Canal Zone as possible before President Moscoso leaves office next year.

In the Anglo-American Common Law system, when the highest court in the land decides a point of constitutional law that's a binding precedent unless the constitution is amended or the court changes its mind. In the Roman-Napoleonic Civil Code legal system, precedents count for less. During the Pérez Balladares administration the high court overturned a national law regulating billboards, holding that billboards are an exclusively municipal issue. Now the Moscoso administration has issued a decree that purports to strip Panama City of its control over billboards and give it to the Ministry of Public Works. Control over millions of dollars in legitimate fees and countless opportunities for bribery are at stake. The city has sued to have the decree declare null and void, and the Supreme Court has agreed to take the case. There's an Arnulfista majority on the court and a PRD mayor, but in this argument the PRD city council members are siding with the mayor and other city governments of various political persuasions are also expressing their support for municipal control of billboards. Under our present system the fees charged for billboards are one of the few independent sources of revenue that municipalities have.

The Embera communities of Arimae and Embera Puru, located in the Darien outside the comarca, on the Pan-American Highway between Aguas Frias and the turnoff to Santa Fe, have settled a long-running dispute with farmers from the central provinces. When Omar Torrijos ran the government, the Embera community in the area was given collective title to a large tract of land. Later when Manuel Antonio Noriega ran the government, the same land was given to colonos from the Interior. There ensued years of legal disputes, punctuated by occasional violent confrontations. Under the deal 18 colono families will be allowed to farm and live on 45 hectares each, the government will send in surveyors to measure and mark the land boundaries, and the Embera title to the rest of the land will be respected and protected.

It seems that more than a dozen, and probably more than two dozen, Banco Nacional de Panama employees have been putting their hands in the till in what police and prosecutors say was a systematic, organized fashion. So far 23 employees have been fired and 15 jailed, and at least $250,000 is missing. Basically it seems to have been a ring of low and mid-level employees who gave themselves five-finger raises and knew how to conceal their subtractions from the state-owned bank, at least for awhile.

The Banco Balboa y Viscaya Argentaria (BBVA) is getting sued for three-quarters of a million dollars by a computer firm for its merger with the Banco Exterior de Panama. Computotal's complaint is that it had an exclusive software contract with BBVA, but the merger brought Banco Exterior's competing Windows software into the business. Despite the difficulties of combining operations with different computer systems and the possibilities of lawsuits like this, look for mergers to continue in the Panama City banking district. It's part of a worldwide trend.

Because it has reached its capacity, the kidney dialysis clinic at the Social Security Fund's Arnulfo Arias Medical Center is not taking any new patients. Actually, the clinic at the center was designed to serve a maximum of 180 patients and it's currently serving 260. The fund has bought the formerly private San Judas Tadeo Hospital in Panama City and will add a new dialysis clinic there, and there are also plans to offer services in Aguadulce. Meanwhile, many new kidney failure patients will have to turn to the private sector. That ought to make presidential advisor Alvaro Antadillas, who owns a private dialysis clinic, a bit richer.

Consider all this a public economic subsidy for one particular private business. Since the Miss Universe contestants began arriving in Panama the Hotel El Panama has taken on the appearance of an armed camp, with presidential guards in their red berets patrolling the roofs, the SINAPROC disaster relief center maintaining a command center in the parking lot and a legion of public and private cops swarming over the place. There have been repeated incidents in which Panamanian and international reporters have been beaten up or had their property confiscated by the Institutional Protective Service (SPI, the presidential guards) or private security agents. The SPI has defended the practice, issuing a statement that it's enforcing Miss Universe contest owner Donald Trump's policy that none of the beauty queens are allowed to give interviews and arguing that since a cell phone might be used to conceal a weapon, presidential guards are justified in confiscating reporters' cell phones. Another set of confrontations has taken place when some photojournalists have attempted to take unstaged photos of the beauty queens, also against Donald Trump's edict. The Panamanian government is paying Trump $9 million to hold his pageant here.

On May 23 there were a lot of dead fish alongside the Cañazas River in Cañazas, Veraguas, and a lot of kids in the town of 18,000 sick with stomach disorders. Apparently somebody had been catching river shrimp just upstream from the community's water system intake by spreading poison on the water. Police and the National Environmental Authority are investigating, but so far nobody has been caught.

For many decades now, the Colon Free Zone has been a favorite shopping place for Cuba to get around the US trade embargo. Mostly the Cubans don't buy US products, but things made by companies in third countries that would have problems with the US government if it were known that they were selling to the Cubans. In some cases, in violation of US law but quite legally in Panama, Cuba buys US-made items in the Free Zone. Now the Free Zone is acknowledging this part of its business, for example by a recent trade expo it held in Havana. At the fair contracts were signed for the distribution of Cuban mineral water through the Free Zone and for exports of clothing and footwear from here to Cuba.

The Moscoso administration has called home its diplomats from China and the Philippines due to the SARS outbreak. Our diplomatic ties in China are informal due to our full diplomatic relations with Taiwan. However, quite a few Chinese ships fly the Panamanian flag of convenience, there are thousands of Chinese citizens living in Panama and China distributes a lot of its exports through the Colon Free Zone, so there's a lot of work for our semi-official consulates in Hong Kong and Beijing. The consulate in the Philippines, a subsidiary of the Escalona family, has done a lucrative business selling Panamanian seaman's papers, sometimes to grossly unqualified individuals for the right price.

The Ministry of Health is setting up a ward of the new Santo Tomas Hospital to isolate patients with contagious diseases and speeding up the effort due to the SARS outbreak. So far Panama has not recorded a case of the atypical pneumonia that's caused by a virus. However, because we have ships from all over the world passing through here we are at risk, and Colombia has recently recorded a SARS case.

On May 12 Customs waylaid a truck loaded with nearly two tons of Costa Rican-grown tomatoes sneaking into Panama at Rio Sereno. The Panamanian driver was arrested. This was Panama's first-ever tomato bust. Panamanian farmers have been complaining about an upsurge in illegal imports of rice and other agricultural commodities lately, which they say drives prices down and poses the danger of introducing plant diseases. The complaint that the government isn't doing enough to stop such imports is one of the main points in a litany of grievances that has alienated most of the nation's farm organizations from Agricultural Development Minister Lynette Stanziola. The argument has become so acrimonious that most farmer groups refuse to sit in the same room with Stanziola, so the Moscoso administration has sent other officials to meet with them in an attempt to resolve grievances.

Experience tells us it may or may not happen. The Interoceanic Regional Authority has signed a $32 million contract with a Naos Island Development Inc to build a 120-room five star hotel, with a casino, artificial beach and convention center, on Naos Island. This year is unusual because it's Panama's centennial, but generally Panama is unable to fill most of its upscale hotel rooms. Most of the hotel projects announced by ARI have never materialized but some have, so we shall see.

Also in this section:
Business & Economy Briefs
Panama City's El Mercadito
Environmentalists buying logging concessions
Now's the time to buy --- NOT!
Tax hike for Americans working abroad avoided

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