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Panama and the United States have reportedly reached an agreement that would allow the US Navy to board and inspect Panamanian-flag ships on the high seas if they are suspected of carrying weapons of mass destruction. The United States already has a similar agreement with Liberia. The Panamanian and Liberian ship registries are the world’s largest, together accounting for more than 20 percent of the global maritime fleet. The Bush administration is concerned that Osama bin Laden’s followers may introduce chemical, biological or nuclear weapons into the United States by sea, and these agreements are one of the preventive measures being taken. Theoretically, Panama’s Servicio Maritimo Nacional would have reciprocal rights to board and inspect US-flag ships suspected of carrying such weapons.

The Panama Canal Authority (ACP) has announced that the tonnage of ships and cargoes passing through the canal went up 7.8 percent in the second quarter of the current fiscal year (January-March 2004) as compared with the same quarter of fiscal 2003. The authority attributed the rise mainly to an increase in transits of Panamax-sized container ships traveling between Asia and the east coast of the United States. There was also a substantial increase in the amount of crude oil passing through the waterway. The ACP reported an increase in revenues of some 12.8 percent.

On April 30, the Standard & Poor’s bond rating agency warned that the risk classification for Panama’s public bonds could be downgraded if the Panamanian government continues its high budget deficits. S&P said that for 2003 Panama’s public budget deficit was 5.3 percent. However, according to the Moscoso administration, it was only 1.9 percent. There is a two percent legal cap on government deficits, but the Moscoso administration played various accounting tricks last year, most notably by including the Panama Canal in the calculations although it had previously been figured separately and by assigning various expenditures made in 2003 to different fiscal years. S&P did acknowledge a “moderate” improvement in the Panamanian economy but opined that there wouldn’t be much foreign investment without a number of major reforms in the way business is done here.

The Ministry of Economy and Finance estimates a 6.8 percent annual growth rate in the Panamanian economy during the first four months of this year, but the Panamanian Business Executives’ Association (APEDE) is skeptical. The group’s president, John Bennett, told El Panama America that the national economy is improving this year, but not nearly as much as the government claims.

On May 4 the Ministry of Economy and Finance held a bond auction and nobody came. In its fifth public bond auction of the year, set to raise $15 million, not a single private entity submitted a bid. The bonds thus went to the state-owned Banco Nacional de Panama, at a price of 99.75 percent and a 5.309 percent yield. It seems that the expectation that the US Federal Reserve Bank will raise interest rates shortly was a major factor behind the private sector’s lack of enthusiasm to lend money to the Panamanian government.

In the wake of Telefonica’s purchase of BellSouth’s cell phone operations in several Latin American countries including Panama, Standard & Poor’s has put the Spanish-based multinational on its negative watch list. S&P believes that the outlook for the telecommunications business in the region is unstable and thus that Telefonica substantially increased its risks when it bought BellSouth’s assets.

According to a report in La Prensa based upon figures from the Panamanian Automobile Distributors Association (ADAP), car sales in March of this year were up 23.6 percent over the same month in 2003. The association’s president, Javier Díaz, attributed the increase to consumers’ optimism about the economy and the currently prevailing low interest rates.

Representatives of the governments of Panama and Singapore will meet on May 17 in Singapore to begin talks aimed at a free trade treaty. The Southeast Asian city-state exports some manufactured goods and could become a significant importer of Panamanian agricultural products, but the main effect of a free trade deal would be to pull down customs and tariff barriers between two of the world’s principal import-export centers.

The Fiduciary Fund for Development which the Pérez Balladares administration created with the proceeds from the sale of state-owned enterprises shrank by $6.8 million last year and stood at $1.260 billion on New Year’s Eve. Although the spending rules were relaxed early in the Moscoso administration with the PRD’s acquiescence, the fund’s principal is supposed to remain untouched, leaving the income from its investments available for development projects. The government took $94.5 million out of the fund last year, while on the other hand the Interoceanic Regional Authority (ARI) only put a lower-than-expected $2.4 million from sales of property in the former Canal Zone into the fund and low world interest rates and a mediocre performance by the fund’s stock portfolio failed to replenish the amount that was withdrawn.

The University of Panama, which is beset by a severe financial crisis, has raised a number of its fees. Copies of diplomas now cost $15 more, while certifications of degrees earned abroad or at private universities will cost $75 each. Certificates updating graduates’ qualifications will also cost more now.

The University of Panama Academic Council has approved a new job classification of “exclusively dedicated professors” for those faculty members who teach full-time and hold no other employment. “Other employment” might be, for example, a medical school professor with a private clinic on the side, or a professor who dedicates part of his or her work day at the university to research rather than teaching. Current full-time profs who don’t qualify for the new classification will have their salaries cut. The university rector’s move to fire law professor Miguel Antonio Bernal stems mainly from his strident criticism of this proposal, and now the faculty union is threatening to walk out if the new pay scale is implemented or if Bernal is disciplined for criticizing it.

Despite the decline in Panamanian educational standards, increased public school class sizes and the Moscoso administration’s record of starting each school year with hundreds of teaching positions unfilled, National Education Director Gilberto Solís has called upon the nation’s universities to stop training teachers. Arguing that the educational system has no jobs for new teachers to fill, he complained in El Panama America that students are led to believe that their diplomas will land them jobs when that is not the case. Silly students! --- everyone knows that in addition to a university degree, one needs to pay dues to a Rosas family racket known as the MOLIRENA party to get a good public school teaching assignment. This is probably one of the reasons why young voters voted en masse against MOLIRENA and the rest of the Mireyista alliance on May 2. The Rosas family is struggling to maintain its grip on MOLIRENA and may or may not succeed, but on September 1 they will definitely lose control of the Ministry of Education. Then it will be up to the next government to fix an educational system with many severe problems, not all of which are the fault of the outgoing administration.

The National Environmental Authority (ANAM) and the Interoceanic Regional Authority (ARI) are now on opposing sides of a dispute between Clayton residents and Cemedin Real Estate SA, which is building a shopping center near the former Fort Clayton antenna field. The main problem is that part of the development is within the Soberania National Park, which ARI had no legal right to sell. Add to this the developer’s razing of a forested area without a proper permit to do so, and non-compliance with the environmental permit that the company did have. Thus ANAM has ordered work on the project halted.

On April 23 President Moscoso turned on the water to much of the eastern part of the Panama City-San Miguelito metro area. It happened at a ceremony inaugurating the IDAAN water and sewer utility’s Linea de Oriente, a 23-kilometer, $17 million water main that will bring water to Tocumen, Pedregal, Mañanitas, El Golf and other nearby areas. The water will come from IDAAN’s Chilibre plant, which is in the process of being modernized and expanded.

Businessman and unsuccessful legislative candidate Augusto “Onassis” García will stay on as publisher of La Estrella de Panama, this country’s oldest newspaper, but the board of directors has announced that it will unlink itself from the Arnulfista Party. García was Mireya Moscoso’s campaign treasurer in 1999 and many of his relatives got jobs in the Moscoso administration. Along with other investors, he bought control of La Estrella, which was founded in 1853, from the Duque family and turned it into the state-supported Arnulfista daily. Although La Estrella has claimed a circulation in excess of 10,000 copies, its paid circulation is a tiny fraction of that, with most copies being passed out for free at the nation’s hotels. Despite its negligible readership, La Estrella was the leading publisher of the government’s print advertising. Now that gravy train is screeching to a halt, García is under investigation by electoral authorities for the alleged spending of public funds to support his losing bid to be a legislator and the newspaper’s future is in doubt. There are some prominent PRD members on the board of directors along with the Arnulfista shareholders, and various competing dailies have published speculation that they may buy a controlling interest. Meanwhile, however, the paper has announced that it will back away from its close ties with the Arnulfista Party.

The Panama News has been shown documents of the quasi-public authority which was created to take over Tocumen Airport which suggest that new vending concessions at the passenger terminal that’s about to be expanded will be awarded before Mireya Moscoso leaves office. This despite the fact that the construction project will take a year and one-half to complete. Airport concessions are usually lucrative, and if the Moscoso administration acts as it usually has it would be expected that some of these will end up in the hands of people with family or political ties to the president.

Two years and many developments after the fact, Comptroller General Alvin Weeden is suing to set aside the “equalization” deal by which the Moscoso administration slashed the rent on the ports of Balboa and Cristobal. The port concessionaire, Panama Ports, is a subsidiary of the Hong Kong-based Hutchison Whampoa, the world’s largest seaport management company. Over the 50 years of the concession, the reductions in payments to the Panamanian government would amount to more than $1 billion. Moreover, because other private ports have contracts stipulating that they shall receive comparable benefits to anything a competitor gets, Panama is in the process of transferring a large part of Coco Solo to the Manzanillo International Terminal (a subsidiary of Seattle-based Stevedoring Services of America) as compensation. However, Weeden says that the deal given to Panama Ports is illegal because he didn’t sign it, and has petitioned the Supreme Court to set it aside.

Ruling in one of several cases arising from the Port Engineering Consultants Corporation (PECC) contract to maintain Panama’s buoys and lighthouses, the Supreme Court has agreed to hear a constitutional challenge to the expropriation of the company’s assets and thus reversed Comptroller General Alvin Weeden’s orders rescinding the contract and transferring the company’s assets to the National Maritime Authority. Weeden had produced documentary evidence suggesting that PECC, which received its concession during the Pérez Balladares administration, is in fact partly owned by one Ernesto Pérez Balladares. The court also agreed to hear former port authority director Hugo Torrijos’s appeal of Weeden’s order freezing his assets in relation to the same case, and thus restored Torrijos’s control over his property.

At a Mayday rally in Baru the SITRACHILCO banana workers’ union announced that 12 workers who had been expelled from the union by its former secretary general, José Morris, have had their membership restored. They had been purged from the union and fired from their jobs at the cooperative that supplanted Chiquita subsidiary Puerto Armuelles Fruit Company for opposing Morris. The union’s new secretary general, Cornelio Quintero, also announced that legal steps would be taken to recover SITRACHILCO-owned lands that have been invaded by squatters and that the union-dominated cooperative would diversify some of its plantations from bananas to other crops.

On April 28 the Ministry of Health ordered the seizure of 1.5 million kilos of flour that had been treated with potassium bromate, a preservative that’s illegal in Panama, from the Panificadora La Favorita bakery. The tainted flour had been imported under a permit granted by the Ministry of Agricultural Development, which is headed by Lynette Stanziola, who also sits on the board of directors of Panificadora La Favorita.

Long ago in the 1960s, the Panama Red variety of marijuana was a legend among American hippies. Since then the Panamanian government has made regular efforts to suppress marijuana growing, which mostly takes place on unpopulated islands off of Panama’s coast, and meanwhile some agricultural science has been applied to marijuana cultivation, such that most of the pot smoked in the United States is grown in that country and it’s far more potent than the Panama Red of lore ever was. These developments have made Panama an importer, rather than an exporter, of marijuana. However, on May 6 Costa Rican police seized 2,475 kilos of pot at a roadblock near San Vito and they say that the drug shipment came from Panama. But the question remains whether the stuff was grown here or merely smuggled through this country from Colombia.




Also in this section:
Business & Economy briefs
US-RP trade talks underway
Anatomy of a scam, part 3 of 4
Mayday: unions oppose Seguro privatization, FTAA

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